An application of economic theories and concepts to water management in New Zealand

Abstract

This report describes an economic assessment of the policies and strategies used to manage water resources in New Zealand. A number of economic theories which relate to water allocation and water pollution control are outlined, with an emphasis on pricing theory. Results of a survey undertaken on charges made for municipal water and sewerage services and regional water board charges are given. The strategies used in New Zealand to manage water resources and to provide finance for water-related services are then evaluated in the light of overseas policies, and the strategies suggested by economic theory. It is concluded that a greater use of pricing policies based on marginal cost pricing, which relates charges to the cost of providing water services, would lead to a more efficient and equitable allocation of water resources. Specific recommendations for changes to water supply and sewerage service pricing, and for changes to existing water and soil management legislation are outlined.