By Chris Ryan

 The Ruataniwha dam is a proposed 83m-high dam in the central Hawkes Bay’s Ruahine Range to supply water to 28,000ha of farmland[i]. The proposal would flood a section of the Tukituki River and provide storage for 93 million m³ of water[ii]. The project has been immensely controversial. The Hawkes Bay Regional Council (HBRC) is backing the project via its subsidiary company, the Hawke's Bay Regional Investment Company (HBRIC)[iii].Why the interest?Interest in the scheme developed after a series of dry summers and a desire to secure water supply for agriculture in the region[iv].Proponents of the scheme argue that the dam will increase the supply of water which will allow farmers in the region to shift to more intensive agriculture, which will be more profitable and thereby benefit the economy[v]. One report estimates that the dam will create 3500 jobs and contribute $380 million to the GDP of the Hawke's Bay[vi]. Furthermore, proponents argue that the dam would allow for a shift to higher value crops, such as pipfruits, broccoli, carrots and radish seeds[vii].Sounds great! Why are people opposed?Opponents point to the high cost ($900 million) of the dam, approximately half of which will come from the government and the HBRC[viii]. Even with the state taking on some of the capital costs, the Hawke’s Bay’s Ngati Kahungunu investment arm estimates that the scheme will be loss-making for the first 5 to 10 years[ix].Opponent Ngahiwi Tomoana argues that it will further entrench the disadvantaged position of Māori in the region:

“Water is going to be owned by people who aren’t from here, who don’t have a heart for here. It’s one transaction that will make a whole lot of people rich and a whole lot of people poorer”.  [x]

There is also concern that the project will degrade the condition of the Tukituki River. The expansion of agriculture in the Canterbury region, also reliant on large irrigation schemes, has led to a significant deterioration in the water quality in the region[xi]. The risk of water quality degradation as a result of the Ruataniwha dam is particularly great because the modelling for the project assumes that 37% of the irrigated land will support dairy cows which are associated with high rates of nitrogen and phosphorus pollution[xii]^,[xiii].Moreover, the project is immensely controversial as a result of procedural failures during the development of the dam proposal. Investor, regulator, approver and beneficiary?In 2012 the HBRC decided to invest $80 million in the project, via the HBRIC, so that the development could go ahead[xiv]. The HBRC hopes to get a a 6% return on its investment[xv]. However, this could represent a conflict of interest as the HBRC is the main regulator responsible for the management of the waterways in the region.The Tukituki River has a target level of nitrate (a pollutant commonly associated with agricultural activity) concentration target of 0.8mg/L[xvi]. However, the HBRC has interpreted the target as an aspirational goal rather than as a requirement, so this acts as an examination of the dam’s effects rather than as a threshold for action[xvii]. As an investor in the scheme HBRC has little incentive to enforce the 0.8mg/L target as compliance threshold because:

• Currently nitrate current concentrations in the Tukituki River exceed 0.8mg/L[xviii].
• An increase in the amount of intensive agricultural activity could therefore arguably increase nitrate concentrations.

Consequently, if 0.8mg/L were a compliance threshold, the HBRC would be required to:

• Reduce the amount of water stored by the dam.
• Reduce the amount of intensive agricultural activity in the area.

However, both of these courses of action would reduce the profitability of the scheme which would reduce the HBRC’s rate of return. Therefore, the HBRC is likely to have to choose between the economic benefits of the scheme, which are inevitably hard to resist once the dam has been built, or try to protect environmental values.Freshwater specialist Kate MacArthur expresses such concerns:

“I’m concerned that the council has a fundamental conflict of interest as a major investor in the scheme and as its environmental regulator. It has to make the Ruataniwha scheme work financially, but to do that, we think it has to compromise environmentally”.  [xix]

The ability of the Council to make objective decisions is particularly important in a context where the economic benefits of the project are uncertain. For example, the amount of rainfall required for the dam to be economic (2300-2500mm per anum) likely overestimates the actual amount of rainfall in the region (1600-1800mm per anum). The 20% difference in the available water resources is very significant in the context of a large dam in a small catchment. Furthermore, climate change will likely reduce future rainfall[xx]. Additionally, the economic modelling for the dam assumes that 4000ha of highly profitable apple orchards and vineyards will locate themselves in the scheme area. However, currently only 300ha (2%) of the land area within the scheme is intended for pip fruit, likely because conditions are not ideal.However, the environmental harms from the project are certain. Dams generally reduce the flow of a river, and the occasional flushing of the river, where extra water is released from the dam to simulate floods, is unlikely to shift the gravels and scour the rocks of algae[xxi]. This means that the river system will undergo ecological and morphological change. Furthermore, the river will likely be subjected to increased nutrient loads from a result of increased agricultural activity.Resource management necessarily involves weighing up the risks and benefits of a project. However, in this case, the HBRCs ability to weigh up the harms and benefits of the project has been limited because HBRC is an investor who receives a benefit from the project. Decision makers with a pecuniary interestFurthermore, when it came to vote on providing Council funding for the scheme the council was split 5-4 in favour. Given the close nature of the vote and the controversial nature of the project, it is significant that one councillor, whose family owns 19ha of land within the scope of the project, was allowed to vote despite having a clear pecuniary interest as the value of the land would increase if the project went ahead. Had this councillor (councillor Hewitt) not voted the project would have been unlikely to progress[xxii].In the context of controversial projects in particular, pecuniary interests ought to preclude voting. This is because although it might be in the interests of community to vote for a councillor with a pecuniary interest to vote, this pecuniary interest means that a councillor is likely unable to weigh the environmental risks and the economic benefits. Furthermore, when councillors with a pecuniary interest are allowed to vote it makes the project controversial irrespective of whether the project goes ahead or not due to the possibility of their being influenced by their pecuniary interest. Fast and loose land swapsAnother sources of controversy for the Ruataniwha dam project was the proposal to deregister 22 hectares protected conservation estate and swap it for 170 hectares of nearby private farm land so that the deregistered conservation land could be flooded[xxiii]. Forest and Bird took the Minister of Conservation and the HBRIC to court arguing that the swap was not permissible under the Conservation Act 1987.The High Court found in favour of the HBRIC on the basis that the transfer was within the broader purpose of the Conservation Act[xxiv]. Forest and Bird appealed to Court of Appeal who found in their favour. The majority of the Court of Appeal held that[xxv]:

• The Director-General of Conservation did not, but should have, made the decision on the basis of whether the land in question was no longer worth permanent protection as envisaged by the Conservation Act. This means that external or internal forces would have had to have degraded the intrinsic values of the land which was going to be removed from the conservation estate.
• It was wrong for the Director-General of Conservation to approve the land swap on the basis that it was a net gain to the area of land within the conservation estate.
• France P dissented on the basis that the Director-General of Conservation could consider conservation purposes more broadly, and as such could consider an increase in the area in the conservation estate in their decision making.

The HBRIC now intends to appeal the decision[xxvi]. Should the HBRIC’s appeal be successful it would lessen the standard of protection for up to a third of the conservation estate[xxvii].In order to try and avoid the effects of the judgement, the HBRIC has argued that it might try to acquire the land via alternative means, for example, by acquiring the land under the Public Works Act 1981. The HBRIC has applied (and is likely to be successful in doing so) to becomea requiringauthority so that it could acquire land within the whole footprint of the proposed development[xxviii]. If the HBRIC is approved as a requiring authority it can seek to use the Resource Management Act 1991 to request that the Minister of Lands acquire the land under the Public Works Act[xxix]. This would allow the HBRIC to acquire the 22ha of conservation estate under the Public Works Act.If the 22ha is a significant part of the conservation estate and the HBIRC were unable to acquire it under the process in the Conservation Act, it seems like a cynical use of the process for the HBRIC to then be able to acquire that land under the Public Works Act.ConclusionThe Ruataniwha Dam project is an example of both the HBRC and the government pursuing economic profit at the expense of a process which objectively considers the risks and benefits. The failure to follow legitimate processes means that the project will be marred in controversy irrespective of its possible benefits and whether it goes ahead or not.

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[i] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[ii] Hawkes Bay Regional Council. Ruataniwha Water Storage Scheme. Retrieved from: http://www.hbrc.govt.nz/hawkes-bay/projects/ruataniwha-water-storage-scheme/[iii] Victoria White (2016). Council approves Ruataniwha dam company. Hawkes Bay Today. Retrieved from: http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11712872[iv] http://www.hbrc.govt.nz/hawkes-bay/projects/ruataniwha-water-storage-scheme/[v] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[vi] http://www.radionz.co.nz/news/regional/301334/dam's-cost-jumps-to-more-than-$900m[vii] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[viii] Peter Fowler (2016). Dam's cost jumps to more than $900m. RNZ. Retrieved from: http://www.radionz.co.nz/news/regional/301334/dam's-cost-jumps-to-more-than-$900m[ix] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[x] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xi] Rachael Young (2013). Dairy farming harming water. The Press. Retrieved from: http://www.stuff.co.nz/the-press/news/9425346/Dairy-farming-harming-water[xii] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xiii] Rachael Young (2013). Dairy farming harming water. The Press. Retrieved from: http://www.stuff.co.nz/the-press/news/9425346/Dairy-farming-harming-water[xiv] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xv] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xvi] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xvii] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xviii] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xix] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xx] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xxi] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xxii] Rebecca Macfie (2016). The Government’s Ruataniwha water storage scheme remains dogged by controversy and litigation. NZ Listener. Retrieved from: http://www.listener.co.nz/current-affairs/ruataniwha-water-storage-scheme/[xxiii] http://www.radionz.co.nz/news/national/314408/further-legal-action-looming-over-ruataniwha-dam[xxiv] Sophie Price (2016). Company appeals High Court decision. Hawkes Bay Today. Retrieved from: http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11617701[xxv] Royal Forest and Bird Protection Society of New Zealand Incorporated v Minister of Conservation and Hawke’s Bay Regional Investment Company Limited (CA 118/2016) [2016] NZCA 411.[xxvi] RNZ (2016). Further legal action looming over Ruataniwha Dam. RNZ. Retrieved from: http://www.radionz.co.nz/news/national/314408/further-legal-action-looming-over-ruataniwha-dam[xxvii] RNZ (2016). Court hears Forest & Bird appeal over dam. RNZ. Retrieved from: http://www.radionz.co.nz/news/regional/305104/court-hears-forest-and-bird-appeal-over-dam[xxviii] Victoria White (2016). Alternative plans hatched to acquire Ruataniwha Dam land. Hawkes Bay Today. Retrieved from: http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11718615[xxix] Victoria White (2016). Alternative plans hatched to acquire Ruataniwha Dam land. Hawkes Bay Today. Retrieved from: http://www.nzherald.co.nz/hawkes-bay-today/news/article.cfm?c_id=1503462&objectid=11718615