Managing Uncertainty

There’s nothing quite like an anniversary to make you step back and reflect on the twists and turns life has thrown at you, and to humble you with the illusion that we have total control over the events that shape our lives.

Ten years ago, we were enjoying our carefree adult lifestyles with disposable income, a house that stayed clean for more than a day, and time to waste doing fun, non-productive things like hobbies or sleeping in.

 We made plans assuming we were in control of the major events in our lives. Little did I know I was already four months pregnant…

I regularly get asked to advise on how to plan for future consent renewals, approve changes in land use requiring millions of dollars of additional debt, or recommend actions people can take to mitigate the risks of regulatory change.

 All of these decisions require some understanding of what the future regulatory landscape will look like so we can prepare a robust plan to navigate it.

 By the time this piece is published, new legislation will have been released to completely overhaul our environmental resource management system, reform local government, and lay the foundations for a national freshwater farm planning system.

 By 2030, a new environmental regulatory authority will be created, along with new environmental targets and new rules setting out how those targets will be achieved.

The foundations of this new system will be completely different from those of the Resource Management Act, with core principles such as being outcomes-focused and balancing environmental, social, cultural, and economic needs no longer embedded in legislation. Thirty years of case law could be erased as we navigate the implementation of 1,200 pages of new legislation.

 So how can we possibly make robust, strategic, long-term plans in our businesses given the unprecedented uncertainty we face about our future environmental landscape? From what I’ve seen, there are two approaches: the "jump and hope" approach, or the "do nothing" approach.

 Given the value the agricultural industry brings to New Zealand’s already weak economy, there is a school of thought that no government will be brave enough to introduce limits that severely impact production. Or, if they do, the bureaucracy involved will mean a new government comes in and reverses everything before the new rules ever take effect. Therefore, we might as well carry on with the assumption that the future will look much like today.

There is a risk, of course, that those assumptions prove wrong and development plans are cut off at the knees. On the flip side, a lack of regulatory certainty is a surefire way to hinder capital investment in innovative land-use options and new technology.

 Why would anyone spend additional money to mitigate nitrogen losses if they don’t have to? You might as well make hay while the sun shines so you're in a stronger financial position if things do change.

And this is probably the key risk for the new regulators to manage: flip-flopping rules are a great way to make sure nothing happens. Water quality outcomes do not particularly care what laws we operate under or whether the economy is thriving.

 If we want to see real improvements in our water, we need farming systems that can deliver those outcomes without burdening businesses with regulation that adds cost but little environmental benefit.

 Long-term strategic thinking needs to happen at every level of the community—from national and local government to catchment groups and individual landowners—regardless of the laws we are operating under.

Eva Harris is Principal Environmental Advisor, Enviro Collective