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Should New Zealand Stop Exporting Water?

by Dr Don Brash

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One of the issues almost guaranteed to provoke a strong reaction at many a social gathering in New Zealand is any suggestion that New Zealand should be exporting more bottled water. There have been noisy demonstrations in public, well covered by television news channels, strongly opposed to such exports.

One of the commitments made by the incoming Labour-New Zealand First-Green Government when announcing its policy priorities in the Speech from the Throne in November 2017 was that “commercial users who profit from bottling water and exporting it overseas will pay a royalty” on such water. And I suspect many of those who heard that commitment cheered loudly.

But in fact, it is a totally bizarre commitment, while the public opposition to exporting water has to be based on a total misunderstanding of the facts.

New Zealand has more fresh water resources on a per capita basis than any other country in the world with the exception of Canada and Papua-New Guinea. And that huge abundance is the basis of our comparative advantage in international trade. We export products which are heavily dependent on water and import products which are not.

Data produced by the UK-based Institution of Mechanical Engineers suggests that, on average across the globe, it requires 15,400 litres of water to produce a single kilogram of beef, and 10,400 litres to produce a single kilogram of sheep meat. It requires 5,600 litres of water to produce a kilogram of butter, and 3,200 to produce a kilogram of cheese. Even producing a single litre of milk requires, on average, more than 1,000 litres of water!

And of course we export many thousands of tons of all those products, requiring a substantial amount of water.

New Zealand has recently seen rapid growth in exports which are a bit less dependent on water. Apples require just 820 litres of water per kilogram of product, while kiwifruit require even less water, some 510 litres per kilogram of fruit.

I frankly don’t know how many litres of water are required to enable somebody to export a single litre of bottled water, but I assume the number would be nothing remotely like that required to export any of our main export products.

It has been estimated that every year around 500 trillion litres of water falls on New Zealand as rain or snow, with approximately 10 trillion litres – or about 2 per cent of the total – being used by households and in irrigation. Of that 2 per cent, only 163 million litres is bottled – or less than 0.002% of the 10 trillion used by households and irrigation, and of course an utterly infinitesimal part of the total of water falling on New Zealand.

As the New Zealand Beverage Council has noted, if all the water used by New Zealanders was reduced to fit into a ten-litre bucket, the water bottling industry would use the equivalent of just two teaspoons.

Most of the bottled water produced in New Zealand is consumed in New Zealand by New Zealanders, some 135 million litres of the total of 163 million litres, often by athletes and others wanting to remain hydrated on a long run or hike. Just 28 million litres of water is exported.

The mean discharge of the Clutha River is 533 cubic metres, or 533,000 litres, per second. That means that the entire export of water from New Zealand is equivalent to less than a single minute of the water flowing out of the Clutha to the sea.

And to my own surprise, the largest single external market for New Zealand bottled water is not China but the United States, though China comes a close second.

I strongly suspect that exporting water directly, rather than indirectly as meat, dairy products, logs, wine or fruit, generates considerably more foreign exchange per litre of water than any other use of that water, and quite possibly more employment per litre also. Opposition to the export of water is based on ill-informed emotion.

Dr Don Brash is an economist and former Member of Parliament. He served as the Governor of the Reserve Bank of New Zealand from 1988 to 2002.

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elocal Digital Edition – September 2019 (#222)

elocal Digital Edition
September 2019 (#222)

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