On August 27 I was invited to a breakfast which was one of a series of consultations by the Ministry for the Environment on the issues which faced it. After a lively session we were invited to make submissions. I wrote to the new chief executive, Barry Carbon. Subsequently the MfE published my letter in its report back to participants. Here is what I wrote – a little tidied up.

Keywords: Environment; Regulation & Taxation;

Dear Barry Carbon,

Thankyou for breakfast this morning, and the interesting (and entertaining) session that went with it.

You invited written feedback. May I make a couple of comments?

The first I made from the floor, which is that there is a need for the community as a whole to have a better grasp of environmental principles and the related regulatory framework that goes with it. It is important that this message does not get lost in the need for each community having to have a better understanding of the particular environmental issues it faces. My concern is that the particular needs be informed by a background of understanding. While the particular is usually a LGA responsibility (although the MfE can support them) the general is a national responsibility, and properly the Ministry’s. (And of course, as Cath Wallace drew attention to, there are national and international issues which need a much better public understanding too.)

I may say I see a wider issue here, which illustrates your role, which is the public’s competence in science. For instance, I am concerned that the genetic engineering policy debate is severely handicapped by public ignorance of the underlying science. (My best example is that one of our most respected journalists, on learning that there appears to be a human gene which causes violence, asked the scientist whether we should replace it in individuals.) MoRST and MfE need to promote a vigorous program to educate the public in some of the most elementary science that underpins your and national policy concerns. I am not a specialist in this area, but it occurs to me that the two ministries may even fund NZ on Air to commission a series of essentially educational (but also entertaining) programs to lift public understanding. Of course there may be cheaper and more effective methods to deal with more prosaic issues – such as an informed understanding of the practices and processes of the RMA.

The other matter was hardly touched upon at the breakfast, but was simmering there. By way of introduction I am one of those people who are always introduced as ‘needing no introduction’ but as a recent arrival to the country you may need to know I am an economist.

I am concerned that the economic principles of the RMA are getting lost. They are so elegant let me repeat them. I have added some references below.

Ideally the RMA was to make environmental decisions more-market by reducing the transaction costs in the system. But more-market requires the proper allocation of property rights, and so we ended up with a complicated tribunal system to identify them. (The alternative of a sort of Doomsday registry was obviously not feasible.)

I worry that there are various attempts to abridge some of the property rights, in effect shifting them to others. And I worry that the transaction costs under the RMA are becoming excessive (an excess which is being used to promote the abridgement property rights). I did some work for the Ministry of Consumer Affairs, which argued that one of its primary economic functions was to minimise transaction costs in consumer transactions. (I attach a reference to the final report below). It seems to me that while the MFE has many high policy issues it should include in its activities the prosaic one of aiming to minimise transaction costs in environmental transactions. I know this is a big ask, but I hope that it is something which the Ministry will keep constantly in mind whenever it is looking at the regulatory framework for which it is responsible.

I report to you that a number of people said they were impressed by your performance this morning. Best wishes with your stewardship.

Brian Easton

On the economics of the RMA

“Applying More-Market to the Environment”, The Commercialisation of New Zealand (Auckland University Press, 1997) Appendix to chapter 3, p.36-43.

“Is the Resource Management Act Sustainable?” Planning Quarterly, June 1998, p.5-8.

On Transaction Costs in Public Policy

The Economic Context of the Ministry of Consumer Affairs, (Ministry of Consumer Affairs, 1998)

“A New Microeconomic Policy Paradigm?”, The Whimpering of the State: Policy after MMP (Auckland University Press, 1999) Chapter 20, p.223-236.