Clause 3.14: Setting limits on resource use

Limit setting is one of the last steps in the NOF process. It must be done well for the instream TASs and concentrations to jointly achieve the environmental outcomes.

This step has proven to be complex and difficult. A robust set of regulatory limits will control cumulative effects, because they clearly set out when and how to stop allocating or using the resource. They also clarify how much resource use to reduce in over-allocated catchments, to achieve the sustainable amount of resource use that will meet water body outcomes.

What is resource use?

The phrase ‘resource use’ has been part of the definition of a limit since the first Freshwater NPS in 2011. It links back to the purpose of the RMA to promote sustainable management, which means managing the use, development and protection of natural and physical resources.

A limit on resource use is defined in clause 1.4 as “the maximum amount of resource use that is permissible while still achieving a relevant target attribute state or a nutrient outcome needed to achieve a target attribute state (see clauses 3.12 and 3.14)”. It is intended to be directly about use of resources, and specifically restricting the amount of that use, so that a particular environmental outcome or TAS is achieved and maintained over time.

‘Resource use’ can encompass many different types of use and can relate to:

• how those uses are undertaken (eg, management practices)
• where they occur (eg, not on certain soil types or near sensitive locations)
• when they occur (eg, the time of year or flow of river when a use can or cannot be undertaken)
• what use can be undertaken or if it should occur at all (eg, prohibited activities).

For water quality, the concept of resource use is potentially broad. Examples could include:

• limits in quantity and timing of the discharge of a contaminant (so as not to overburden a water body’s capacity to absorb a contaminant such as nitrogen)
• restrictions on land use or land use practices (eg, a limit on the amount, timing, seasonality, minimum soil temperature for applying fertiliser or grazing)
• a maximum stocking rate on certain soils, in certain locations or at certain times of the year
• restricting access to waterways for stock (ie, a minimum limit or requirements for kilometres fenced or length of riparian margin planted)
• point-source limits on wastewater discharges.

The methods to set limits must:

• not be open to manipulation, leading to further leaching
• be transparent so that all assumptions are known and the on-farm actions can be identified and quantified
• control the contaminant effectively.

What is a limit on resource use?

Limits on resource use are a tool to achieve a TAS and a nutrient outcome needed to achieve a TAS. This leads to a cascade of desired consequences:

1. determining the state of water body and ecosystem
2. producing the environmental outcome or nutrient outcome for the values
3. achieving the long-term vision
4. giving effect to Te Mana o te Wai.

Limits on resource use

A limit on resource use is defined as the maximum amount of resource use that is permissible while still achieving the relevant TAS and nutrient outcomes needed to achieve a TAS. It enables communities to use resources, but limits use to a level that can support the health and well-being of freshwater.

Limits on resource use can apply to a whole region, all or part of an FMU, or even a specific water body or individual property.

Types of limit

The limits can apply to input, output or land use.

• Point-source discharges (eg, from a factory) or input controls, such as stocking rate, have the benefit of being easier to measure.
• Output controls are harder to measure for diffuse discharges, but give the user more flexibility on how to achieve the allocated use.
• Land use controls are easy to measure and can have a big impact. However, they have a higher impact on the current users if their land use is restricted.

Requirements

Limits on resource use must:

• be based on the best information available and take into account monitoring and accounting information
• focus on the future, taking into account the long-term vision and foreseeable impacts of climate change
• be rules in the regional plan
• meet the instream concentrations and exceedance criteria, or instream loads, for nitrogen and phosphorus.

Resource use is often discussed in terms of discharge of contaminants. However, councils should take a broader view of resource use to set limits for some attributes.

Limits versus other controls

In the past, some councils have mistakenly assumed that controls set on a water body are limits. However, this is where TASs and maximum concentrations are set (eg, the maximum instream E. coli concentration at a specified location). These are not limits. The limit for E. coli will be the total set of rules in the regional plan, which limit resource use to achieve the in-water body TAS for E. coli.

How much use to provide for?

The amount of resource use allowed must ensure that the TASs and Te Mana o te Wai are achieved. A limit cannot, individually or cumulatively, allow the TASs to be undermined or prevent them being achieved in the timeframe set.

Limits and over-allocation

There is a strong link between limits on resource use and the direction in Policy 11 in the NPS‑FM to avoid over-allocation and to phase out existing over-allocation.

Over-allocation is defined (in part) as a situation where resource use exceeds a limit. Once a limit is set, the regional council must ensure it is not exceeded. If it is currently exceeded, the council must phase out the over-allocation. This is done using a ‘sinking-lid’ limit: a limit that caps the use at the level it is currently allocated (or used, if not all allocated resource is used), and lowers the limit in steps over time. This way, the limit will be lowered gradually to allow for the allocation to be clawed back from current users, or not renewed up to the point where the resource is no longer allocated.

Principles for setting limits on resource use

Although the NPS-FM gives councils flexibility in limit setting, the NPS-FM framework provides guiding principles.

• In some places, limits have favoured the status quo land use, and the control methods gave resource users a high degree of flexibility and certainty. Te Mana o te Wai requires that certainty is now given to the water body. Councils should favour limits and tools most likely to achieve outcomes, particularly for at-risk or highly sensitive water bodies.
• A limit is about the amount of resource use. It is linked to, but different from, the in-water outcome (by the TAS, nutrient outcome and environmental outcomes). A limit should direct or restrict resource use.
• The suite of limits should be considered together to achieve the TAS or a nutrient outcome needed to achieve the TAS.
• A limit restricts resource use where this could otherwise prevent the TAS from being achieved. For example, limits on activities that generate sediment, such as earthworks, will achieve the TAS for deposited sediment.
• Limits must address the cumulative impact of multiple resource users over time. For example, limits requiring good management practice for earthworks will only be effective if they address the amount or area of earthworks being undertaken in a catchment, at a particular time.
• A limit should be underpinned by the best available information from monitoring, freshwater accounting systems, climate change predictions and other modelling tools.
• Once a limit on resource use is set, councils may need to allocate the ‘amount of resource use’ between users. But they are two consecutive processes that should not be confused.
• Where allocation of resource use is required, the NPS-FM does not prescribe a particular method beyond the obligations imposed to give effect to Te Mana o te Wai.
• The limit must be clearly stated as a rule in the regional plan. It should set out the point at which resource use must cease or be further restricted, to avoid over-allocation. This may require strict rules and restrictive activity statuses – such as, prohibiting further allocations beyond the limit, and permissions and consent requirements for uses where there is degradation and over-allocation that needs reducing, and a pathway to achieve this.
• Difficult decisions and hard conversations are necessary where there is severe over-allocation and land use change, or land use intensity has to be reduced. These decisions should be made openly during the plan-making process, with the scrutiny of a hearing panel. They should be set out in rules, not deferred and delegated to individual decision-makers through consents and farm plans. This would place an unreasonable responsibility and burden on individuals, which is likely to lead to: status quo bias, poor transparency about whether the actions required on-farm will achieve freshwater goals, and inequitable application of limits.
• A limit can be on any type of resource use, as long as there is a link (direct or indirect) between the use and the TAS, or a nutrient outcome needed to achieve the TAS. This may require different ways of thinking about resource uses that either generate or mitigate contaminants.
• Rules should meet regulatory best practice, including being enforceable.

Scale

A limit may be defined at different scales, including:

• individual users (eg, a maximum discharge rate for individual locations)
• FMU (eg, a maximum stocking rate per hectare).

Steps for determining a limit

The steps could include the following.

• Identify the contaminant load that will meet the desired TAS.
• Identify the current contaminant sources and amount, to either:
  • maintain the resource use, if maintenance of current state is the goal (noting that achieving baseline states, or locations with long lag times, may require further reduction of resource use), or
  • improving degraded or over-allocated water bodies, and setting the starting point for reductions.
• Identify the complete set of limits and actions that will ‘hold’ the current contaminant loads. Where reductions are required, set out the complete set of actions (land use practices, extent and intensity) to meet the reductions.
• Establish a rules framework and cascade:
  • prohibit use above and beyond the limit
  • set a transitional pathway for over-allocation, allowing reductions from the current state.

Relationship between TASs and limits

TASs and limits are two essential components of the NPS-FM 2020. They are sometimes thought of in the same way, but in the NPS-FM they are about different things, and the distinction is important.

A TAS is a measurable description of the intended instream state, the freshwater and the ecosystem. It is expressed in units as in the attribute table of the NPS-FM (eg, mg/L).

A limit is a restriction on an amount of resource use, which allows that TAS to be achieved, and nutrient outcomes needed to achieve a TAS.

Limits are not set on measures of water body health (or instream concentrations) but on the activities that affect those measures.

In setting a limit to achieve a TAS, the main question is: ‘What actions must we take or restrict to achieve the TAS?’. For example, a limit is not the amount of deposited sediment in a river. It is the constraints that have to be put on resource use so the amount of deposited sediment is no higher than the TAS for that location. This will require limits on sediment generating activities, such as on the amount or scale of earthworks or vegetation clearance in a catchment, or requiring sediment detention. Deposited sediment is also influenced by flows, so councils must set environmental flows and take limits at a level that allows sediment to be flushed from the river, before it reaches a level that would breach that of the TAS.

It may be hard for councils to estimate what the the effect on deposited sediment will be, if these changes are made. This means that the first time limits and other methods are set, they may be based on very general estimates and assumptions that the methods will be a move in the right direction toward the TAS. As indicated in the earlier detail on Clause 1.6: Best available information and the NOF, uncertainty about data or expected outcomes warrants a precautionary approach. This can mean building a more conservative buffer into a limit to ensure the achievement of incremental movement towards achieving a TAS

When more information becomes available from monitoring councils can adjust their limits and methods to increase the likelihood of reaching the TAS. This finetuning of the limits and other methods to achieve the desired outcome is an iterative process, one that will be informed by both monitoring data and new knowledge that may become available.

For some types of resource use, a limit will need to achieve multiple target states.

Maximum amount of resource use

The first step is to understand the current amount of use. A second step is to establish the maximum amount of resource use that could occur while still meeting the TAS.

Figure 7 shows that the current resource use only informs the starting point for making reductions. It is not material to deciding the sustainable maximum amount of contaminant or whom the resource use should be allocated to and in what quantity.

A limit must be expressed as a rule in a regional plan. Whether or not it has been exceeded is important to understanding if over-allocation has occurred. However, over-allocation can also occur when a limit has not been exceeded, in the case of degradation (see clause 1.4). To be a ‘good’ rule, and to allow an assessment of over-allocation, it must be possible to objectively measure, survey or estimate a limit. It should be clear, certain and capable of consistent interpretation. Where possible, a limit should be based on a numeric or other quantifiable amount.

To determine the limit for a resource, councils and tangata whenua must use the best information available. The total allocated limits on a resource must add up to no more than the total amount of resource use that a catchment’s water body can assimilate. That means using limits that only control a part of the use of a resource will not be effective nor sufficient. Uncertain estimates must err on the side of caution, to protect the health and well-being of water bodies and freshwater ecosystems.

Achieving a TAS and the long-term vision

The purpose of a limit is to ensure a TAS or a nutrient outcome needed to achieve a TAS is met or achieved within the timeframe. Without limits on resource use set through rules in a regional plan and – where necessary – restrictions on consents, TASs are just numbers in the plan, with no clear pathway to achieve them. Therefore, an effective limit must have a direct or indirect link with a TAS.

For some attributes that relationship is obvious, such as limits to the amount of nutrients in point source discharges to achieve the TAS for nutrient levels in rivers.

For other attributes this relationship is not so direct. For example, to achieve a TAS for dissolved reactive phosphorus, an appropriate limit might be restricting land use practices that generate sediment containing phosphorus. Interim TASs need to be set for all the intermediate steps to achieve the long-term vision and environmental outcomes.

Interim target attributes are treated the same as the ultimate TAS (clause 3.11(6)(b)) so limits must be set that achieve each interim target over time. Limits do not have to achieve the ultimate TAS immediately, stricter limits can be phased in over time, so long as the interim targets are met. This allows for spreading change over time, which will assist with the transition when large changes to resource use are needed.

A limit places constraints on resource users. These do not have to all come into effect at the same time. But clarity about what future reductions and allocations to expect will give greater certainty to both current and future users to plan for their resource use.

If a limit is placed on stocking units, these reductions can be gradual, giving land users clarity on the scale of these reductions for more effective business planning.

The NPS-FM only requires limits be set through rules in the regional plan. This is sometimes misunderstood to mean that these limits are only set for the time that the plan is in force. TASs will often need more time – or the life cycles of multiple plans – to achieve the long-term vision, so rules that set limits will be set without an end date. During each plan review, limits will need to be reassessed to establish whether they are set at the right level to achieve the TASs.

The likelihood of having to reassess the limits to accommodate the effects of climate change, or because better information is available establishing the relationship between the pressures and the instream state, should be identified when the limits are first established and set in regional plans or on resource consents. This will help reduce expectations that the limits will be permanent. Without this critical information, resource users in highly over-allocated catchments may mistakenly believe they will not face further future reductions. Although councils may not yet know the future levels needed for the limits and other methods, they should reveal the reductions in contaminant load to meet final target states. This information is required in the RMA section 32 analysis. However, it should be kept front of mind and may be best placed in action plans. This should set out future ‘end-state’ limits and future contaminant loads and constraints with likely associated land use, and reveal the extent of expected changes to intensity and land use.

Impacts of climate change

Considering the impacts of climate change when setting limits is one element of achieving Policy 4 of the NPS-FM. This policy is to ensure that all freshwater is managed as part of New Zealand’s integrated response to climate change.

When setting limits, the regional council must have regard to the foreseeable impacts of climate change (ie, adapting to climate change).

Given the recent evidence towards more frequent and severe weather events in New Zealand, failure to consider the effects of climate change will lead to poor planning and poor implementation of the NPS-FM.

For example, when planning for the maximum amount of water takes, also consider available modelling on the frequency of drought in the future. Drought will change the amount of water that can be allocated to sustain (maintain or improve) aspects of freshwater and freshwater ecosystems.

Councils should also consider the expected frequency of floods when deciding on methods to achieve outcomes that could mitigate climate change effects, such as restoring wetlands or larger riparian margins.

How to determine the appropriate limit

Limits must be set to meet the TASs. This does not necessarily equate to one limit for each TAS. Rather, the set of limits (together with the action plans and consent conditions) should lead to a set of target states. These in turn lead to achievement of the freshwater objectives.

There may be situations where a TAS requires a range of limits to meet it, or one limit might meet several TASs. What matters is whether the set of limits in combination with any relevant action plan or consent condition will achieve the corresponding set of target states.

Generally speaking, each TAS should be met via a combination of limit rules, action plans and other methods. In other words, meeting the limit may require a suite of regulatory and non-regulatory methods.

The following questions should be considered.

• Do you have complete information? If not, use the best information available. The lack of sufficient information cannot be a reason to delay limit setting. When the best information available still includes uncertainty, interpret it in a way that best gives effect to Te Mana o te Wai. In other words, when there is uncertainty, apply the precautionary principle and ‘err on the side of caution’ for the health and well-being of the water bodies and freshwater ecosystems.
• Do you already have freshwater objectives (based on the NPS-FM 2017), TASs and limits in your plan? If so:
  • Do they give effect to Te Mana o te Wai?
  • Have you set environmental outcomes and TASs for all compulsory values in appendix 1A?
  • Have you set limits for all the attributes (appendix 2A) that require them? And does the best available information indicate that these limits will achieve all these target states?
  • Do they fit together to reach environmental outcomes and the long-term vision?
  • How likely is it that the TASs will be met in their timeframes? And is adequate monitoring in place to track and confirm this?
  • Are the limits expressed in such a way, and supported by policy, that stops resource use and does not allocate new resource use when the limit is reached (avoids over‑allocation)?
• Which types of resource use (eg, water abstraction, discharges, land use), including permitted use, cumulatively affect a TAS? And will individuals deciding on resource use (eg, land users and their advisors) have enough information to predict if their activities will fit within their allocated limits?
• What is the maximum amount of resource available, what resource use is currently taking place, and what use could be allowed in the future? Also consider any fluctuations and uncertainties with these quantifiable amounts.
• Which method will you use to allocate the resource under the various potential users (eg, through a formal allocation system, rules on activity status, or some other method to determine how to spread the reduction across multiple users)?
• Is there complete information to calculate a maximum amount of resource use, with evidence to link it to the TAS? If information is incomplete or uncertain, have you taken a precautionary approach (prioritising the health and well-being of the water body and its ecosystems)?
• If you are setting limits on multiple sets of resource use, all achieving the TAS within the timeframe, analyse each combination using the tests in section 32 of the RMA. Section 32 requires an assessment of the effectiveness and efficiency (including costs and benefits) of different options to achieve the plan’s objectives. Understanding effectiveness and efficiency will help councils choose the most appropriate set of limits. See also the section NOF and section 32 of the RMA of this guidance.
• Is a limit the only incentive (or disincentive) to drive the behaviour change that meets the TAS? What other incentives – action plans, consent conditions – could contribute?

Limit setting: A challenging step

Limit setting is the step in the NOF where planning decisions begin to directly affect resource users. It is where decisions are made that will determine who will be most affected in the community and how and to whom the cost is allocated of achieving the environmental outcomes the community seeks. It is therefore the most challenging and potentially controversial step in the ‘values–environmental outcomes–limit-setting’ cascade.

Clarity for users and the community

It is best practice to give maximum clarity to the community and resource users. Where there is over-allocation, and reductions in contaminant loads are required, it is best practice to ensure that the complex and challenging decision-making process around what actions are required to achieve these are clearly identified in the plan, rather than devolved to individual decision makers through consents or farm plans. The plan should provide as much clarity as possible on the required reductions, and on possible changes in land use, land intensity and practice changes.

‘Adding up’ limits

It must be likely that limits ‘add up’ to not more than the total contaminant load required to meet the TAS, and that they will be hard and enforceable. In the past, limits have not added up from the farm scale (individual resource use allocation) to the catchment load scale (total limit). Even though every attempt should be made to set a limit as accurately as possible, it will always be an estimate. ‘Adding up’ the allocated uses (and loads) should use the best available information and best estimates.

However, once the best estimate is agreed, with enough certainty that it will achieve the TAS, councils must provide a high degree of certainty that the rules themselves will achieve the load limit or reduction.

Effective limits and good management practice

Councils need to create a hard limit to ensure there are no unintended cumulative effects. To do this, Good Management Practice (GMP) may often not be enough, because it does not address the scale of the activity in the catchment.

The choice of method, or combination of methods, is also important when determining how to regulate and cap contaminant loads. For instance, using GMP on its own will not create a hard limit. It may result in a useful and tangible set of reductions to address some portion of over-allocation, if the standards are clear and enforceable and applied well, but GMPs are practice standards and do not generally ‘limit’ either the extent or intensity of land uses.

Limits should be applied to three critical parameters of resource or land use to be effective. These are controls on: land use practice, and the extent and intensity of land uses where they leach contaminants beyond the land’s assimilative capacity.

Final decisions on limit

Limit setting is highly technical and requires analysis by experts including scientists, planners, economists, mātauranga Māori experts and consenting officers.

The complete set of limits and methods must meet all the TASs, which (alongside take limits) will achieve the environmental outcomes. Ultimately, these will achieve the long-term vision and give effect to Te Mana o te Wai and its hierarchy of priorities.

What about new resource users?

A TAS must be set at baseline state or better, and the health and well-being of water bodies must be at least maintained, and, in some cases, improved. It may not be possible to allow for additional resource use (above the current level).

If the community seeks growth in particular kinds of resource use, the limits may accommodate new users while still achieving the TAS. Figure 7 illustrates this.

Figure 7: Sinking lid – accommodating for new users of an over-allocated resource

Reducing existing use

Any new resource use will need to come from reductions in existing use. For example:

• greater efficiency, such as producing fewer contaminants for same amount of activity
• alternative methods that do not produce contaminants, such as moving from discharging wastewater into a river to discharging it to land
• less intensive farming systems or methods that mitigate or contain discharges, such as switching horticulture from in-ground to glasshouse.

These options need to be considered with tangata whenua and the wider community engaged in the process. There may be additional costs, and who these fall to and over what period should be part of the discussion.

When the maintain or improve policy requires a contaminant load to either decrease or remain the same, there may seem to be no room for allocating the resource use to new users. However, this is not clear cut. Resource use can be freed up within the limit threshold by reallocating part of the current use to new users. This can only happen within the reductions required to achieve the TAS and Te Mana o te Wai.