The Environment Court in New Zealand recently decided a case regarding a water conservation order (WCO) for Te Waikoropupū Springs (Re Ngāti Tama Ki Te Waipounamu Trust [2023] NZEnvC 157). In this decision, the court applied the precautionary principle to provide guidance on setting nitrogen and water allocation limits for the Springs.

In the November issue of the Resource Management Journal, NERA Director Kevin Counsell sets out an economic framework for the precautionary principle. The principle states that when there is a risk of irreversible harm to the environment, scientific uncertainty should not be used as a reason to postpone actions that can prevent such harm. The concepts of uncertainty and irreversibility also provide the basis for an economic framework for the precautionary principle, drawing on the concept of “option value.” When there is uncertainty over the impact of some action on the environment, there can be option value in taking a precautionary approach to prevent irreversible damage, but keeping the option open to take the action later if more information that assists in resolving the uncertainty comes to light. Mr. Counsell outlines the key aspects of this framework and analyzes how the approach adopted by the Environment Court in the Te Waikoropupū Springs WCO aligns with this framework.