In favour of the ‘iwi tax’

Fishermen on the Waikato are apparently going to be subjected to an environmental levy on their earnings by the iwi who own the river. The newspaper article seems a bit negative about the scheme and I can’t see why. To me this is a great idea on a number of levels. I just hope that the levy is a tax, rather than a one off charge.

First, fishing almost always imposes externalities on people and ecosystems. At the very least, the commercial value of the fish (eels here) is less than the social valuation, because it doesn’t take into account the value people place on having a river full of fish. A tax on fishing would be a great way to internalise those problems and reduce the level of fishing to the socially optimal level.

I realise that there are already quotas on fishing but these only aim to maintain a sustainable population, not reduce fishing to an optimal level. However, it would be good to have some knowledge of where that optimal level is relative to the maximum sustainable level. Having two control systems operating concurrently on the same activity, and managed by different groups, is probably unlikely to lead to an optimal outcome.

Secondly, the money will be used to fund environmental improvement projects. With the money being reinvested in the lake environment, the lake might be able to sustain a higher level of fish recruitment and permit a lower tax rate than would otherwise be possible. It’s fortuitous that the iwi seems to have a similar objective to the government in controlling and managing usage of the lake. Indeed, the Department of Conservation supports the tax scheme.

Finally, it’s great to see the Coase theorem in action. Giving property rights in the lake to a private party — the iwi — has resulted in a transfer between the fishermen and the iwi which prevents a tragedy of the commons and degradation of the lake environment. In this case the iwi’s ownership of the rights has resulted in them garnering the surplus from trade, but it could equally have been the other way around if the fishermen had the rights and iwi had to pay them to reduce their fishing.

7 replies
  1. StephenR
    StephenR says:

    The newspaper article seems a bit negative about the scheme and I can’t see why.

    You sure you can’t see why? Or are you just deliberately stearing clear of the politics?

  2. rauparaha
    rauparaha says:

    A bit of both: we try to steer clear of politics on this blog, but I also doubt that major newspapers are being intentionally racially biased when they write their pieces. I would like to think that the tone of the article reflects the view of the people that the reporter canvassed when researching it.

  3. StephenR
    StephenR says:

    It does at least outline the facts as you stated them in the post, but whether or not people will be able to see through visions of Maori making them pay to fish in the sea is another thing.

  4. rauparaha
    rauparaha says:


    I don’t think so. First, the iwi own the river (or the relevant part of it) in fee simple so they do privately own it. In this case the idea of customary title is irrelevant.

    Secondly, while the CA’s decision allowed that there may be customary title over foreshore and seabed, that is far from a title in fee. Any current private or public ownership of the land that could be established would preclude the claim of customary title.

    Finally, I am not sure that having customary title would allow the iwi to charge people for the right to take fish from the land, or even whether it would allow them to exclude others from the land. Perhaps someone better versed in the nature of customary title in New Zealand could help out here? I’m sure Richard Boast’s written something on the topic but I don’t have time to look it up now, sorry.

  5. Lew
    Lew says:


    I also doubt that major newspapers aren’t being intentionally racially biased

    Heh. I, too, doubt that they aren’t 🙂

    Thanks for your post – a deeper and more formal look at the underlying motives of the action, rather than how the action was rendered. And in the comments an interesting set of questions about the nature of different titles – I assume fee simple or a common understanding of what it is to `own’ a resource, and while I believe the rights I ascribed in my post are necessarily included in that title (otherwise, what economic value would the title have?) it’s useful to consider the margins of those rights.


  6. rauparaha
    rauparaha says:

    Ha, I corrected that typo, thanks Lew. Although I do agree with your sentiment that it seems acceptable to be anti-iwi in today’s politics. It’s definitely sad that the front-page news is about iwi harassment of fishermen, not fishermen using racism to try to achieve political ends.

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