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Memon, Ali; Skelton, Peter --- "The practice of environmental compensation under the Resource Management Act 1991" [2004] NZJlEnvLaw 6; (2004) 8 NZJEL 177

Last Updated: 12 February 2023


The Practice of Environmental Compensation Under the Resource Management Act 1991

Ali Memon and Peter Skelton*

This article analyses the concept of environmental compensation as a planning tool. Within New Zealand, a number of planning instruments prepared under the aegis of the Resource Management Act provide for environmental compensation, although the Act itself makes no specific reference to the issue. The advantages and disadvantages of the use of such a concept are considered; reference is made to the current literature on the topic and the international experience of environmental compensation examined. The authors consider means to protect indigenous ecosystems on private property and analyse the arguments for compensating landowners for loss of property rights. An assessment of the case law in New Zealand reveals an uncertainty as to how the concept of environmental compensation should be applied or given efficacy to. The authors counsel that if the concept is to be adopted and utilised to good effect, clarity of the issue must be achieved through the implementation of a robust legislative regime. Ultimately, they advocate a cautious approach be taken to the use of environmental compensation.


Since the 1990s, there has been growing international interest in environmental compensation as a means to address negative environmental impacts in the wider context of the sustainable development debate. Environmental compensation

* Ali Memon is a Professor of Environmental Management and Planning in the Environment, Society and Design Division at Lincoln University (e-mail Peter Skelton, CNZM, LLB, MEIANZ, is a former Judge of the Environment Court and currently an Associate Professor of Resource Management Law at Lincoln University (e-mail

has been broadly defined as “... the provision of positive environmental measures to off-set, balance or otherwise atone for the adverse environmental impacts of some action, particularly development projects.”1

Our objective in this paper is to provide a reflective commentary on the broad policy context, institutional architecture and emerging practice relating to environmental compensation as a planning tool under the Resource Management Act 1991. The practice of environmental compensation has been adopted within statutory planning regimes in a number of developed countries, led by the USA and Germany. In New Zealand, while environmental compensation is not provided for, explicitly, under the Resource Management Act 1991 (henceforth, the Act or the RMA), a number of first generation planning instruments prepared under this Act (the New Zealand Coastal Policy Statement, regional coastal plans and city and district plans), make provision for some form of environmental compensation.

The New Zealand critique is based on an analysis of the statutory provisions of the Act within the ambit of the wider policy context that has shaped the RMA, the policies and rules rating to environmental compensation in the first generation RMA planning instruments and the development of recent Environment Court case law. Our critique is also informed by a review of international literature on environmental compensation practices in USA, Europe and Australia from a New Zealand perspective 2.

We argue that the practice of environmental compensation in New Zealand is unsatisfactory in a number of respects and, based on international experience, suggest possible ways to address these concerns. These concerns and recommendations relate to clarifying the scope for environmental compensation within the RMA as well as developing clearer policies and rules for environmental compensation within second-generation RMA planning instruments. In the conclusion, we recommend a cautious approach to the use of environmental compensation by RMA planning authorities as a means to resolve contentious land use conflicts.

  1. Cowell, R. Environmental Compensation in Theory and Practice: An Instrument for more Sustainable Development? (1996) Department of City and Regional Planning, Cardiff at ix.
  2. Memon, A., Skelton, P. and Borrie, N. An International Perspective on Environmental Compensation: Lessons for New Zealand’s Resource Management Regime (2004). A research monograph. Environment, Society and Design Division, Lincoln University, Canterbury. The scope of the literature review encompasses recent experiences with developing and implementing environmental compensation regimes in the USA, Germany, the Netherlands, Britain and Australia. In each of these countries, we examine the broad policy context and institutional arrangements for the practice of environmental compensation. This includes the statutory basis and methods for assessing if environmental compensation is required for a development proposal; deciding how adequate compensation is determined; how natural assets are valued; and procedures for implementing conditions for environmental compensation attached to planning consents for development proposals and for monitoring.


In the definition of environmental compensation cited at the beginning of this paper, the scope of the term ‘environment’ is limited to the carrying capacity of the biophysical (viz. natural or ecological) environment. In accord with international usage in the environmental compensation literature, we restrict the scope of environmental values that come under the ambit of environmental compensation specifically to those pertaining to biophysical/ecological functions.3

When used as a planning tool, environmental compensation seeks to assess if a development proposal may deplete environmental (ecological or natural) capital and to prescribe compensation to remedy the loss of natural capital resulting from adverse impacts. The types of environmental compensation measures can be defined in terms of four modes of compensation (on-site, off- site, in-kind, out-of kind). While there is broad agreement on the legitimacy of the first three modes, out-of-kind compensation (e.g. compensating loss of a wetland by enhancing a Kiwi habitat) is generally deemed not compatible with the underlying intent of environmental compensation.

The chief purpose and benefit of environmental compensation is to maintain environmental capital against depletion by cumulative developments that pass through the net of environmental planning regulations4 5. Environmental compensation is directly related to the harm done in each case.

In the course of designing a development proposal and seeking approval from a planning authority, environmental compensation provides an alternative in the three step sequential test to address negative environmental effects: avoidance-mitigation-compensation. Compensation is only applied to residual impacts after all reasonable avoidance and mitigation measures have been exhausted. Thus, environmental compensation may be seen as a mechanism “... by which social activities may be reconciled with maintaining the ‘capacity’ of the environment to continue to deliver benefit streams.”6 In the parlance of environmental economics, development which erodes natural capital can still proceed provided losses can be restored or ‘reversed’ by environmental

  1. As discussed later, the term environment has a much broader definition in the RMA in contrast to its usage in the environmental compensation literature.
  2. Wilding, S. & Raemaekers, J. ‘Environmental Compensation: Can the British Planning Regime Learn from Germany?’ Planning Theory & Practice (2000a) Vol. 1, No.2, pp.187-201.
  3. Rundcrantz, K. & Skarback, E. ‘Environmental Compensation in Planning: a Review of Five Different Countries with Major Emphasis on the German System’ European Environment, (2003) Vol. 13, pp. 204-226.
  4. Cowell, R. ‘Stretching the Limits: Environmental Compensation, Habitat Creation and Sustainable Development’ Transactions of the Institute of British Geographers (1997) Vol. 22, No.3, pp. 292-306 at 293

compensation – positive environmental measures of comparable worth – to maintain the overall ‘stock’.

Understandably, environmental compensation is practised in different ways in different countries. Thus, a distinct jurisprudence has developed related to the practice of environmental compensation in each country7. The USA and Germany have had the longest experiences, dating back to the 1970s, followed, more recently, by the Netherlands, Britain and Australia during the 1990s. These approaches also reflect the influence of contrasting national cultural and institutional settings for environmental management. Thus, for example, the German regime for environmental compensation is characterised by a highly prescriptive approach, whereas the emerging British approach is discretionary, and both are significantly different from the nascent practices in New Zealand. Germany, the Netherlands and Britain are part of the European Union and have to follow the EU directives, which should be implemented in the country’s national legislation. The use of environmental compensation measures has a legal basis in the Environmental Impact Assessment (EIA) Directive8, the Bird Directive9 and the Habitat Directive10. In Britain there are, as yet, few legal instruments that formally require compensation whereas compensation has been used systematically in the German land use planning system since the 1970s as an instrument for the evaluation of environmental impacts11.

Understanding of the relationship between the terms “environmental compensationand “mitigationalso varies between different national jurisdictions. These differences in perspectives are illustrated in Table 1 (opposite)12. In accord with evolving European usage, we define the term “mitigation” to mean minimisation, such as limiting or reducing the degree, extent, magnitude or duration of adverse impacts. Mitigation can be achieved by scaling down, relocating or redesigning elements of a project13. In contrast to mitigation, the term “environmental compensation”, as stated above, may be used to refer to:

8 85/337/EEG

9 79/409/EEG

10 92/43/EEG

  1. Peters, W. ‘Use of Methods and Evaluation Systems of the Impact Mitigation Principle in German EIA’ Journal of Environmental Impact Assessment (1993) Vol. 2(2), pp. 49-53.
  2. Supra 5 at 205.
  3. Terms such as avoiding, remedying, minimising, rectifying and reducing adverse effects are deemed to be aspects of mitigation. As discussed later in this study, the RMA terminology of ‘avoid, remedy or mitigate’ in s.5(2)(c) is not congruent with international nomenclature.


In the international literature on the subject of environmental compensation, opinion is divided into those who support it and those who are critical and cautious15. The biophysical science literature is focused on the ecological design principles for environmental restoration, while the social science literature has a broader critical focus.

Environmental compensation is a socially defined concept, based on the view that biophysical environmental (or natural) capital, which provides ecological ‘source’ and ‘sink’ services, should not be depleted by the cumulative impacts of development projects. Conceptually and practically, it has also been associated with recent thinking on strategic environmental assessment in a bioregional geographical setting. Reflecting these conceptual underpinnings, an obligation on developers to compensate for loss of environmental values is seen as a necessary step towards the imperative of sustainable development. However, this narrative of environmental compensation is debatable for a number of reasons. The concept of environmental compensation and the ideological intent behind it are frequently contested. A major criticism in the social science literature on environmental compensation as a planning tool is that it, necessarily, involves valuing natural assets (capital) in some way and, ironically, risks promoting the view that all natural assets are tradable.

As noted earlier, environmental compensation in a formal (policy/legislative) sense has had relatively limited implementation experience internationally, dating back only to the 1970s. In the USA, it has been applied primarily to protect wetlands within areas proposed for development. The focus on wetlands is partly because international agreements, such as the Ramsar Convention16, have given added legitimacy to wetland retention.

European Union directives have been the driving force for a few member states in Europe adopting environmental compensation within statutory planning regimes, e.g. in Germany, and the Netherlands and, to a much lesser degree, in Britain. Environmental compensation practice is still in the very early stages of taking root in Britain on account of Whitehall reluctance during Thatcherism.

  1. Supra 5 at 206.
  2. Supra 2.
  3. 1971 Convention on Wetlands of International Importance (Ramsar), 996 UNTS 245. In force 21 December 1975.

There, planning agreements with conditions have been a means of seeking some compensation for development impacts as a ‘win-win’ strategy on an ad hoc policy basis. The emerging approaches in New Zealand appear to have the same intent.

The USA has the most documented experience with putting the science of mitigation into practice and developing and managing mitigation banks. The long-term results and ‘success’ of mitigation and mitigation banking are debatable. The development of practice in the USA has been driven, primarily, by political and economic considerations. Private property rights are important under the US Constitution but the community has expressed increasing concern about environmental quality. A ban on development is not an attractive option for developers or government. ‘Mitigation’ allows development while addressing the environmental impacts. American writers are now starting to evaluate the success of ‘mitigation’ sites. While some have been successful, many have been ‘unsuccessful’ due to the small size of the areas, lack of technical expertise, implementation, and monitoring. Mitigation ‘failure’ has led to an increased interest in mitigation banking, e.g. larger off-site mitigation, as one way of addressing the shortcomings. There are still issues, however, with respect to effective design and management of mitigation banks.


4.1 Broader Policy Context

The need to provide better protection of New Zealand’s indigenous biodiversity and landscape values has emerged as an important public policy concern since the 1970s17. Public attitudes towards remaining natural areas in New Zealand have changed significantly since the pioneering days. It is now recognised that New Zealand’s indigenous biodiversity is declining with 70% of New Zealand’s forest cover and 90% of its wetlands having been lost through human colonisation18. In 1995 the government adopted the goal of maintaining and enhancing the ecological integrity of other remaining indigenous ecosystems19. Approximately 30% of New Zealand’s land area is in public ownership and

  1. Peart, R. A Place to Stand. The Protection of New Zealand’s Natural and Cultural Landscape

(2004) Environmental Defence Society, Auckland.

  1. Davis, P. & Cocklin, C. Protecting Habitats on Private Land. Perspectives from Northland, New Zealand. (2001) Department of Conservation, Wellington, at 6.
  2. The Ministry for the Environment Environment 2010 Strategy: A Statement of the Government’s Strategy on the Environment (1995), Wellington.

protected for conservation purposes. However, the conservation estate is not representative of all indigenous ecosystems, in particular lowland ecosystems. There are significant areas of indigenous ecosystems on privately owned land and which currently are unprotected. It is argued that there is an urgent need to increase the level of protection to assist in the conservation of the nation’s threatened species and ecosystems20.

The issues of compensation for loss of property rights and the determination of effective mechanisms for protecting natural values, which may impinge on private property rights, have proved contentious21. Attempts to use regulatory mechanisms, such as land use zoning, for these purposes have met with resistance in a number of rural districts during the last decade. Groups such as Federated Farmers argue that if landowners have to internalise environmental costs themselves, they should also be recompensed for providing environmental good. At the social level, conservation and production interests are contesting the rights to private (economic) benefits or public (environmental) benefits22.

Retaining natural values may be of some advantage to land owners, e.g. water and soil factors and property resale values. Often, the benefits of retaining these areas are shared by the wider community, other land users and future generations. The landowner, however, faces costs involved in protection, maintenance and foregone economic opportunities. This is seen as penalising those who provide the public good23.

The question then is, how to protect areas on private land that contain indigenous biodiversity values or other biophysical or landscape values within the ambit of existing legislation and, in particular, under the RMA? Arguably, environmental compensation may be seen by some as one method of achieving this objective and at the same time protecting private property rights. We are cautious about this proposition because of difficulties with interpretation and application in the context of the RMA as it exists at present. In the absence of a clearer policy basis in the RMA to define the scope of environmental compensation, accompanied by good practice guidelines for RMA professionals and decision makers, environmental compensation provisions in RMA planning instruments may inadvertently lead to continued depletion of valued environments. We elaborate on this argument in the following sections.

  1. Supra 18 at 6.
  2. See Epstein, R.A. Natural Resource Law. Property Rights and Takings. (1999) New Zealand Business Roundtable, Wellington. See also McShane, O. Land use control under the Resource Management Act: A think piece. (1998) A study commissioned by the Ministry for the Environment. Ministry for the Environment: Wellington. See also Scott, R.R. & Hughey,

K.F.D. Environment and Property Rights. Proceedings of a conference held at Lincoln University 10-11 November 1998 (2000) Lincoln University, Canterbury.

  1. Supra 18.
  2. See Davis and Cocklin supra 18; Scott and Hughey supra 21.

4.2 Institutional Arrangements and Practices

In the New Zealand setting, the term “environmental compensation” should be differentiated from other forms of compensation provided for under the RMA

e.g. financial compensation for loss of private property rights resulting from designation procedures for public works.

We argue in this and the following section that there is a lack of proper understanding amongst different stakeholder groups associated with the administration of the RMA (including central and local government, the Environment Court, and environmental professionals) about the meaning of environmental compensation and how it should be used as a planning tool under the Act. Even central government agencies have, over the years, sent mixed policy signals about the legitimacy of the emerging practice of environmental compensation in New Zealand.

The adoption of environmental compensation as a planning tool is very recent in New Zealand compared with its usage in the USA and Germany. In the late 1980’s the Resource Management Law Review Group considered including provision for it in the then Resource Management Bill. In the Study of the Review Group on the Resource Management Bill (1991) environmental compensation and net conservation benefit were discussed. The Review Group recommended that the concept of environmental compensation be included in the Bill so that local authorities were able to impose conditions on resource consents that would provide for environmental compensation24.

The then Minister for the Environment also identified environmental compensation as a type of economic instrument which might be employed in cases where a development involved adverse effects on the environment that could not otherwise be avoided. The Minister also proposed a further clause that would require those responsible for environmental effects to mitigate and provide compensating benefits. However, a clause on environmental compensation was not included in the final Bill25. Notwithstanding this decision, policies on environmental compensation appeared in the Draft New Zealand Coastal Policy Statement prepared in 1990 by the Department of Conservation in anticipation of the Resource Management Bill being enacted. The Draft contained a number of policies that referred to environmental compensation26:

  1. Turner, S. ‘Coastal Management and the Environmental Compensation Challenge’ New Zealand Journal of Environmental Law (2000) Vol. 4, pp.181-200
  2. Supra 24.
  3. Department of Conservation Draft New Zealand Coastal Policy Statement (1990) Department of Conservation, Wellington.

Policy 5.0 Maintenance of Natural Character.

5.6 Minimising adverse effects.

5.6.8 Where a use or development has been allowed, plans and decisions shall require, where appropriate, that compensation (whether financial or otherwise) is made for any adverse environmental effects.

5.6.8 Where a use or development has been allowed, plans and decisions shall require, where appropriate, that compensation (whether financial or otherwise) is made for any adverse environmental effects.

Where permitted use or development is likely to result in adverse environmental effects, it would be appropriate for the consent holder to provide for the restoration or enhancement of similar characteristics in another area.’ (DoC, 1990 at 16).

Where permitted use or development is likely to result in adverse environmental effects, it would be appropriate for the consent holder to provide for the restoration or enhancement of similar characteristics in another area.’ (DoC, 1990 at16).

7.7.3 Environmental assessment documentation shall address the following matters:

The study on submissions to the 1990 Draft found that support for the concept to compensate for adverse environmental effects was divided. While supporting the concept, some queried how compensation was to be allocated and to whom. Many submissions demonstrated concern that compensation could lead to environmental trade-offs. The use of ‘compensation’ was seen as questionable because it left open the possibility of ‘paying’ for environmental damage. The policy implied that the maintenance of environmental standards was open to bargaining by developers. It was also questioned whether compensation would benefit the environment and act as a deterrent28.

  1. Ibid at 23.
  2. Department of Conservation A Synopsis of Submissions Received on the 1990 Draft New Zealand Coastal Policy Statement (1992a) Department of Conservation, Wellington.

Submissions on the 1990 Draft were taken into account when the 1992 Proposed Policy Statement was prepared. Despite the reservations expressed by some submitters, the concept of environmental compensation was retained in the revised Statement:

Principle 6:

People shall avoid, remedy or mitigate the adverse effects of their activities on the coastal environment29.


Outcome 3.2. Providing for Appropriate Subdivision, Use, or Development of the Coastal Environment.

3.2.2 Provision should be made to allow for compensation for the adverse effects of subdivision, use, or development on the coastal environment. This may include:

(a) mitigation of adverse effects; and/or
(b) environmental compensation; and/or

(c) financial contributions (as provided for by s.108(9)) of the RMA.30

Interestingly, at that time, financial contributions and environmental compensation were seen as separate methods. The Board of Inquiry considering the Proposed Policy Statement took into account the submissions made on that Statement. On environmental compensation the Board said in its report to the Minister of Conservation that Policy 3.2.2,

... was the subject of a very large number of submissions. There was widespread support for the concept that those who damage the coastal environment should compensate for the damage in some way, or restore the damaged areas. But there was also a questioning of the meaning of ‘environmental compensation’. However, the main question raised by this policy is that of its validity in terms of the Act.

Your representative suggested that it should be worded to take advantage of the provisions of s.108 (1) & (9) as follows:

Provision should be made for the use of financial contributions for the adverse effects of subdivision, use, and development.

  1. Department of Conservation Proposed New Zealand Coastal Policy Statement 1992 (1992b) Department of Conservation, Wellington, at 11.
  2. Ibid at 20.

There is no doubt that ‘environmental compensation’, i.e. some environmental benefit offsetting environmental damage, can be sought only in the manner, and to the extent, authorised by the Act. Section 108 appears to be the only empowering provision. We believe that local authorities are already well aware of the powers that it confers. A policy in the NZCPS could merely recommend the use of those powers.

We have concluded that this policy should be reworded as follows:

“Policy statements and plans should recognise the powers conferred by Section 108 to obtain environmental benefits which will (to a degree) offset environmental damage, by specifying purpose in their plans for which ‘financial contributions’ can be sought, in cases where there will be unavoidable adverse effects from subdivisions, use or development in the coastal environment”.31

In the New Zealand Coastal Policy Statement gazetted on 5 May 1994, reference to environmental compensation was deleted, presumably on the assumption that it could be provided for through the financial contribution provisions of a plan pursuant to s.108 of the RMA. A further attempt in 1994 by a central government agency to give official recognition to environmental compensation also failed. The draft Environment 2010 Strategy prepared by the Ministry for Environment included environmental compensation as one of the 12 principles. The phrase used was “... no net loss of a valued environmental asset or amenity”, recognising that replacement areas should be functionally equivalent to those being lost. However, this principle was removed from the Strategy after public consultation32. The reasons were not spelt out. Thus, despite the recommendation of the 1991 Review Group and the proposal of the then Minister for the Environment, the term ‘environmental compensation’ is not used in the RMA at all.33

Questions have been raised about whether environmental compensation is implicit in the Act. For example, in 1993 Edmonds considered whether environmental compensation was implicit in the phrase ‘avoiding, remedying or mitigating’ as in s.5 (2)(c) of the RMA and put forward the alternative view that it was confined to the concept of “financial contributions” as defined in

  1. Department of Conservation New Zealand Coastal Policy Statement 1994 (1994) Department of Conservation, Wellington, at 45. Also see Department of Conservation Study and Recommendations of The Board of Inquiry into the New Zealand Coastal Policy Statement (1994) Department of Conservation, Wellington.
  2. Supra 24.
  3. The word ‘compensation’ is used in connection with designation and heritage order procedures where private property is taken under the Public Works Act 1981.

s.108 (9) of the Act34. In 2000, Turner expressed the view that environmental compensation is implicit in the RMA through such concepts as avoiding, remedying or mitigating adverse effects and also in the provision for “services or works” in s.108 (2)(c) of the Act35. As we will show in the next section the Environment Court appears to have adopted a similar view in recent times although earlier cases do not make it clear which provisions of the RMA were being applied. However, there are difficulties with applying s.5 (2)(c) because the formula in this subsection has been interpreted as not requiring a sequential test. This is in contrast with the international practice of “avoid-remedy- compensate”. Then too, at least since North Shore City Council & Ors v Auckland Regional Council (Okura)36 it has also been interpreted as providing but one of a number of tests for deciding, by way of an overall broad judgment, whether a particular policy, plan or development proposal will meet the purpose of the Act37.

The definitions of “environment” and “effects” in the RMA add to the difficulties of applying an international understanding of environmental compensation. These definitions are very wide and include matters that go beyond the biophysical environment and beyond effects on that environment. Twelve years after its enactment there is still a lack of clarity about whether environmental compensation, as we have earlier defined it, is provided for under the RMA. This could have been remedied through amendments to the Act but this has not occurred. Even though environmental compensation is referred to as a method in the financial contributions sections of a number of planning instruments, as we demonstrate in the next section, there are inconsistencies and differences in meaning and application of the plan provisions and their interpretation by the Environment Court. This is an unsatisfactory situation.


There is a growing body of case law relating to environmental compensation that also raises questions about its scope under the RMA. Before discussing a selection of these cases it is useful to further reflect on the relevant provisions in

s.108 of the RMA and their application thus far.

  1. Edmonds, K. ‘Team Explores RMA’s Chant’ Planning Quarterly (1993) Vol. 111, September, pp.12-14.
  2. Supra 24.

36 [1996] NZEnvC 23; [1997] NZRMA 59

37 For a discussion of the development of the law in this regard, see Skelton, P. & Memon, A. ‘Adopting Sustainability as an Overarching Environmental Policy: A Review of s.5 of the RMA’ Resource Management Journal (2002) Issue 1 Vol. X, March, pp.1-10.

5.1 Application of s.108

For the purpose of avoiding, remedying, or mitigating adverse environmental effects, consent authorities use the condition-making provisions of this section.

S.108 (2)(a) authorises a condition on a consent, requiring a financial contribution if the purpose and manner of determining the contribution have been set out in a plan. The section also separately, authorises a condition requiring services or works to be carried out (see s.108 (2)(c)). This does not depend on provisions being made in a plan. This raises questions about the appropriate mechanism for environmental compensation, when it should occur, and how it should be assessed. For example, does it need to be by way of financial contribution or services or works to be carried out?

A number of regional and district councils have sought to provide for ‘environmental compensation’ through the Financial Contribution sections of their plans based on the above provisions of the Act. A detailed assessment of the adequacy of the scope and potential effectiveness of policies and rules relating to environmental compensation in individual plans is beyond the scope of this study. The approaches in different plans vary, as shown in Table 2 (see page 198). Some approaches appear robust, others appear to appease developers, while others are a direct copy of provisions imposed by councils elsewhere in New Zealand. This may indicate the inexperience of councils, lack of understanding, difficulty in writing plan provisions, or councils’ lack of political will. For example, in its district plan at Chapter 13 the Waipa District Council refers to ‘Development Impact Fees’. Their purpose is “... to avoid, remedy or mitigate the adverse effects on the environment, including the district’s existing infrastructure.” No reference is made to methods for determining financial contributions for loss of the natural environment.

5.2 Environment Court Decisions

The varying approaches by the Environment Court to environmental compensation or something akin to it are illustrated by the following review of selected cases. It is difficult to discern clear guidance emerging from these decisions to assist RMA applicants, professional practitioners and decision- makers.

Transit New Zealand v Hawkes Bay Regional Council38 was a case about the validity of a condition to be attached to a coastal permit to allow the construction of a bridge and causeway across the Ahuriri Estuary at Napier. This was part of a motorway bypass proposal for that City. The condition required

38 Environment Court, Decision W 116/94

the Outfall Canal in the Estuary to be fully bridged (total length 220m) unless the cost/benefit ratio of such a crossing caused the project to fall from funding priority. If that were to occur a bridge of not less than 140m was required.

The Court found the condition to be invalid and replaced it with 4 new conditions. These required first that the bridge was to be not less than 140m. Then, in 10 years time when the project was due to take place, consideration was to be given again to providing a full bridge of 220m. If this was not possible within the funding regime then Transit and the Regional Council were required to “plan for and put in place, an additional estuarine area on the north side of the estuary to mitigate the adverse effects of the development.” Finally, Transit was also required to landscape the embankments necessitated by the bridge being only 140m in length.

In arriving at these conclusions the Court talked about s.5 (2)(c) of the RMA having three components: avoiding, remedying and (sic) mitigating. It held that to avoid the adverse effects would mean the bridge could not be built at all. To remedy the adverse effects would involve expenditure of some $2million (to provide full bridging) and to mitigate would involve landscaping the embankments.

The Court then considered, apparently as a separate matter, the notion of “mitigating” the effect of lost estuarine habitat that it said had been raised by one of the Environment Commissioners as a “question of compensation”. It recorded that a NIWA39 scientist called by Transit felt it was possible to do this. It also recorded that a conservation officer with the DoC while having doubts, acknowledged that, “any trade-off or replacement for loss of habitat is better than none.” This discussion appears to have lead to the “mitigating” condition earlier referred to but it should be noted that no mention is made of the statutory authority for such a condition. Consequently, although it may be assumed to be

s.108 there is no indication which part of that section applied.

In Arrigato Investments Limited v Rodney District Council40 the Environment Court allowed an appeal against a refusal of resource consent for a rural/ residential subdivision in a coastal environment which was claimed to have ss.6

(a) and (b) values. The Court recorded that a “major feature” of the application for consent was a proposal to covenant almost 60 per cent of the site, including parts already planted out with almost 300,000 indigenous seedlings. Much of this area had been “degraded” by earlier farming practises and an attempt was being made to remedy this. Later the Court said of this proposal; “Such enhancement should be encouraged, as indeed it is in the regional plan. However, private sector-initiated restoration on the scale envisaged here, is most unlikely

39 National Institute of Water and Atmospheric Research, New Zealand. 40 [2000] NZRMA 241

to occur unless there is some incentive. This is already recognised in Plan Change 55 by the provision of subdivision for the creation of bush preservation lots”.

On the issues relating to the matters of national importance in ss.6 (a) and

(b) the Court concluded that dwellings in a coastal landscape are not necessarily a negative visual element and there were no outstanding landscape values requiring protection. Then, even if it was wrong about that these matters, such values had to be “balanced” with other matters such as the protection in perpetuity of the enhanced degraded landscape.

Nowhere in this decision does the Court mention environmental compensation. But it does talk about “incentives” and about balancing enhancement against perceived adverse effects. Perhaps the major difficulty with this case, in the present context, is that the perceived adverse effects of the proposed subdivision (additional houses in a coastal environment) had no connection with the existing degraded landscape. Consequently, it is not really a case about environmental compensation as understood internationally but rather a case about trading off one value for another or as some might see it “buying” a resource consent.

In Transit New Zealand v The Auckland Regional Council41, the Environment Court was again called upon to consider appeals relating to a series of resource consents associated with a roading project, this time the realignment of State Highway 1 between Orewa and Puhoi.

Under a heading “Mitigation Measures” the Court discussed proposals by Transit to mitigate the adverse effects of this project. These included: bridging a stream; purchasing and vesting an area of 50.6 ha in the Department of Conservation that would be severed by the highway and enhancing it by further planting and fencing as required; protecting bush on additional land by conservation covenants and fencing and facilitating public access; re-vegetating riparian strips adjacent to a stream and a buffer area; acquiring another buffer area to protect a pond; and carrying out extensive landscaping and stability planting on batter slopes and areas exposed during construction. Transit had also agreed to carry out a full archaeological survey of the entire route and develop protocols for consultation with local iwi. There were also other mitigation and monitoring procedures proposed. In total the tangible estimated cost of all these measures was between $12 and $23 million. They were described by one witness as “off-setting” mitigation. Another witness is recorded as having said that he did not agree with off-setting mitigation where avoidance was possible but accepted that it had become established practice in the Auckland region.

The Court concluded that the proposals outlined above involved very considerable measures to “mitigate” the adverse effects on the environment of

41 Environment Court, Decision A100/2000

the construction and operation of the highway and to safeguard the life-supporting capacity of the ecosystems affected. It confirmed the consents with amended conditions (including “off-setting mitigation” conditions) and in doing so clearly gave weight to the mitigation measures in forming its overall broad judgment pursuant to s.5 of the RMA. Section 108 was not mentioned presumably because its application was not in issue.

Of all the “mitigation” measures mentioned in this case the one that appears to equate most closely with the international understanding of environmental compensation is the proposal to purchase and vest land for conservation purposes. But unlike the Napier case, it is not clear whether this was to replace lost habitat or other conservation values caused by the proposed works. It is also unclear from the amended conditions just how this mitigation measure was to be secured. It seems from a reading of the decision that it may simply have been by way of a “side agreement” between Transit and the Department of Conservation.

In more recent times some further decisions by the Environment Court have addressed the concept of environmental compensation quite directly but unlike the earlier cases this has been in the context of district plan references or appeals. Three of these cases are now discussed.

In Rutherford Family Trust v Christchurch City Council42 the Court concluded that it would serve the purpose of the RMA if part of an area of land on the Port Hills in Christchurch City, recognised in the proposed district plan as containing an outstanding landscape in terms of s.6 (b) of the Act, was to be rezoned for urban living purposes provided that a substantial part of the remainder of that land was transferred to the Council for public reserve purposes. This had been offered by the landowner seeking the change in zoning. In reaching this conclusion the Court relied quite heavily on a policy statement in the proposed plan that read as follows:

6.3.14 In limited circumstances, to apply the concept of “environmental compensation” where

(a) land of high landscape or natural value is protected or made available for public use and /or

(b) significant public benefit will be gained from hazard mitigation measures which would substantially enhance amenity values

In the explanation and reasons for this policy specific reference is made to portions of the Port Hills as being suitable for this purpose. Then it says; “ The acquisition or protection of land having high landscape values or natural values is often impractical on account of land purchase costs. The use of the concept of “environmental compensation” (public ownership or covenants) for development

42 Environment Court, Decision C26/03

rights has to be approached with some caution, but it does offer a cost-effective means to the community of achieving environmental benefits. This may result in development in locations which may not meet all other policy criteria, but any such arrangement must still require permitted development to be sustainable and environmentally acceptable”.

It is also clear from this decision that without this so-called “environmental compensation” the proposal to zone the rest of the land for urban living purposes would have failed. Given the policy statement referred to above the Court’s decision is probably defensible but in international terms the policy statement is not. As we have said elsewhere in this paper environmental compensation is generally understood as having the purpose of ensuring no net-loss of the natural environment. In this case there is a net loss of the natural environment through the re-zoning of part of an outstanding landscape for urban living purposes and the justification for that is the public acquisition of another piece of that same landscape which is said to provide a public benefit. But will the public benefit be so evident in years to come when the maintenance of the reserve falls on the public purse? In our view this case is similar to the Arrigato case where, as we said earlier, a development right, had in effect, been purchased. The only difference here is that the public will have to bear the cost of maintaining the so- called “compensation” land.

In Memon & Others v Christchurch City Council43 the Environment Court was again faced with issues about re-zoning Port Hills land for urban living purposes. In the end it reached what the Court itself described as a “compromise position” being a better way of achieving the purpose of the RMA than the two extremes proposed by the landowners on the one hand and nearby residential opponents of the re-zoning on the other. Here too s.6 (b) values were in issue and an offer of “environmental compensation” had been made by the landowners which in the end was modified by the Court. But the important point for present purposes is, that in this case the principal trade-off or compensation factor was the setting aside of an area of flat flood prone land for the purposes of a flood retention ponding area as part of a council flood protection scheme. With this setting aside by the landowners they were then given residential development zoning on areas of land that contained outstanding landscape values admittedly with some attempt being made to mitigate adverse visual by earthworks and landscaping. Once again, as with the Rutherford and Arrigato cases, there was no link between the adverse effects of the proposed residential development and the so-called “compensation” measures approved by the Court.

Finally in Remarkable Park Limited & Ors v Queenstown Lakes District Council44 the Environment Court discussed the relationship between financial

  1. Environment Court, Decision C116/03
  2. Environment Court, Decision C161/03

contributions and other ways of achieving positive effects under the RMA. It began by pointing out that s.108 (10) which provides that financial contributions can either be money or land or both, also provides that such contributions must be for a purpose specified in a plan, “ (including the purpose of ensuring positive effects on the environment to offset adverse effects)”. This phrase, which the Court described as “elusive” has always been in s.108 since the RMA was passed in 1991. It may have been this provision that encouraged the Board of Inquiry looking at the New Zealand Coastal Policy Statement to advise that s.108 provided the only legal mechanism in the Act by which environmental compensation could be obtained.

However the Environment Court went on to draw a distinction between financial contributions and other ways of achieving positive effects that it described as “environmental compensation”. In doing so it referred to the justifications for positive effects (as it saw them) contained in ss. 5(2)(c) “mitigation”, 7(c) and (e) “enhancement”, and s.32 of the RMA. It also referred to Rutherford (supra) and Memon (supra).

Based on these cases the Court concluded that environmental compensation might include such measures as vesting land and/or covenanting and /or easements for essentially utilitarian reasons for example, vesting of rights of way, roads etc or for ecological or landscape reasons. The Court then pointed out that it is impossible to predict or pre-set the value of environmental compensation because it depends on the circumstances. The implication is that this distinguishes environmental compensation from financial contributions that need to be for purposes specified in a plan and of course can only be imposed as conditions of a resource consent. Neither Rutherford nor Memon are such cases.


Our analysis of the situation in New Zealand raises a number of questions relating to the adequacy of the emerging practice of environmental compensation. The current practice in New Zealand has developed in an ad hoc and inconsistent manner as a consequence of a policy vacuum. Judged against international practice, it is considered to be deficient in a number of respects.

6.1 Policy Ambivalence and Legal Validity

Although earlier attempts to include explicit provision for environmental compensation in the Resource Management Bill were rejected, there appears to be a tacit acceptance now that environmental compensation is permitted under

s.108 of the Act. However, it is not clear whether it can be provided under s.108

(2)(a), as a form of financial contribution, or s.108(2)(c), as “services or works” or more generally as a reasonable condition that satisfies the legitimate purpose, relevance and reasonableness tests laid down in Newbury v Secretary of State for the Environment45.

The majority of regional and district planning instruments that we have examined, as well as the New Zealand Coastal Policy Statement, provide for environmental compensation via their financial contribution provisions. Some councils have endeavoured to be specific with regard to how this is to occur. For example, under Financial Contributions, some have indicated work can be undertaken “... in the general areas affected by the proposal”, “... in other locations within the Auckland Region...” (ARC Proposed Auckland Regional Plan: Air, Land, Water.); “... either on the site affected or nearby...” (Waikato Proposed Regional Coastal Plan). Others have not beenn specific at all. For example, Canterbury Regional Council’s (CRC) Proposed Natural Resources Plan 9.12(2) & (3) provisions stipulate that funds taken are to be used by the CRC, an incorporated society or properly incorporated trust, any of whose primary objects are to protect, restore, enhance and create wetlands in Canterbury. This may include land purchase. It is unclear how this mechanism will work. It is anticipated that the legality of these provisions will be challenged through the plan hearing process.

All three approaches under s.108 are capable of being supported in terms of their strict legality. But their adequacy as a basis to provide appropriate guidance for environmental compensation is debateable. Then, most recently the Environment Court has purported to make provision for what it has called environmental compensation through the combination of s.5 (2) and s.32 in the context of plan appeals. It is of interest to notice, however, that the consent of the parties and in particular the council involved has been required for these solutions to work. Indeed, in the earlier cases involving resource consents, applicant’s had offered mitigating conditions of various kinds. As yet, there has not been a court case where an environmental compensation condition has been imposed on an unwilling applicant. Consequently, the various paths by which such solutions have been arrived at to date have not been fully tested.

In our opinion, many RMA planning authorities and the Environment Court have struggled to deal with matters related to environmental compensation as a direct consequence of policy ambivalence on the part of central government and inadequacies within the RMA. We are profoundly concerned about this situation because it is already leading to the cumulative loss of New Zealand’s valued biophysical environments.

45 [1981] AC 578.

6.2 Implementation and Enforcement

There is a need for a recognised method for determining what is to be compensated and how to value it. Kerr & Sharp’s (2003) study for Auckland Regional Council, on the use of choice modelling for assessing offsetting mitigation, is a first for New Zealand.

Creation or restoration of a habitat, ecosystem or wetland may take a considerable length of time. In many instances the consent holder on-sells the developed land. Ensuring such work occurs and to a satisfactory standard could be enforced under s.108, 108A and 109 of the Act. These recently amended sections create a mechanism that can bind consent holders and their successors for the long term including following the expiry of the resource consent

6.3 Permanence of the Compensatory Area

Permanence is of relevance as, under s.127 (1) of the RMA, a condition of a consent can be changed or cancelled. Further, as a result of the Amendment Act 2003, there is no longer a threshold test of inappropriateness or lack of necessity for this section to apply. For example, a consent holder may have a condition requiring restoration work to be undertaken in another area within the site. An ecologist investigates the site and considers the condition has failed to achieve the intended purpose. The consent holder asks for the removal of the consent condition. Approval has to be gained from the other parties who agree restoration has been unsuccessful, and they allow the condition to be cancelled. There is then a net loss to the environment. Given overseas experience, it is highly probable that some compensatory measures will fail. A review of conditions requiring environmental compensation could, therefore, open the way for the removal of such compensatory measures.


The policy framework for environmental compensation and emerging practice in New Zealand is nascent compared with the experience in the USA and Germany. For example, in New Zealand, there is no statutorily recognised meaning given to the term “environmental compensation” within the RMA which is its major environmental statute. Central government has failed to provide explicit policy direction.

In the USA and Germany there is a hierarchical approach of avoidance, reduction or mitigation and, as a last resort, compensation. Australia appears to be following the United States model. New Zealand is not using s.5 (2)(c) of the

RMA in that way. Remedy and mitigate in New Zealand both appear to mean compensation. As the cases show, however, it is not necessarily that at all. The New Zealand regime is, arguably, more permissive because of the interpretation that developers can decide to avoid, mitigate or remedy. An applicant for resource consent can choose not to avoid but, instead, to mitigate.

Local government understanding and practice varies, as does the Environment Court’s application of the concept. Some plans would appear uncertain in effect and questionable in law. Their ability to achieve good environmental outcomes relating to protection of biodiversity and landscape values also looks uncertain.

Our conclusion is that a far more robust regime needs to be developed in New Zealand if environmental compensation is to be used to protect significant biodiversity and landscape values. At present, we appear to be learning as we go rather than learning from the best and worst of international practice. Central government should not only provide more explicit policy direction but should also promote good practice guidelines. This is imperative in order to improve the quality of policies and rules for environmental compensation in second- generation planning instruments (including the New Zealand Coastal Policy Statement).

Finally, notwithstanding the potential for environmental compensation as a legitimate planning tool to manage adverse impacts of human activities on New Zealand’s biophysical environment in a property owning democracy, our review of the international literature would suggest caution in the application of this technique for the following reasons:

Our caution is also justified from a wider stance. Arguably, the approach to planning as a means to resolve land use conflicts, professionally and politically, has tended to shift to a more open conciliatory style of decision-making in many New Zealand local authorities during the last decade. The rhetoric of environmental compensation fits well within this discourse as a means to achieve apparent ‘win-win” outcomes. RMA planning practitioners and decision makers should be cognizant of these pitfalls in the course of exercising their roles under the Act.

From a New Zealand perspective, environmental compensation and mitigation banking do offer a method of potentially achieving some ‘public’ and ‘private’ benefits when a community is faced with development pressures within a property owning democracy. However, environmental compensation and mitigation banking require a more strategic policy approach by both central and local government to address the questions raised in this study. They would also require local authorities and their staff to have the expertise to develop possible mitigation areas, value the resources being mitigated, monitor mitigation measures and, if the measures fail, enforce and, if necessary, pay for mitigation. Such resources and skills may be limited within New Zealand’s local government. The practice of environmental compensation in New Zealand has recently developed largely by default. There is a need for research and public debate, possibly by way of a national policy statement under the RMA. If considered a desirable mechanism, then legislative amendments may be appropriate to put it on a sounder statutory basis with good practice guidance from central government.

Table 1 Definitions of the concepts of mitigation and environmental compensation by European and American authors (source: Rundcrantz and Skarback, 2003: 207)



Minimising, rectifying and reducing different impacts.

Minimizing, rectifying and reducing different impacts and also replacement of ecological functions and values.

Miinimizing, rectifying and reducing different impacts.

Environmental compensation

(a) restoration of ecological functions and values in the right functional context: re- extablishing or newly shaping the natural scenery (both in an adequate way).

(b) replacement of ecological functions and values in another functional context: substituting the impaired functions of nature in an equivalent way or newly shaping the natural scenery in an adequate way.

Compensatory mitigation (this term refers to restoration, creation, enhancement and, in exceptional cases, preservation of other wetlands as compensation for impacts to natural wetlands).

Replacement of ecological functions and values. The substitution for ecological functions or values that are impaired by development. Compensation is in practice limited to nature functions in a rigid sense. It can be achieved by increasing existing ecological values or through land acquisition in order to create habitats, subsequent management of farmland and adaptive design.

The provision of positive environmental measures to correct, balance or otherwise atones for the loss of environmental resources.

To restore functions in the right functional context or to replace functions in another functional context.

Country and author


From the German Nature Protection Act (Der Deutsche Bundestag, 2002). Translated by Professor Bunge at the Federal Environmental Agency in Berlin.

USA (National Research Council, 2001).

The Netherlands (Cuperus et al., 2002).

The UK (Cowell, 2000).

Sweden (Eriksson and Lingestäl, 2002).



New Zealand Journal of Environmental Law

Table 2 Provisions for environmental compensation in first generation RMA plans.

Regional Council
Term used
Section of plan
Auckland Regional Council:
Regional Policy Statement

Transferable property rights
Policy: Rural Areas. (xi) Remediation of natural resources, environmental enhancement and or remediation opportunities
Pages 2-28
Auckland Regional Council:Proposed Auckland Regional Plan: Air, Land, Water.
Oct 2001
8.1 Where a financial contribution is taken it will, as a first priority, be used to remedy or mitigate actual adverse effects of an activity. Where this is not practicable, consideration shall be given to taking a contribution that will obtain environmental benefits or compensate the environment or the public for the effects of the activity.
  • 8.3 ... margins of wetlands, lakes and rivers...
  • 8.4 (a) provide for the restoration, creation or enhancement of aquatic ecosystems ... in the general areas affected by the proposal and/or
8.4 (b) providing for the creation or enhancement of aquatic ecosystems
... In other locations within the Auckland region where (a) is not practicable or desirable.
  1. Financial contributions
Sets out circumstances and purposes of financial contributions
  • 8.3 Maintenance enhancement of public access to and along the margins of wetlands, lakes and rivers
  • 8.4 Effects on aquatic ecosystems, the habitat of aquatic ecosystems, flow regimes, or riparian margins
  • 8.5 Avoidance, remediation or mitigation of residual adverse effectsPermitted activities
  • 8.8 Assessment guidelines
  • 8.9 Reasons for adopting

The Practice of Environmental Compensation Under the RMA 1991


Regional Council
Term used
Section of plan

8.5 Avoidance, remediation or mitigation of residual adverse effectsIncludes assessment guidelines. To ... offset.

Auckland Regional Council:
Proposed Auckland Regional Plan: Coastal.
  • 38.1.5 ... consideration shall be given to contributions that will obtain environmental benefits, or compensate the environment or the public, for the effects of the activity within the same general locality.
  • 38.1.6 ... Financial contributions shall not be used as a method to ‘buy off’ the adverse effects of any proposal. There are some values and features that ... no amount of financial contribution could satisfactory remedy or mitigate the adverse effects.
Chapter 38. Obtaining Environmental Benefits
Waikato: Proposed Regional Coastal Plan
Obtaining environmental benefits or environmental compensation Protecting/restoring/improving/ enhancing/... either on the site affected or nearby ...Habitat ... the full actual costs of compensating for any permanent loss
14 Financial Contributions
Policy 14.1.4 Policy – Calculation of the Amount


New Zealand Journal of Environmental Law

Regional Council
Term used
Section of plan
Taranaki: Regional Soil Plan for Taranaki
Environmental compensation Circumstances: where the activity for which a resource consent is granted will have adverse effects which will not be adequately avoided, remedied or mitigated and those effects can be offset by positive effects elsewhere.
7. Financial contributions
7.1.2 General-environmental compensation.
Purposes: To provide positive effects by way of environmental compensation by protecting, restoring and/or enhancing natural and physical resources and/ or amenity values.
Determination of amount: ... determined by reference to the matters set out in s.7.2 ... and will provide for offsetting positive effects reasonably equivalent in amenity value and /or environmental value to those amenities or resources which will be lost, compromised or adversely affected.
7.2.1 Matters to be considered
1 ... purpose ... to compensate the community or environment ...
8. Financial contributions may not be appropriate in every case, even where there are adverse effects.
10. TRC does not intend that adverse environmental effects must be fully mitigated or fully compensated in every case by financial contributions.
Taranaki: Regional Fresh Water Plan for Taranaki
Environmental compensation
Chapter 9: Financial contributions
9.2.1.(ii) Purpose: To offset or compensate for reduction or loss of access by contributing to new or enhanced access ... within the same general locality or serving the same general community
Determination of amount: ... will contribute to alternative public access to a reasonably equivalent standard and extent ...
2. Purposes. To mitigate or offset ... including the maintenance or provision of public amenities at alternative sites. Determination of amount: ... to a reasonably equivalent level or standard to those which will be lost.
9.2.6. General-environmental compensationCircumstances: Where the activity for which consent is granted will have adverse effects which will not

The Practice of Environmental Compensation Under the RMA 1991


Regional Council
Term used
Section of plan

be adequately avoided, remedied or mitigated and those effects can be offset by positive effects elsewhere.
9.3 Matters to be considered
9.3.10 The TRC does not intend that adverse environmental effects must be fully mitigated or fully compensated in every case by way of financial contributions.
West Coast:
Environmental compensation
9. Financial contributions and bonds
Proposed Regional

9.2 All monies collected by the RC will be used in such a manner as to
Land and Riverbed

avoid, remedy, mitigate, or offset the adverse effects on the environment of
Management Plan

the activity. When deciding how those contributions should be levied or

allocated, consideration will be given to matters continued in public

submissions on a resource consent application.

9.2.1 Circumstances, purpose, and amount

9.2.1.b. General – environmental compensation

Circumstances: where the activity for which a resource consent is granted

will have adverse effects which will not be adequately avoided, remedied,

or mitigated and those effects can be offset by positive effects elsewhere.

Purposes: To provide positive effects by way of environmental

compensation by protecting, restoring, and /or enhancing natural and

physical resources and/or amenity values.

Determination of amount: reference to 9.2.2. reasonably equivalent in

amenity value and/or environmental value to those amenities or resources

that will be lost, compromised, or adversely affected. Purpose ... to avoid, remedy, mitigate, offset, or compensate the

community or environment for adverse effects ...


New Zealand Journal of Environmental Law

Regional Council
Term used
Section of plan The adverse effects ... cannot be avoided remedied or mitigated directly be project design or adoption of the best practicable option for preventing or minimising the effects. In deciding the actual value ... the RC will have particular regard to ...
(c ) the extent to which any positive effects offset any adverse effects. be in reasonable proposition to the significance of any adverse effects caused or contributed to by the activity. Financial contributions may not be appropriate in every case ... The RC does not intend that adverse environmental effects must be fully mitigated or fully compensated in every case by way of financial contributions.
[Similar format to Taranaki RC. Coastal Plan]
West Coast: Regional Coastal Plan for the West Coast
16.2.1. Maintenance & enhancement of public access to and along the coastal marine area ...
Purpose 2: To offset or compensate for reduction or loss of access by contributing to new or enhanced access to ...within the same general locality or serving the same general community.
Max. amount: the full cost of providing or continuing alternative access ...
16.2.2 To mitigate or compensate ... by providing public open space & facilities ... in the same general locality or serving the same general community.
Max. amount: Full actual cost of providing land..
16.2.3. Planting or maintenance of coastal vegetation or habitats. Circumstances: Where the activity for which the consent is granted will or

The Practice of Environmental Compensation Under the RMA 1991


Regional Council
Term used
Section of plan

is likely to result in destruction or damage to vegetation or habitats Purposes: To mitigate, remedy or compensate for the loss ... by planting, replanting, transplanting or maintaining new or existing plantings either at or adjacent to the site concerned or elsewhere in the same general locality. Max amount: the Full actual costs of the works and of providing land.
16.2.4 Landscaping or planting ... contribute to adverse effects on visual amenities and /or involved land clearance or disturbance.
[Similar format to Taranaki RC]
16.2.8. Protection, restoration or enhancement of marine mammal and bird sites ... purpose ... to mitigate or offset ... by protecting, restoring or enhancing the site
Max amount: The full actual costs of works and of providing land sufficient to fully mitigate such effects.
Canterbury Regional Council: Proposed Natural Resource Plan

Chapter 9. 9.12 Financial Contributions
... Such contributions may be for any of the following purposes;
  • (1) To enhance, restore or create wetlands with, to the extent possible, the same or superior ecological and cultural values, of equal or greater area than any wetland likely to be lost or degraded in exercising the consent
  • (2) To contribute to a fund managed by Ecan, an incorporated society or properly incorporated trust, any of whose primary objects are to protect, restore, enhance and create wetlands in Canterbury.
  • (3) To purchase land for the purpose of protecting, enhancing, restoring or creating wetlands in Canterbury.
Contributions of land to offset the loss or degradation of an existing wetland shall either be existing wetlands suitable for enhancement or land suitable for wetland restoration or creation.


New Zealand Journal of Environmental Law

Regional Council
Term used
Section of plan

Any offsetting shall, as far as practicable, be equivalent in type, ecological integrity and functioning, and condition to the original area. Choices between wetland enhancement, restoration or creation shall be based on achieving that outcome.
The amount ...
(a) Where the contribution is wetland, the contribution shall be an area of wetland up to 1.5.times the original area.

(b) Where the contribution is land other than wetland, the contribution shall include the measures required to enhance, restore or create on that land an area of wetland up to 1.5 times the original area.

(e) Any contribution in excess of the original area shall reflect the degree of shortfall in offsetting the original natural and cultural values, together with any risk factors. Risk factors to be considered include the likelihood of failure to fully establish or maintain the offsetting wetland areas.
Southland: Proposed Regional Fresh water Plan for Southland.

2.4.1 Management methods – Financial Contributions [Same wording as Taranaki]
District Councils

Auckland City: District Plan Isthmus Section
Environmental compensation:
4B.7.2 Circumstances may also arise where it is very difficult to
Part 4 B Financial contributions
4B.7 Environmental or heritage financial contributions
4B.7.1.1 Objective To provide opportunities to safeguard & protect

The Practice of Environmental Compensation Under the RMA 1991


Regional Council
Term used
Section of plan

avoid or remedy the damage to a natural or heritage feature resulting from a development proposal. In these cases the concept of environmental compensation may be a useful way of mitigating the adverse effect or damage and so allowing the development to proceed.
Environmental compensation relies on damage to a particular resource in a particular location being compensated by an improvement to a similar resource in a different location. An example may be the destruction of a coastal habitat in one area being compensated for through enhancement of a similar habitat in a different location.
Environmental compensation may be put into effect through the use of financial contributions.
important natural habitats & other environmental qualities & values through the use of financial contributions
Policy – Applied on a project by project basis to identify important habitats and other natural features.
4B.7.2 Expected outcomes – Through the use of financial contributions, a policy mechanism is provided which allows a developer or subdivider to undertake the necessary works or provide a cash contribution for such works, .... In this way a consent can be given to a proposal while at the same time protecting the natural and heritage resources of the City.
4B.7.4 Rules: Assessment of financial contributions
... fair & reasonable contribution based on the land, work or the cost of the work, necessary to avoid, remedy or mitigate the adverse effects .... will be assessed on a case by case, project by project basis.
In assessing the level of contribution required
... a number of factors will be taken into account ... 4B.7.5 Rules: Payment of contributions
(a) contributions in land

(b) contributions in cash

(c) contributions in works

4B.7.6 Expenditure of financial contributions
Christchurch City: Proposed District Plan
Environmental compensation
Policy 2.4.5 Extended Protection
Volume 2, S.15. Methods of Implementation Non regulatory options.
These include: 2. Financial Contributions; 3. Incentives;


New Zealand Journal of Environmental Law

Regional Council
Term used
Section of plan

4. Environmental Compensation; 6. Land Acquisition; 8. Transfer of Development Rights.
Volume 2 S.6, Urban Growth. Policy: Environmental Compensation.
6.3.14 In Limited circumstances, to apply the concept of ‘environmental compensation’ where:
(a) land of high landscape or natural value is protected or made available for public use and/or:

(b) significant public benefits will be gained from hazard mitigation measures which would substantially enhance amenity values.

Explanation and reasons: ... The use of the concept of ‘environmental compensation’ (public ownership or covenants) for development rights has to be approached with some caution, but does offer a cost effective means to the community of achieving environmental benefits. This may result in development in locations which may not meet all other policy criteria, but any such arrangement must still require permitted development to be sustainable and environmentally acceptable.
Environmental compensation may also be appropriate in circumstances where a public benefit is obtained from hazard mitigation, but only where as a result of such measures, there is a significant enhancement of amenity values (e.g. plantings, or wetlands for flood retention). It would not apply to normal sound management practices which landowners can be expected to undertake.
Environmental compensation would arise in circumstances requiring significant development proposals, which would arise through plan changes, variations or resource consents, the outcome of which would still be subject to rights of submission and reference under the Act.
Example: In Vol.3, Part 14, 18.3 Protection of bush is accepted as
environmental compensation for the adverse effects of urban development.

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