100% Pure Business Opportunities

Is DOC’s zeal for commercial ventures with the private sector an environmental hazard ?

by Josh Gale
Photos of Crystal Valley and Steep Head Gully by Peter Langlands

Photo: Bubs Smith

Spotting a whio in the wild is a rare experience many nature lovers long for.

No surprise when there’re only 1500 breeding pairs of the endangered bird left in the country. The unusual whio, or blue duck, is one of only four duck species in the world that eschews the calm-water environments its relatives favour for a more exciting life on the rapids. Due to habitat loss, introduced predators and human disturbance, the whio is now more endangered than the kiwi.

A lot of hopes for the wellbeing of our remaining blue ducks have been pinned on a partnership brokered by the Department of Conservation’s Commercial Business Unit (CBU) with Genesis Energy. In August, Genesis agreed to give $2.5m over five years to DOC’s whio recovery programme as well as staff time and monitoring work. The funding will double DOC’s capacity to secure and recover the whio nationally. “In areas with no management, they’re doomed to extinction,” DOC’s whio recovery group leader Andrew Glasier says. “Support from Genesis gets us over the hump.”

To DOC Director-General Al Morrison, the partnership with Genesis reflects a growing recognition that investing in conservation is good for business. “Genesis Energy understands the true value of the native bird on our $10 note – a healthy whio population indicates a healthy river, which assists in sustainable power generation. It’s a classic case of looking after your business by looking after the environment.”

It is the kind of deal that Morrison wants more of – and it represents a shift in direction for DOC from wariness towards making deals with the private sector to aggressively pursuing alternative forms of revenue. Morrison set up the CBU in February 2010 to find, pursue and be capable play hard ball in such deals with business, to this end. He says the public sector often lacks the necessary business smarts to ensure the deals it does are wins for both sides.

“If we’re going to do deals, then we need to toughen-up rather than be a pussycat, lie down and be thankful for whatever deals we can get,” Morrison says. “We’ve been dealing with business for a long time, but to take a hard-nosed approach we need commercial skill which is why I set up the CBU.

It was my idea, it was my vision and I drove it real hard.” This avowedly muscular approach to commercial relationships will see the CBU become responsible for applying and instilling business acumen throughout the department’s functions, including recreation. So at the same time DOC announced plans to cut 96 jobs in legal, science, technical and communication roles, it also established new business development manager positions in all conservancy offices. DOC media advice manager Rory Newsam said the these new business development managers are charged with “working with local agencies and businesses to increase the engagement, involvement and investment in conservation” He added: “They reflect the move within DOC to forge more effective partnerships with outside agencies and businesses to achieve conservation gains.”

More specifically, Newsam says the CBU will be looking at such things as hut fee compliance as well as the possibility of allowing concessionaires to take over the running of certain high-profile huts around the country to shift funding to maintain low use facilities. DOC’s visitor services manager Gavin Walker indicated there is no agenda to privatise huts, but that DOC has to look at all its options.

“There has to be a really robust discussion around potential concessionaire involvement in what have been traditionally publically-managed facilities,” Walker says. “There is a whole range of options that could include concessionaires managing part of a hut and having the other part of the hut being freely available. But I just don’t know yet.”

Some groups, including Forest and Bird, Federated Mountain Clubs (FMC) and the Green Party, are concerned that DOC’s embracing of business is leading to the commercialisation of conservation. “It suggests the department’s priorities will be to further open conservation lands to business while reducing staff with the technical expertise to highlight the risks to biodiversity and non commercial recreation such commercialisation can involve,” says Eugenie Sage, Green Party candidate for Selwyn.

Forest and Bird’s conservation advocate Nicola Vallance points to the change in DOC’s strap line from ‘protect, enjoy, be involved’ to ‘conservation for prosperity’ as a “thinly-veiled shift in ideology” in how the Government conceptualises conservation. “Conservation for prosperity implies that a dollar value is necessary in order to give conservation prominence and significance,” Vallance says. “Conservation does promote prosperity; however, there is a worrying trend of compromising our conservation values to gain economic outcomes.” Being business-friendly doesn’t have to be bad, she says. “As long as they are required to make substantial and long term commitments, at market value, business can and should play a part in conservation, but the question must be ‘at what cost’?”

Just how hard a deal DOC can strike with business remains to be seen, but a recent land swap it brokered with an Australian company doesn’t instil Vallance with confidence. In March Al Morrison gave freehold title to 198ha of near pristine sub-alpine land, valued at $320,000 (located in the Craigieburn Range known as Crystal Valley [pictured left] and purchased in 2004 by the Nature Heritage Fund) to Blackfish Ltd, an Australian-owned company. In return, DOC received a 70ha block of coastal lowland forest, valued at $600,000, at Steep Head Gulley on Banks Peninsula.

Blackfish went on to sell its interests in Porters Ski Area, including Crystal Valley, for $6.9m to PSA Capital Ltd which is 60 per cent owned by four Russian investors and the other 40 per cent by Australian interests. PSA Capital is planning a $500m redevelopment of Porter’s Ski Area, creating a ski resort with a village, 3400 bed accommodation, access roads and an underground car park. The deal has outraged conservation and outdoor recreation groups, not least because the Crystal Valley land was due to be incorporated into Craigieburn Conservation Park.

Ski tour and walking guide operator Nicky Snoyink has extensive backcountry experience in the Southern Alps and takes many of her clients into the Craigieburn Range. She is opposed to the development for a raft of reasons, but primarily because she believes the way the development is presented will not match reality and will result in a loss of other opportunities. “A future project could have been a ‘Canterbury Walkway’ traversing this route, similar to the long Pacific Crest and the Appalachian trails in the US, both of which are enormously popular and valuable contributors to community wellbeing and the tourism economy, without serious negative environmental consequences,” she said in her submission against the land swap.

Forest and Bird life member Gerry McSweeney says the deal is a shocker. “Never forget Crystal Valley was owned by everyone in New Zealand and was designated to be part of Craigieburn Conservation Park and purchased by the Nature Heritage Fund for that purpose. That has been totally overturned by the government on the fairytale promise of hundreds of millions of dollars and a snowy alpine resort.”

However, Al Morrison says the land swap offers the chance to secure the future protection of a rare piece of coastal podocarp forest on Banks Peninsula.

“Protecting remaining coastal forest blocks like Steep Head Gulley [pictured left] is a conservation priority – bringing this forest under public ownership improves the quality and extent of land DOC manages,” Morrison said in a statement.

According to Eugenie Sage, the percentage of podocarp in the forest is overstated, with “mature podocarps sparse at best”. Sage, who is campaigning for the Selwyn electorate (which includes the Craigieburn Range) also points out that large ski fields on Mt Ruapehu and Mt Hutt operate on conservation land under concession agreements – so she questions why the same couldn’t have been done for Porters. “PSA Capital and its predecessor Blackfish Ltd’s dealings with DOC take the commercialisation of conservation land to the extreme,” she says. “The land exchange and associated decisions by the Minister and Director-General will allow PSA Capital to sell off former conservation land as part of the ski area and tourist town development. Under a concession, the company would not be able to on sell conservation land and pocket the revenue.”

Vallance described the touted conservation benefits of the exchange as spin: “The proposal to swap Steep Head Gulley is comparing apples and pears,” she said. “For starters, the land area is smaller and secondly Steep Head Gulley is already protected by the Banks Peninsula District Plan and is also protected by virtue of its topography. I don’t understand how swapping an alpine circ basin in New Zealand’s beautiful alpine habitat with a small piece of coastal forest can even be considered a sensible swap.”

Morrison acknowledges he gave up some biodiversity values for recreation and economic gain in the form of increased tourism dollars. “Was it a net gain for conservation? Probably not.” But he argues it was worth it. “If we don’t get it and fence it off now, these remnants of coastal podocarp forest are going to disappear.” A number of encumbrances were hastily written into the contract to improve the deal, including ensuring DOC continues to manage the land, guaranteeing public access rights and if the development doesn’t go ahead within 15 years, the land is returned to DOC.

That’s done little to allay the concerns of outdoor groups, who see the land swap as proof that Morrison is going out of his way to facilitate the private sector at the expense of conservation.

Morrison admits he is trying to turn conservation into an opportunity for extraction, but not in the way you might think. Despite the Crystal Valley deal, Morrison maintains the days of business interests milking the conservation estate for all it’s worth are over. He says the roles are being reversed, so that DOC is doing the milking by extracting as much money as possible from business to use for conservation. Morrison says DOC can’t afford to maintain the public land it manages and – with pests steadily eating our native birds and flora – something must be done to reverse this. “We need people with skin in the game to help us because we don’t and never will have the resources to manage a third of New Zealand,” says Morrison. “We have thousands of volunteers, thousands of community projects, but it will only take us so far.
“We want people with money who will do things for conservation.”

Green Party spokesman for conservation Kevin Hague is not opposed to some commercial activity on conservation land, so long as it’s on the terms set out in the Conservation Act. Section 6, Part E of the Act states the use of any natural or historic resource for recreation or tourism should be consistent with its conservation. It says DOC’s role is to foster these resources for recreation, and to allow their use for tourism. In a 2007 speech to the Methodist School of Theology in Palmerston North, Morrison acknowledged this section of the Act suggests a hierarchy of importance.

“The department must advocate, and manage for, the value of nature for its own sake,” Morrison said. “Provided it is consistent with that, we can ‘foster’ recreation and ‘allow’ for tourism. The hierarchy is clear: intrinsic value first, enjoyment second and commercial benefit third.”But according to a senior DOC staff member spoken to, Al Morrison has since said: “We’ve had to go past that [part of the Act]”.

In May this year DOC deputy director-general Felicity Lawrence made the same point in a speech she gave in Auckland. “Section 6 of the Conservation Act talks about fostering the use of natural and historic resources for recreation, and to allow their use for tourism,” Lawrence said. “Well, the practical and economic reality is that we have moved way past that.” Hague has sympathy for DOC, which he says receives inadequate funding, forcing it to seek revenue elsewhere. The Government’s $26.8b investment into roads over the next 10 years, including $2b for Auckland’s Waterview Connection, shows where its priorities lie, says Hague.

Despite the crucial role the conservation estate plays in the economy, the Government only spends 0.5 per cent of its total expenditure on DOC – about the same amount of money the health service consumes every nine days. DOC’s forecasted output expenses in 2011/2012 are $338m, while the Ministry of Transport’s is $1.8b and New Zealand Defence Force’s is $2.3b, 85 per cent more than what DOC gets to manage one third of New Zealand. “The choice to give low priority to conservation is one based on values rather than a real lack of money,” says Hague. “At the same time DOC is receiving cuts to funding, the Government is choosing to spend virtually limitless money on new motorways as well as choosing to keep troops in Afghanistan and provide tax cuts for the rich.”

A spokesperson for Conservation Minister Kate Wilkinson said the focus for DOC is to become more efficient. “There will always be criticism over funding, especially from people with a tax and spend mentality, but New Zealand doesn’t have an open chequebook,” the spokesperson said. “The Government has been looking for savings across the board, as the huge increase in state spending seen over the past 10 years simply wasn’t sustainable. Our national debt has to be brought under control.”

DOC CBU director Dave Wilks says whether the Government is flush or not is not the reason the CBU was created or the only reason why DOC is pursuing more deals with the private sector. He says “doing more with less” is a fact of life for the department. Working smarter, with fewer resources, means “you’ve got to find other ways to skin the cat…There’s a view that the only reason we’re doing this is because we don’t have enough money, but I’m not sure that’s totally true,” says Wilks. “Even if we had an unlimited budget, maybe we could say ‘bugger off’ to our business partners, ‘DOC can look after this itself’. But that’s about saying our society is like two sides of a ledger, rather than seeing New Zealand as a community that should be responsible for the place we live whether we’re a business, a community group or an individual. We’ve got to be open-minded about the way we look after the place we live.”

That’s a view also taken by Parliamentary Commissioner for the Environment Jan Wright. She says DOC only conducts pest control on one eighth of the conservation estate and is fighting a losing battle. “Earning revenue from the DOC estate and using that money to fund more pest control is very appealing to me,” Wright said in a speech at Federated Mountain Club’s 80th anniversary conference in June. “But – and this is a big but – it must be done well. “It should be based on principles, not done in an ad hoc way.”

Wright became interested in the issue of commercial involvement in the conservation estate when her office investigated the National Government’s proposal to allow mining on Schedule 4 land. “I was really surprised how little money appeared to be paid by companies that were digging up gold and coal and other minerals on DOC land,” Wright said. “Miners with access to many hectares of land are paying access fees in the low thousands.”
As well as getting better financial returns on deals with business, Morrison wants DOC to get better gains for conservation, including with mining companies which, he says, do far less damage than pests like rats, stoats and possums. “Why wouldn’t we say part of the deal for a company to mine is it has to do mitigation at the site as well as put a capital fund into a trust so a huge area can be pest controlled in perpetuity,” he says. “That to me is a net-gain for conservation and that’s the bit the conservationists don’t like. They’re okay with everything DOC is doing so long as we don’t give up a single thing. We’ve got to be more pragmatic and prepared to do deals that clearly are good for conservation, but don’t give us everything we want, in every place we want, to the standard we want.”

As a former DOC Director-General, Hugh Logan understands DOC’s need to get revenue from the private sector. However, in his experience the revenue opportunities are not big. “My own view is that I don’t think there’s actually a really big financial opportunity in it,” says Logan. “Commercial organisations can present and help promote the view that conservation is a central and positive part of the New Zealand way of life. That to me is the positive part of working with the commercial sector.”

Logan thinks DOC’s business relationships should be with New Zealand-based companies only, preferably owner-operated. “I don’t think a business analyst living in Shanghai or London working for a big foreign company and looking to invest in New Zealand really cares about conservation here,” says Logan. “It’s just another overhead. But it’s different with domestic companies.” Logan wants the Government to establish clear principles so the deals done with business result in win-wins. He also wants more public consultation on any proposed deals. “DOC needs to be careful it doesn’t create a culture where everything is tradable,” he warns.

Resource Management Act lawyer and partner at Anderson Lloyd Lawyers Mark Christenson agrees “not everything should be up for grabs”. Christenson’s largest clients are the likes of Solid Energy, Meridian Energy, Main Power, Food Stuffs and Fish and Game. He is currently working on a project for Main Power involving a wind farm the company wants to build on Mt Cas in North Canterbury.

Christenson says debate about conservation and industry involvement has traditionally been positional and confrontational. “We need to learn to engage more constructively,” he says. “There’s a lot of goodwill in business, they want to do the right thing. DOC has a shortage of resources and business can help, but they need and want to do it in partnership.”
Christenson sees a lot of potential for the conservation estate in biodiversity off-setting and says this approach can go beyond the boundaries of DOC-administered land. “We can achieve conservation gains by working with business even though the operation is not on the conservation estate,” he says. “For example, a company with a mine on private land that is causing a biodiversity loss could, to offset it, do pest control on the conservation estate.”

For biodiversity off-sets to be ideal, Christenson says they need to be “like for like” and done close to the site to ensure the ecosystems are similar. This is why deals like the Crystal Valley land swap are difficult because “you’re comparing apples with pears”. Christenson acknowledges that even with the most robust processes, decisions will always be subjective. “While it should be a scientific and robust process, it all comes down to value judgements,” he says. “What we want to do is put some rigour and transparency into the process so, while you may not agree with the specific outcome, you can see how the decision-maker came to a decision.”

Al Morrison says by placing a value on biodiversity, off-setting and bio-banking become useful tools for conservation. “The tool I dream about, the one I want to see us more engaged with in five or 10 years time is bio-banking,” says Morrison. “When a company wants to do a development and it’s impossible to reach an agreement either through off-setting or mitigation, it can buy the banked biodiversity value, in the same way companies purchase carbon.
“It’s not a complete system, it’s not a complete answer, but it’s part of the mix that is going to allow [DOC] to manage the whole country’s natural resources, rather than just a third.”

FMC President Richard Davies doesn’t his mince words when he hears about bio-banking, describing it as “very dangerous groundfor DOC….New Zealand’s conservation land is not a bank to enable development and destruction of other bits of land,” Davies says. “FMC does not think that DOC has the expertise to do it properly; this is not something New Zealand should try to be a world leader in. Instead, we should properly fund conservation, see it as a public investment, not a cost.”

Critics of DOC’s business-friendly approach say with pests chewing their way through New Zealand’s forests, there isn’t time to wait for the private sector to come to the rescue. Dr Wren Green, who worked as a scientist for DOC for 10 years and who specialises in conservation science and policy, has the view that the threat posed by pests is too great to wait for a “miracle intervention”. Green says relying on the private sector will not result in a win-win for conservation in the long term.

“I see it as a win-lose,” says Green. “It’s a win for the private sector who get what they want, but a long term lose for the department which isn’t getting the investment from the Government it needs to do what it was created for. It’s far, far cheaper to invest now in keeping our ecosystems healthy than it is to have to front the repair bill.”

That’s a sentiment those working to protect whio and many of New Zealand’s other native species would agree with.

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Footnote : This is a (slightly) edited version of an article that first appeared in the October issue of Wilderness magazine.

Josh Gale is a journalist living in the foothills of Auckland’s Waitakere Ranges.