Submission to Venture Southland’s ‘Draft Business Plan’ 2015.

I made a submission again this year on the ‘big picture’ issues relating to the draft Venture Southland business plan. The full submission is available below, and under this para, my presentation to the committee which tries to summarise the main theme, which in itself can be summarised as follows: A probable future is one of much lower economic activity, particularly in export industries and tourism, and this will come about as a direct result of declining ‘net energy’ available to us as a result of global trends that have a root in bio-physical limits that we’re hitting.

The future we face is ‘not the future we ordered’…

Spoken Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 08/06/15

Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 22/05/15

I would like to speak to my submission.

I strongly support the CEO’s statement’s as follows:

International influences such as global oils prices, US dairy exports, international competition for our exports, international debt in Europe, and the growing economies in South East Asia will affect our economy. Continual awareness is critical to ensure that we capture all the opportunities, and proactively manage challenges, and any threats that are ahead of us.”

Our region, our resources and our environment offer the “X” factor many people are seeking domestically and internationally. This is our point of difference – this is our future – and together with our stakeholders, business, and the Southland people we aim to achieve and facilitate projects and initiatives that will enhance the prosperity and quality of life of Southland communities.”

Questions regarding these statements:

  1. What specific work is Venture undertaking to maintain ‘continual awareness’ (other than my submissions regarding limits), particularly of the threats to the growth agenda?
  2. In line with the ‘X factor’ of the region, what specific planning is being done to ensure that future migrants to the region have good quality, resource and energy efficient housing, resilient infrastructure, etc? As I stated at the time of its release, I believe that the thinking behind the “Southland Region Labour Market Assessment” is flawed, being modelled using assumptions regarding the future being a continuation of ‘business as usual’ that are not aligned with bio-physical reality. My full thoughts on this are appended as Appendix 1 and available online here:
  3. Did you receive the follow up to my oral presentation last year? I sent for circulation following comments made in the discussion following the presentation a blog post that I created outlining that the ‘Limits to Growth’ modelling I referenced in my submission which was challenged by Mayor Shadbolt is in fact not ‘disproved’. Specifically, the ‘world3’ model predicting overshoot and collapse is in fact correlating well with real world data accourding to updated research in recent years. The full post is available as Appendix 2 and is also online here: I never received any acknowledgement that this information had been circulated.

Suggested changes to the wording of the Priority Projects that VS must report upon, including reasoning for the changes suggested:

  • Increase in regional Gross Domestic Product. Remove this priority.I recently ‘discovered’ via the Southland Times, the ‘Regional Development Strategy’ workstream from the ‘Mayoral Forum’. In correspondance with the chairman Graham Cooney, the terms of reference for this particular strategy appear to be focused wholly towards maintaining ‘growth in GDP‘. I continue to disagree with this approach for the reasons I stated in this and my other recent submissions on an economic, energy and environmental basis. These physical constraints will ‘overrule’ your attempts to continue growth, and will untimately waste time and effort that would be far better directed towards adaption to, and mitigation of future challenges.

  • In particular, I’m concerned at the (sole?) consultant to this workstream, Geoff Henley. This is because Geoff’s own firm’s website explicitly states that his consultancy aims to subvert regulatory safeguards regarding environmental protection, in a pro-extractivist model that is no longer appropriate for the realities we face, thus:Our expertise lies in building social, commercial and political license for development projects, particularly those based around the use of natural resources such as water, land and minerals. Our focus includes building the importance of regions in New Zealand’s future development. In an era where limits and regulations such as for nutrients in water and carbon release into the atmosphere are becoming clear and prescriptive, finding new ways of grasping development opportunities and building a reasonable constituency around an idea has become extremely important, particularly in agriculture.The key to advancement is so often intellectual capital. Some of this takes the form of technical capital, but much of it is instinct, experience, collaborative practice and old-fashioned leadership and determination. HenleyHutchings seeks to harness the human factor in development.Source: And that he is a PR specialist for the Petroleum Industry (this from the NZ Petroleum Summit website):

    Executive Director, Stakeholder Relations

    Network Communication

    Geoff is a director of Network Communication specialising in stakeholder relations. Having worked across a wide range of sectors Geoff’s principal focus has been in primary industries, natural resources and infrastructure Over the last six years he has been extensively involved in water management particularly relating to irrigation development and more latterly the exploration and development of petroleum and minerals. He regards resolution of the conflicting interests in resource development as being a key factor in New Zealand’s economic growth and social development. He believes there is common ground between development and environmental priorities to achieve managed development. Geoff has been a communications professional for 25 years and has handled some of Network’s largest clients projects in this sector.”


    Will you please confirm what particular resources this workstream is focused towards the definition and exploitation of? Soil (via industrial agricultural expansion)? Silica? Platinum at Longwoods? Flogging the (in energy and economic terms) dead donkey of lignite exploitation? Fracking…?

  • There are other changes I have unfortunately not had time to suggest to this, I’ll try to put them into my oral submission.

The major problem with Growth is that it is only possible when we’re not hitting limits in Energy or Ecological terms. And it’s apparent from my research, which forms the basis of my submissions to date that this is unfotunately the case. As such, the economy must operate within the limits of the Available Energy, and the Planetary Ecosystems as per the diagram to the left (adapted from’Strong Sustainability for Aoteroa also the 5 part series ‘Creating Tomorrow’ by Dr Wayne Cartwright published in ‘Element Magazine’, the NZ Herald supplement:

A suggestion for an alternative, more appropriate workstream for Venture Southland (full context is available in my submission to ES LTP, Appendix 3):

It’s a paradoxical idea, but one way to build resilience, or antifragility, is to keep the vast majority of the business as safe as possible, but then take big risks – ones that may pay off 10-fold or more – with a smaller part of the business [the Southland Regional Economy].

Think of the famous idea from Clayton Christensen of trying to disrupt or cannibalize your own business before someone else does. Imagine setting up a skunk works to identify major risks to the business stemming from resource constraints or climate change – and then lean into those risks and come up with products and services that avoid them and challenge the core business (for example, a car company investing in car sharing programs which consumers use to save money, but also reduce material and energy use dramatically).”


Alternatives to the growth agenda – a realistic, evidence based vision of a probable future:

It’s true that there is much uncertainty in the specifics of how the future will play out, but there are significant risks that I outlined in my submission last year, and expanded upon somewhat in my submission to ES LTP consultation this year (Appendix 3 to this submission) that are know and quantifiable. “The only thing that works for sure is to stop doing what doesn’t work.” – Prof Susan Krumdieck, Christchurch.

With that in mind, I offer the following alternative vision of the future from Ted Trainer (again, see the full context in my ES LTP submission, Appendix 3 to this submission):

A worthwhile response would move us in the direction of a society as summarised in The Simpler Way’: a vision of how the future could be, if we choose to move in that direction: We cannot achieve a sustainable and just world order unless we change to:

  • Simpler lifestyles, much less production and consumption, much less concern with luxury, affluence, possessions and wealth.
  • Small, highly self-sufficient local economies, largely independent of the global economy.
  • More cooperative and participatory ways, enabling people in small communities to take control of their own development.
  • A new economy, one not driven by profit or market forces, and a zero-growth or steady-state overall economy, which produces much less than the present economy.
  • Some very different values, especially cooperation not competition, and frugality and self-sufficiency not acquisitiveness and consuming.

The Simpler Way is about ensuring a very high quality of life for all without anywhere near as much production, consumption, exporting, investment, resource use, environmental damage, work etc. as ther e is now. There are many rich alternative sources of satisfaction other than material acquisition and consuming. Consider having much time for arts and crafts and personal growth, living in a rich and supportive community, having to go to work for money only two days a week, living in a diverse and productive leisure-rich landscape, having socially worthwhile and enjoyable work with no fear of unemployment…and knowing you are not contributing to global problems. There is no need to sacrifice modern technology to achieve these benefits.


A note on ‘techno-fixes’:

A focus on highly complex technological fixes to problems created by technology is ‘using the same thinking to fix the problem that created it (to paraphrase Einstein).

The solution to the unintended consequences of modernity is, and has always been, more modernity – just as the solution to the unintended consequences of our technologies has always been more technology. – Ted Nordhaus and Michael Shellenberger

The Simplicity Institute’s co-director, Samuel Alexander, has been doing some work recently with the Melbourne Sustainable Society Institute, and has just published the first of a number of working papers, entitled ‘A Critique of Technology Optimism: Efficiency without Sufficiency is Lost’:

Technological optimists believe that humanity will be able to solve environmental problems primarily through technological application and advancement, while continuing to focus attention on economic growth. From this widely held perspective, sustained growth of the global economy will eliminate global poverty and raise living standards for all, without destroying the necessary ecosystems that sustain life as we know it. There can be no doubt that this promise of technology is seductive – material abundance for all, while solving environmental problems. But is this promise credible? If not, what are the implications? This paper presents an evidence-based critique of techno-optimism, arguing that the vision of progress it promotes is unrealisable due to the limits of technology and the inherent structure of growth economics. The considered application of technology is, without doubt, an essential part of any transition to a just and sustainable world, but it is argued that there must also be a value-shift away from growth economics toward a ‘post-growth’ or ‘steady state’ economy based on material sufficiency.’

The full paper is available at the following link: and I recommend reading it to the committee. My suggestion is to focus on finding appropriate, low technology fixes that will be able to be sustained locally through what is going to be a painful period of adaption to reality globally, once the financial bubble we’re currently trapped in bursts.

A request for support:

To this end, I co-founded Love Local and – a fruit and vege bag scheme, and a charitable trust with twin objectives: providing significantly more affordable fruit and veges to community services card holders, and sourcing locally.

The co-founders hope this will be a Southland based example of a ‘for benefit’ (not-for-profit) organisation that is actually geared towards addressing some of the probable challenges. We aim to do this by creating a route to market for small and medium sized local market gardening operations that will improve Southland’s food security.

As we develop (grow – lol!), cash flow will increase (according to the threshold identified in our business model), so that we can fund some of the training and seed funding required, however we hope that Venture will consider supporting us in some way in this endeavor, and look for suggestions as to how this might happen.

Thankyou for your consideration of my submission.

Nathan Surendran

Appendix 1:

Some thoughts regarding Venture Southland’s “Southland Region Labour Market Assessment”

I came across the report here:

My immediate thoughts in response to a quick scan through the report introduction:

From the introduction to the report: “historical data, feedback from the Venture Southland labour market workshop, and broad regional and national trends, are then used to project both future labour supply and labour demand for the Southland Region, from 2014 to 2031″ – the problem being that at this point, on the cusp of economic, energy and geopolitical crisis (, the ‘historic data’ and ‘trends’ are not a reliable predictor of the future. This point was well made last year in the ‘Better Growth, Better Climate’ report by the prestigious global economics committee for the ‘New Climate Economy’ taskforce which states simply ‘It will not be business as usual’ (, although it’s neo-classical economic assumptions are flawed.


Specifically, assumptions of ‘business as usual’ are flawed at this point as declining energy profit from fossil fuels ultimately driving a loss of GDP, an effect that can only be temporarily masked by printing money (QE) and other neo-classical or ‘Keyensian’ assumptions. Rather, we must consider the physical reality, which is that the economy is fundamentally intertwined with ecosystems and a finite resource base, and that we’re up against planetary boundaries as a species. This means that the patterns of these complex adaptive ecosystems will enforce limits based on energy availability on economic activity (entropic or energy profit related, a point I’ve made here: Consider some of the policy implications that this implies:

An acceptance that the human society and economy are governed by the same nested adaptive cycles as ecosystems, leads to an acceptance that growth is only one part of a healthy adaptive system. For such a system to remain healthy it must experience regular periods of contraction and radical reorganization. Such an insight stands in deep contrast to a Keynesian philosophy that believes that fiscal and monetary policy should be utilized to offset the contractionary part of the cycle. It also challenges the neo-classical tradition that views the economy as a self-correcting system that tends towards an efficient equilibrium point. Instead, an economy may experience sudden and significant changes that move it from one equilibrium point to another that exhibits lower levels of social welfare. This was the case during the 1930’s.

Preventative measures would seek to facilitate both more regular, but smaller, periods of reorganization and limit the social impacts of such reorganizations (e.g. increased unemployment). In addition, the preservation of institutions, resources and knowledge required for the next growth phase would be an important consideration. In this light, the extension of the economic and growth cycles through the utilization of fossil fuels, and the extension of the financial system growth cycle through repeated bailouts and rescues, could be seen as creating a much larger contractionary phase in the future. Resilience continues to be degraded, and network complexity and interdependence intensified, rather than the required simplification being allowed to take place. With an earth system that is being pushed into a contractionary cycle by the huge scale of humanity’s ecological footprint, and the possible peaking of fossil fuel energy on the horizon, both ecological and human cycles may interact in a rapidly reinforcing fashion. Better to release some of society’s adaptive cycles prior to the challenges that may be delivered by resource constraints and multiple probable ecological crises.

One of the system rigidities produced by the extended conservation phase that human societies have been experiencing are the dense, strong, interconnections between sub-systems as the global economy becomes more integrated and extensive. Local production has been replaced by global production networks that tightly integrate many regions together, with the final assembly of a product possibly involving subsystems supplied by a myriad of suppliers based in many different countries. Just-in-Time delivery systems have also removed many of the local stockpiles of goods in the name of efficiency. The branches of national, and global, banks have replaced local financial institutions. Overall, there has been the growth of very large organizations, both private and public, upon which the system depends. Examples are the “Too Big To Fail” financial institutions, large corporations in the agricultural, retail, energy and other areas, together with, central banks. Locally produced food has been replaced by the production of cash crops for export, with countries being made more dependent on imports for basic foodstuffs. In the case of Europe, even national currencies and governance structures have been replaced by the Euro and European-level organizations. Local variability, and the range and scope of locally adaptive changes have been reduced. The buffering effect of local production and buffer stocks has been removed. The overall global system may have become much more efficient, but much of its resilience has been the price of that efficiency. The system has also become more tightly fitted to, and therefore dependent upon, its current ecological and resource niche. Complicating, and deepening, any reorganization phase.

Another issue is the reduction in heterogeneity and redundancy, as globalization concentrates and homogenizes organizations, products, cultures, and worldviews. A single monoculture is much less resilient to challenges than one with much variation and duplication. In the latter, the removal of a single subsystem may be dealt with successfully through the ability of other subsystems to take over at least part of the functions provided by the failed one. Through the impacts of industrial agriculture, a limited set of crop variants has replaced a much greater variety of local variants in many parts of the world. These crop variants are dependent upon a wide range of industrial inputs, from herbicides and fertilizers to farm machinery and the oil that fuels them. On a cultural and worldview level, Micheals[12] argues that a single master story based upon economics has largely forced out competing narratives. He states:

In … the twenty-first century, the master story is economic; economic beliefs, values and assumptions are shaping how we think, feel, and act. In a monoculture … that single perspective becomes so engrained as the only reasonable reality that we begin to forget our other stories, and fail to see the monoculture in its totality, never mind question it. We accept it as true simply because we’ve heard its story so often and live immersed in it day after day. The extent to which we accept that monoculture unquestioningly and live by its tenets is the extent to which our lives are unconsciously being shaped by it.”

Such as unquestioned belief system greatly restricts the possible corrective actions that can be taken, by restricting the conceptual framework within which such actions will be assessed. Some possible actions may also be explicitly excluded from, or simply not part of, the conceptual framework that stems from the belief system. Due to this, human society may be unable to even contemplate actions that would be beneficial to its ability to successfully traverse the process of reorganization.

Beneficial policies would be those focused on fostering diversity in all forms, and forestalling economic and social concentration.”

Also from the introduction to the report: “While supply of labour is projected to decrease, with sustained economic growth, demand for labour in Southland is projected to increase” – sustained how exactly, in light of a probable rather than wished for, or indeed ‘projected’ future..?

Lastly from the intro: “many strategies will be increasingly difficult to implement in a global environment of high competition for labour” – in a region such as Southland, with so many of the fundamentals right (fresh water, productive land, low population, distance from nuclear hazards – military and commercial, region less effected by climate upheaval than others) I believe the opposite will be true in the timescale this report considers – there will be many people attracted here, and the problem will be integrating them all successfully (e.g. climate refugees from Australia)…


I hope Venture will consider these points carefully. I’m happy to talk to you regarding this at any point…

Appendix 2:

Limits to Growth – 42 years on

In response to a recent observation I encountered, that we talked about all this 40 plus years ago, and it was portrayed as urgent then, I’ve heard it all before…

I’m choosing to focus on the most well known set of predictions from about 42 years ago, made in the book ‘Limits to Growth’. For its 40th anniversary, work was done revisiting its predictions, and assessing if its predictions were as wildly inaccurate as they were often portrayed to be. Here’s  a summary of that work:

Looking Back on the Limits of Growth

Recent research supports the conclusions of a controversial environmental study released 40 years ago: The world is on track for disaster. So says Australian physicist Graham Turner, who revisited perhaps the most groundbreaking academic work of the 1970s, The Limits to Growth.

There is a very clear warning bell being rung here. We are not on a sustainable trajectory.”Written by MIT researchers for an international think tank, the Club of Rome, the study used computers to model several possible future scenarios. The business-as-usual scenario estimated that if human beings continued to consume more than nature was capable of providing, global economic collapse and precipitous population decline could occur by 2030.

However, the study also noted that unlimited economic growth was possible, if governments forged policies and invested in technologies to regulate the expansion of humanity’s ecological footprint. Prominent economists disagreed with the report’s methodology and conclusions. Yale’s Henry Wallich opposed active intervention, declaring that limiting economic growth too soon would be “consigning billions to permanent poverty.”

Turner compared real-world data from 1970 to 2000 with the business-as-usual scenario. He found the predictions nearly matched the facts. “There is a very clear warning bell being rung here,” he says. “We are not on a sustainable trajectory.”

* * *



And from the ‘Our Finite World’ blog, which features regularly in my attempts to summarise what’s going on:

It seems to me that we may be reaching “Limits to Growth,” as foretold in the book by the same name in 1972. The book modeled the consequences of a rapidly growing world population and finite resource supplies. A wide range of scenarios was tested, but the result in nearly all scenarios was overshoot and collapse, with the timing of collapse typically being in the 2010 to 2075 time period.

The authors of Limits to Growth did not model the full interactions of the system. One element omitted was how debt would impact the system. Another item omitted was how prices for oil and other resources would affect the system.

If a person follows through the expected effects of high oil prices and debt, the financial system would appear to be the most vulnerable part of the system. The financial system would also appear to be what telegraphs problems from one part of the system to another. Unless a solution is found, failure of the financial system could ultimately bring down the whole system.


Newspapers print endless articles about the need for economic growth, and the need for return to economic growth. But if economic growth really takes resources of some sort–coal, or oil or copper, or fresh water to produce goods and services–it stands to reason that at some point, the resources needed for economic growth will run short. This is especially true for resources that are used up when they are burned, like coal and oil.

Besides the issue of inadequate resources, growing pollution can also interfere with economic growth. As the world is filled with more people, and resources become shorter in supply, pollution becomes more of an issue.

Logically, at some point we can expect to run into limits that are impossible to get around. One of these limits may be inadequate funds for investment in extraction of resources.

In my view, what has happened since 2003-2004 is very similar to the effect a person might expect from Liebig’s Law of the Minimum, if oil is a necessary component of the economy, and high oil price signals that too little oil is reaching the system. In agricultural science, Liebig’s Law of the Minimum states that the amount of plant growth is governed not by the total resource available, but by the amount of input of the needed resource in least supply (for example, nitrogen, phosphorous, or potassium). In other words, it isn’t possible to substitute one type of fertilizer for another; similarly, it isn’t possible to substitute one energy product for another in the short term. Instead output contracts, if oil is too high-priced. In a way, this contraction might be seen as a dress rehearsal for the ultimate contraction which Limits to Growth models have suggested will eventually arrive.

I am sure that some would say that oil supply would need to actually decline, for there to be a problem. Since the Limits to Growth model does not look at resource prices, it does not consider this detail. It would seem to me that by the time world oil supply actually declines, the world may already be in a major recession, which does not allow prices to rise high enough to keep production up.

Connection with Debt

What relationship does debt have to the economy?

1. Economic growth enables debt, because in a growing economy, the greater amount of resources available at a later date make it much easier to repay debt with interest. I have shown an illustration of this several times.

The above relationship does not mean that debt would disappear completely in a shrinking economy. There would still be some situations where debt would be used, such as in short term loans to facilitate trade, and in situations where high rates of return can be assured.

2. Additional debt enables GDP to grow more rapidly than it otherwise would, because GDP is a gross measure–a measure of what an economy produces and sells–and having more debt helps in two respects:

a. Additional debt helps the company extracting the resource or doing the manufacturing, by giving the company additional funds to work with–to purchase plant and equipment, or to hire consultants. It doesn’t have to wait and only use accumulated profits to fund new ventures.

b. Additional debt helps the potential buyer of goods, because the buyer can pay for the new item purchased (automobile, refrigerator, or house, for example) over a period of years while using the new product.

But higher oil prices tend to be associated with higher food prices. (See Figure 6, below.) When prices of oil and food rise, consumers (except for those making more money because of higher oil and food prices) tend to cut back on discretionary spending. This cut-back in spending leads to lay-offs and recession in discretionary segments of the economy. Some laid-off workers default on their debts,  and businesses scale back their plans for expansion, because of the “bad economy”.  As a result, they too need less debt.

So debt works well in a growing economy, but once an economy hits high oil prices and recession, debt works much less well. An economy has positive feed back loops from debt in a growing economy, but once oil limits (in terms of high prices) start to hit, feedback loops work in reverse–consumers and producers see less need for debt, and in fact, may default on past loans. Shrinking debt levels make it increasingly difficult for GDP to grow.

The following excerpt has some interesting observations regarding the omission of debt on the model’s predictive power:

Impact of Omission of Debt and Prices in the Limits to Growth Model

Figure 1 clearly shows a tendency toward overshoot and collapse, based on the Limits to Growth model as it was originally created. The original model doesn’t consider the impact of debt or of resource prices. The omission of debt means that the model doesn’t consider the possibility of moving from an “increasing debt” situation to a “decreasing debt” situation. If such a change takes place about the time resource limits hit, a person would expect sharper peaks and faster declines to the modeled variables.

The omission of resource prices means that the model doesn’t pick up the interconnections between high prices for one resource, and a cut back on demand for other resources. We discovered during the 2008-2009 recession that electricity demand dropped at the same time as oil demand. If financial interconnections cause a shortage of one resource to lead to reduced demand for other resources, this may mean that substitution will not will work as well as some hope.

Nothing happens overnight with the world economy, so changes are likely to take place over a period of years, rather than all at once. We can’t know exactly what the future will bring, but the handwriting on the wall is worrisome.


I hope I’ve shown that whilst there are some criticisms of the ‘Limits to Growth’ narrative, it’s basic predictions seem to be holding up, as the relentless maths of growth in a finite system place limits on our future economic expansion at best, and quite possibly lead to sharp declines in economic activity in the not too distant future.

More from the 40 year update on the original Limits to Growth here: Particularly this introduction to the book ‘Limits to Growth Revisited’ is a good overview of the history:

Appendix 3:

Submission to ES LTP consultation: Nathan Surendran: 20/05/15

I would like to speak to my submission.

In summary:

Ensure that a probable rather than ‘hoped for’ future is the basis for planning towards the long term for Southland. Come up with a plan that actually addresses the long term changes indicated by the specific ‘Big 3’ risks posed by the ongoing global financial crisis, ‘peak conventional oil’, and climate change.

General Points:

When thinking long term, it is the responsibility of the council to be proactive in understanding the ‘risk environment’ that will shape the future. The specific decisions I seek from the council with respect to the consultation document are as follows:

  1. Ensure that the Long Term Plan complies with the council’s legal obligation under the RMA Section 5 which contains the requirement to consider future risks (as I’ve outlined later in my submission) regarding the “reasonably foreseeable needs of future generations”.

  2. Ensure that the evidence I present is properly accounted for in a risk analysis that should form the basis of the Long Term Plan 2015-2025. I suggest using a risk management methodology, such as outlined in the recently adopted Southland District Council ‘Risk Management Policy’ (Accepted: Item 7.1, Record No: R/14/11/17732 and Policy from Page 5 onwards:, to demonstrate how the consequent impact (high) from these certain events (high) is addressed in the draft Land Transport Plan.

  3. Ensure that the risks identified and accepted by council in documents they have published are properly accounted for in the risk analysis that must form the basis of the Land Transport Plan [Refer to appendix to this submission for excerpt from “Pressures and Risks facing land transport in Otago – 2011” as referenced on page 127 of the “Draft Otago Southland Regional Land Transport Plans 2015-2021”: Source: ].

  4. Address how, in light of the evident I present, your budgets meet the requirements of the LGA 2002 (amendment 3):

    1. section 14(1)(g) which states: “(g)a local authority should ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region, including by planning effectively for the future management of its assets; and”

    2. section 101B Infrastructure strategy which states: “(1)A local authority must, as part of its long-term plan, prepare and adopt an infrastructure strategy for a period of at least 30 consecutive financial years.

      (2)The purpose of the infrastructure strategy is to—

      (a)identify significant infrastructure issues for the local authority over the period covered by the strategy; and

      (b)identify the principal options for managing those issues and the implications of those options.

      (3)The infrastructure strategy must outline how the local authority intends to manage its infrastructure assets, taking into account the need to—

      (a)renew or replace existing assets; and

      (b)respond to growth or decline in the demand for services reliant on those assets; and

      (c)allow for planned increases or decreases in levels of service provided through those assets; and

      (d)maintain or improve public health and environmental outcomes or mitigate adverse effects on them; and

      (e)provide for the resilience of infrastructure assets by identifying and managing risks relating to natural hazards and by making appropriate financial provision for those risks.

Defining the probable future as a basis for effective policy making. A summary of the challenges we face:

We’re in breach of many of the boundaries surrounding the ‘doughnut’ [Humanity’s 21st century challenge is to ensure that every person has the resources they need to meet their human rights, while collectively we live within the ecological means of this one planet. The ‘doughnut’ of planetary and social boundaries is a playfully serious approach to framing that challenge.]:

I’m a member of the ‘Wise Response’ Incorporated Society, which is advocating for a non-partisan ‘broad spectrum’ risk assessment with central government, to try and gain insight into the global risk environment within which the New Zealand economy (and regional / territorial council budgets) exist. We are looking for evidence based answers to the question: As demand for growth exceeds earth’s physical limits, causing unprecedented risks, what knowledge and changes do we need to secure New Zealand’s future wellbeing?

Rather than offer a long narrative, I am going to summarise the major risks that we face in a few sentences, and point you to a number of more comprehensive resources providing references to the peer reviewed science that is behind the assertions that I’m going to make. I have chosen to focus on my own ‘Big 3’ – three major risks to simplify my argument, however, the full risk spectrum needed is much broader than this (refer to the Wise Response appeal for more detail:

  1. Ongoing economic crisis:

    1. This ongoing crisis is probably the factor with the highest near term risk (0-2 years).

    2. What happened in 2008 is that “Extend and Pretend” became the consensus government strategy, based on reliance in economic theories equating market logic with natural law. Psychology was seen as not only capable of gaining infinite extensions, but susceptible to manipulation by mass media. Keynesians assured governments that you can buy your way out of recession using flawed models such as DGSE with a proven inability to give predictions aligned with reality. Central government data is used worldwide to present a rosy picture of the economic performance of an economy, as national politicians of all ilks try to show they are in control of a ‘recovery’. The reality of a weakening long term outlook for commodities prices has significant implications for our export driven economy (refer to my comments on the ‘peak conventional oil’ section below).

    3. public discussions of economic matters are full of confusion, much of which comes from a failure to distinguish between money and the real things money stands for. Our emphasis is placed on the physical economy, the real things to which the earths limits apply, not the money economy, which is a social invention not constrained by the physical laws of the planet.” [Institute and Faculty of Actuaries, UK: Resource constraints: sharing a finite world. The evidence and scenarios for the future Author: Aled Jones et al Publication date: 15 January 2013: Source:]

    4. Most analysts think that the economy has stubbed its toe and has a headache, rather than recognizing that it has a serious underlying illness.

      …Models that seemed to work before are no longer appropriate.

      We take models like the familiar supply and demand model of economists and assume that they represent everlasting truths. Unfortunately, as we get close to limits, things change. Both wage levels and debt levels have an impact on demand; the quantity goods available is also affected by diminishing returns. The model that worked in the past may be totally inappropriate now.

      Even a complex model like the climate change model being used by the IPCC is likely to be affected by financial limits. If near-term financial limits are to be expected, IPCC’s estimate of future carbon from fuels is likely to be too high. At a minimum, the findings of the IPCC need to be framed differently: climate change may be one of a number of problems facing those people who manage to survive a financial crash.”

      [Actuary Gail Tverberg’s analysis: “Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)”]

    5. An inability at the policy level to recognise this structural shift as we hit global bio-physical limits, and prioritise a shift away from a focus on GDP/GNP growth as the primary measure of economic health, is severely hampering efforts to prioritise a long term sustainabiity / resilience focus over shorter term profitability concerns.

    6. What is not commonly understood is why this shift in focus is hard. There are a number of major commonly misunderstood reasons including:

      1. Humans ‘discount’ the future. “The corporate world plots to dynamite democracy for the sake of a few more years (months, weeks?) of fictional profitability (externalising all future costs, of course)…”

      2. We have many unaccounted for ‘external costs’ in environmental terms in our current accounting practices. In a recent paper investigating the extent of the issue, a report by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program concluded that:

        Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.

        That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.” []

      3. 97% of money in the modern economy is created by private banking institutions as interest bearing debt. This is as stated by the Bank of England (, the Federal Reserve (, the International Monetary Fund (, and the Reserve Bank of NZ ( and

        As the debt must be repaid with interest, this creates an imperative for ever more lending, which drives the need for ‘growth’ in industrial output (real GDP) in order to service the debt. This growth in debt over time is exponential, leading to multiple claims on underlying real weath, as financial instruments are ‘rehypothecated’ against a pool of real assets that are only slowly increasing in quantity, even as they are depreciating in value over time. []

    7. I do not think that the currently popular DSGE models pass the smell test. They take it for granted that the whole economy can be thought about as if it were a single, consistent person or dynasty carrying out a rationally designed, long-term plan, occasionally disturbed by unexpected shocks, but adapting to them in a rational, consistent way… The protagonists of this idea make a claim to respectability by asserting that it is founded on what we know about microeconomic behavior, but I think that this claim is generally phony. The advocates no doubt believe what they say, but they seem to have stopped sniffing or to have lost their sense of smell altogether.’” [Robert Solow, Professor Emeritus MIT submission, to the “House Committee on Science and Technology” – “Subcommittee on Investigations and Oversight” statement to Congress, July 2010]

    8. economics as a discipline is just not placed to adapt to the real world in time to save it: “Outdated and economically irrelevant concepts still fill the pages of introductory textbooks. From there they fill the minds of each new generation of students, who pass on these ideas to the next generation of students, and across society more broadly. Breaking the feed- backs in this system is necessary to transform the discipline.””

  1. Peak conventional oil:

    1. This simmering crisis is probably the factor with the highest medium term risk (0-20 years).

    2. Global oil risks in the early 21st century. Energy Policy, Vol. 39, Issue 12” makes the following relevant statements:

    1. The combination of increasingly difficult-to-extract conventional oil combined with depleting super-giant and giant oil fields, some of which have been producing for 7 decades, has led the International Energy Agency (IEA) to declare in late 2010 that the peak of conventional oil production occurred in 2006 (IEA, 2010). Conventional crude oil makes up the largest share of all liquids commonly counted as “oil” and refers to reservoirs that primarily allow oil to be recovered as a free-flowing dark to light-colored liquid (Speight, 2007). The peak of conventional oil production is an important turning point for the world energy system because many difficult questions remain unanswered. For instance: how long will conventional oil production stay on its current production plateau? Can unconventional oil production make up for the decline of conventional oil? What are the consequences to the world economy when overall oil production declines, as it eventually must? What are the steps businesses and governments can take now to prepare? In this paper we pay particular attention to oil for several reasons. First, most alternative energy sources are not replacements for oil. Many of these alternatives (wind, solar, geothermal, etc.) produce electricity— not liquid fuel. Consequently the world transportation fleet is at high risk of suffering from oil price shocks and oil shortages as conventional oil production declines. Though substitute liquid fuel production, like coal-to-liquids, will increase over the next two or three decades, it is not clear that it can completely make up for the decline of oil production. Second, oil contributes the largest share to the total primary energy supply, approximately 34%. Changes to its price and availability will have worldwide impact especially because alternative sources currently contribute so little to the world energy system (IEA, 2010).”

    2. Oil is particularly important because of its unique role in the global energy system and the global economy. Oil supplies over 90% of the energy for world transportation (Sorrell et al., 2009). Its energy density and portability have allowed many other systems, from mineral extraction to deep-sea fishing (two sectors particularly dependent on diesel fuel but sectors by no means unique in their dependence on oil), to operate on a global scale. Oil is also the lynchpin of the remainder of the energy system. Without it, mining coal and uranium, drilling for natural gas and even manufacturing and distributing alternative energy systems like solar panels would be significantly more difficult and expensive. Thus, oil could be considered an “enabling” resource.

      Oil enables us to obtain all the other resources required to run our modern civilization.”

    3. Peak oil is the result of a complex set of forces that includes geology, reservoir physics, economics, government policies and politics.

      There are a number of physical depletion mechanisms that affect oil production (Satter et al., 2008). Depletion-driven decline occurs during the primary recovery phase when decreasing reservoir pressure leads to reduced flow rates. Investment in water injection, the secondary recovery phase, can maintain or increase pressure but eventually increasingly more water and less oil is recovered over time (i.e. increasing water cut). Additional equipment and technology can be used to enhance oil recovery in the tertiary recovery phase but it comes at a higher price in terms of both invested capital and energy to maintain production.

      The situation is similar to squeezing water out of a soaked sponge. It is easy at first but increasingly more effort is required for diminishing returns. At some point, it is no longer worth squeezing either the sponge or the oil basin and production is abandoned.”

    4. Another way to explain peaking oil production is in terms of predator-prey behavior, as Bardi and Lavacchi (2009) have done. Their idea is that, initially, the extraction of “easy oil” leads to increasing profit and investments in further extraction capacity. Gradually the easiest (and typically the largest) resources are depleted. Extraction costs in both energy and monetary terms rise as production moves to lower quality deposits. Eventually, investments cannot keep pace with these rising costs, declining production from mature fields cannot be overcome and total production begins to fall.

      Hubbert (1982) wrote: There is a different and more fundamental cost that is independent of the monetary price. That is the energy cost of exploration and production. So long as oil is used as a source of energy, when the energy cost of recovering a barrel of oil becomes greater than the energy content of the oil, production will cease no matter what the monetary price may be.

      …Attempts to disprove peak oil that focus solely on the amount of oil available in all its forms demonstrate a fundamental, and unfortunately common, confusion between how much oil remains versus how quickly it can be produced.”

    5. Friedrichs (2010) also cautions that after peak oil countries have several sociological trajectories available to them: they can follow predatory militarism like Japan before WWII, totalitarian retrenchment like North Korea, or, ideally, socioeconomic adaptation like Cuba after the fall of the Soviet Union. Given the recent century of conflict and the extensive weapon stocks and militaries held by modern nations (especially the United States, which spends on its military almost as much as the remaining countries of the world combined (SIPRI, 2011), there is simply no guarantee that the relatively peaceful period currently experienced by developed nations that is conducive to rapid energy source transitions will continue much longer.

      A further challenge is that, strictly speaking, for the last 150 years we have not transitioned from previous fuel sources to new ones — we have been adding them to the total supply. We are currently using all significant sources (coal, oil, gas and uranium) at high rates. Thus, it’s common but incorrect to say that we moved from coal to oil. In fact, we are using more coal now than we ever have (IEA, 2010). We never left the coal age. The challenge of moving to alternative energy sources while a particularly important source is declining, in this case oil, should not be underestimated.”

    6. Other mitigation efforts like increased solar, wind and geothermal production may not be prioritized since they do not help the situation — they produce electricity and the world’s 800 million transportation, food production (i.e. tractors and harvesters) and distribution vehicles require liquid fuel.

      A contracting economy presents governments with a host of problems that are not easy to resolve. Promises made to the citizenry, some in the form of social welfare programs, pensions and public union contracts, will be impossible to keep as the energy base of the economy declines. Downward wage pressure and reduced business activity will lower tax revenue. With lower revenues and greater demands in the form of social welfare support by an increasingly poorer citizenry, it is difficult to see how the accumulated (and growing) government debt can be paid back without rampant inflation. Though it is still unclear whether the government response will be hyperinflation (to minimize the debts) or extensive and massive debt defaults (deflation) — or both — it is not likely that business as usual will continue as oil production declines.

      Some governments may also have to contend with food and fuel riots as they did in 2007 and 2008. Other forms of crowd behavior, namely hoarding of fuel and food, may exacerbate the situation and governments should prepare accordingly.”

    7. A significant benefit of cheap oil was that distance was relatively inexpensive. It is possible now to manufacture goods using far-flung operations. However, as oil declines, distance will, once again, become increasingly expensive, and oil price may begin to act as a trade barrier for many products. Another risk as oil production declines is the possibility of oil supply disruptions. If this should occur, much modern manufacturing may be impacted. Just-in-time manufacturing systems in which warehoused parts are minimized through the frequent replenishment of parts by parts suppliers — sometimes with multiple deliveries a day— have little tolerance for delivery delays.”

      1. Note: this part of the paper’s argument is questionable. My current reading of the situation is that the current low oil price is likely to lead to declining supply and possibly shortages in the near term [], and contribute to depressed commodity prices [Source:]

    8. [Fantazzini, Dean; Höök, Mikael; Angelantoni, André. 2011. Global oil risks in the early 21st century. Energy Policy, Vol. 39, Issue 12: 7865-7873”: Source: ]

  1. In “The Paradox of Oil: The Cheaper it is, the More it Costs”, the authors state that:

    1. In this article I outline and analyse various explanations for why the price of oil has fallen so dramatically in recent months and present some considered but tentative hypotheses about what we can expect from the oil markets in coming years. I also hope to challenge the naive conclusion – drawn all-too-hastily in the mainstream media – that the drop in price somehow debunks the analytical framework of the ‘peak oil’ school (see, e.g., Sakya, 2015). Although it may sound counter-intuitive, cheap oil is actually a complicated function or symptom of peak oil dynamics, and far from solving oil problems, the drop in price is merely creating new problems of equal or greater weight, in ways that will be explained. Those who claim that the effects of cheap oil are ‘clearly positive’ are at best being simplistic and are at worst just plain wrong (see, e.g., The Economist, 2014a).

      The main conclusion defended below is that so-called ‘cheap oil’ (at ~$50 per barrel) is just as problematic as expensive oil (at $100+ per barrel), but for very different social, political, economic, and environmental reasons. Just as expensive oil suffocates industrial economies that are dependent on cheap energy inputs to function, cheap oil merely propagates and further entrenches the existing order of global capitalism that is in the process of growing itself to death (Turner, 2014). The fall in prices also undermines the oil industry by scaring off capital investment in an age when the costs of establishing and drilling new fields is relentlessly on the rise (Kopits, 2014), due to declining energy returns on investment (Murphy, 2014). Cheap oil therefore is likely to retard mid-to-long term production, setting the scene for a foreseeable mid-range supply crunch that will soon enough push prices back up (see Kent and Faucon, 2015; Mushalik, 2015a).

      Accordingly, we should not be fooled by this current period of depressed prices. As the world continues to replace the easy ‘conventional’ oil with ever-more marginal ‘unconventional’ oils (e.g. deepwater, shale oil, tar sands, etc.) and alternative ‘biofuels’, the laws of physics will forever be putting upward pressure on production costs. So despite currently depressed prices, it remains true to say that we live in an age of expensive oil, a position that might seem contradictory if interpreted superficially but which is actually accurate when interpreted in geological context: the low-hanging fruit is gone. The only way oil will remain cheap over the long term is if our economies are doing so poorly from a conventional growth perspective that we cannot afford for oil to be any more expensive, making oil demand weak and keeping prices deflated (see Meijer, 2014a).

      Looking at the current situation from a different angle, cheap oil also makes renewable energy alternatives less ‘cost competitive’, which will have disastrous ramifications on climate change mitigation by dis-incentivising the necessary transition beyond fossil fuels at a critical time. This ecological issue is typically overlooked by those oil analysts who are blinded by the apparent, short-term economic benefits of cheaper oil. Herein lies the paradox of oil: the cheaper it is (economically), the more it costs (environmentally).

    2. Could it be that 2015-17 will be the oil ‘glut’ that marks the peak in ‘liquid fuels’? If cheap oil is in the process of jeopardizing future production, as it seems to be doing, and/or if the ‘shale boom’ peters out in the next year or two (Energy Watch Group, 2013; Heinberg, 2013; Hughes, 2013; Hughes, 2014; Mushalik, 2014) this near-term peak could indeed eventuate. A new study conducted by Goldman Sachs (see Adams, 2014) concludes that the lower oil prices means that $1 trillion of oil investment funds are now at risk of being withdrawn from projects, and this would reduce production by 7.5 million barrels of oil per day over the coming decade. Since that study was undertaken prices have fallen further. Even before the price slump, in fact, the biggest oil companies were shelving expansion plans and shredding operations with profit margins too tight to justify (Gilbert and Scheck, 2014; Tverberg, 2014). Maintaining current production looks like it is going to be a Herculean task.

      Nevertheless, the foreseeable consequence of a production and investment drop will be a tightening of global oil supply, thus increasing the price of oil, especially if demand increases at the same time. This upward pressure, of course, could potentially bring some of the high-cost producers back online, although investors will be more cautious and funds will be harder to come by, for fear of another price collapse. Furthermore, if the economy cannot accommodate a return to expensive oil, we may see a subsequent price slump, yet again, and a further production drop for the reasons just outlined. This is a volatility that we can expect to see in coming years and decades. It is too simplistic to suggest that lower prices mean that oil troubles are over. They are merely challenging oil-dependent economies in new ways, primarily by threatening to render huge amounts of existing production ‘uneconomic’. At the World Economic Forum in 2015, the chief economist of the International Energy Agency, Fatih Birol (as quoted in Mushalik, 2015c), described the oil situation as follows:

      In 2015 we expect oil and gas upstream investments to decline $100 billion or 15%. And the big chunk of it will come from the high cost areas. And this will have implications, not perhaps immediately but for 2016-17. And if this comes together with a stronger demand this will have strong implications for the price and the markets.

    3. What we do know is that the EROI of oil is in terminal decline, and it is this geological reality which means that there will forever be upward pressure on the price of oil, and that is forever going to put pressure on oil-dependent, growth-orientated economies. As Murphy and Hall argue: ‘increasing the oil supply to support economic growth will require high oil prices that will undermine that economic growth’ (Murphy and Hall, 2011a: 52). This is the world we now live in.

      In the introduction to this article I stated that there is no ‘optimal’ price for oil. It should now be clearer what I meant. In an age of increasing capital expenditure on new oil fields, due to declining EROI, oil needs to be sufficiently expensive for oil supply to keep up with demand. But when oil is too expensive, economies that rely on cheap energy inputs cannot function and demand dries up, reducing the price of oil. Some analysts argue that there is a ‘narrow ledge’ (Nelder and Macdonald, 2011) where the price of oil is high enough to procure the necessary investments and production but not so high as to inhibit so-called ‘healthy growth’ of the economy. That may have been the case in recent history, but my suspicion is that this ‘narrow ledge’ has itself now crumbled away. There is no longer an ‘optimal price’ that falls within such a ledge. Oil is now either too cheap to procure ongoing investments and production or too expensive for oil-dependent economies to function well (perhaps even both too cheap to meet demand and too expensive for growth). When these issues are placed in the context of climate change and the need to transition beyond fossil fuels, it becomes clear that there is no such thing as cheap oil.

      In short, industrial civilisation now finds itself between a rock and a hard place; or, to change the metaphor, we now find ourselves in ‘checkmate’, with nowhere to move. Our only option is to start playing a different game – a game ‘beyond oil’ – a choice we should have made many years, if not decades, ago. Unfortunately, building a post-petroleum civilisation (Trainer, 2010; Alexander, 2012) would require a bravery and boldness that we have hitherto lacked. Can we yet muster the courage?


  2. New Zealand is in many ways exceptional when considering Peak Oil. It has its own oil and gas supplies, which at the time of writing are producing enough liquid fuel to support around 70-75% of our current needs (although we export it all and import the same amount of lower quality crude for national petrol and diesel needs). However, our current proven reserves are subject to the same eventual declines that we’re seeing globally. Recent efforts to find further productive wells in risky deep sea locations are so far proving fruitless. Reliance on the same strategy as in the USA – massive expansion in fracking activities – is both a short term strategy only, and also dependent on huge capital expenditure which has to be debt financed.

  1. Climate change:

    1. This crisis is probably the factor with the highest long term risk (0-200 years).

    2. All evidence indicates that the causes of the surface warming slowdown are temporary, that the Earth is still accumulating heat at an exceptionally rapid rate, and that surface warming will soon accelerate. Although they don’t yet capture short-term variability accurately, we have no reason to doubt climate models’ long-term global warming projections, which are dominated by the growing global energy imbalance caused by the increasing greenhouse effect.

      Arguments against the need to take immediate action to curb global warming are unsound, both scientifically and from a risk management perspective. There’s always a chance that future climate change won’t be as bad as experts currently think, but there’s also a chance it will be worse than expected.

      If we fail to minimize the risks associated with future climate change impacts, especially given the scientifically flimsy arguments against taking action, future generations won’t praise us for our rosy optimism.””


    3. Increasing extreme weather events, a warming ocean, and increase in sea level rise has happened with a .85C rise in temperature. The atmosphere now has a concentration of over 400 ppm CO2. If you take into account other greenhouse gasses such as methane you have a total concentration of 480 ppm. The last time that happened we had dinosaurs, and we had the Permian extinction.

      There is a 20 – 40 lag time between releasing greenhouse gasses and when we feel the effects with an increase of temperature. What we are experiencing now, is not what we are doing now, but what we did 20-40 years ago. That means that with 400 ppm of CO2 we already have further warming factored in, irrespective of what we do if ever the world’s leaders DID decide to do something.

    4. Climate change is has been described as “the greatest market failure in human history” [Lord Nicolas Stern]. The failure to curb emissions of emissions trading schemes globally shows the folly of trying to fix it with a market solution.

    5. The Infometrics Limited report “A General Equilibrium Analysis of Options for New Zealand’s post-2020 Climate Change Contribution for Ministry for the Environment – 13 April 2015” states: “Uncertainty should not be a reason for doing nothing. Instead policy should be cognisant of the risks (favourable and unfavourable) and seek to manage those risks.”

    6. A legal basis for challenging governments on inaction on this existential threat to our species and all life on earth has recently been established by a panel of eminent international judges and legal experts from countries including India, Brazil, the US and China released the Oslo Principles, which hold that governments have an obligation to avert dangerous global warming. The preamble states that:

      1. Climate change threatens the well-being of the Earth. The threats are grave and imminent. Indeed, climate change has already begun to harm human communities and the environment. As a group of legal experts concerned about global climate change and its disastrous effects on the planet and on life, we have come together to identify and articulate a set of Principles that comprise the essential obligations States and enterprises have to avert the critical level of global warming.

      2. These Principles, seeking to overcome the generally abstract nature of previous efforts to define the scope of legal obligations relevant to climate change, express both

        1) the current obligations that all States and enterprises have to defend and protect the Earth’s climate and, thus, its biosphere; and

        2) basic means of meeting those obligations.

      3. Fulfilling these obligations is necessary and urgent if we are to avoid an unprecedented catastrophe. The obligations set out here derive from broad fundamental principles and a wide range of well-established law.

      4. The biosphere, all forms of life within it and the ecological processes that maintain all living organisms are part of the common heritage of humanity. Human beings, because of their unique nature and capacities, have an essential duty, as guardians and trustees of the Earth, to preserve, protect and sustain the biosphere and the full diversity of life within it.

      5. Avoiding severe global catastrophe is a moral and legal imperative. To the extent that human activity endangers the biosphere, particularly through the effects of human activity on the global climate, all States and enterprises have an immediate moral and legal duty to prevent the deleterious effects of climate change. While all people, individually and through all the varieties of associations that they form, share the moral duty to avert climate change, the primary legal responsibility rests with States and enterprises.”


    7. I broadly support the conclusions from Generation Zero’s ‘Fix Our Future’ campaign that:

      1. Acting on climate change is an investment in our future.

      2. New Zealand needs a target of zero carbon dioxide emissions.

      3. Targets need to be backed up with a credible plan.

      4. We need a climate change law to keep government on track.

      5. We need political parties to work together.

      6. We can’t wait.


Please refer also to my presentation to the Draft Venture Southland Business Plan 2014 [] and to the draft Otago/Southland Regional Land Transport Plan 2015 [].

Summary of implications for infrastructure, ‘business as usual’, and our communities:

Financial risks: In NZ as in most developed nations, we are heavily indebted to the global banking cartels, worsened by recent central government decisions to borrow from overseas rather than engage in QE as other major economies have. The effect of a worsening export climate with further depression in commodity prices forecast, combined with a strong NZ dollar, spells big trouble for our exporters.

Energy risks: In NZ, we are geographically dispersed, and heavily dependent on oil supply in our economy, particularly for transport and fertilisation. Furthermore, we produce none of the electronics, etc that will be unavailable if disruption in globalised supply chains occurs. Risk of long term disruption from fuel shortages is growing yearly as our energy budget, or the ‘net energy available’ to us declines.

Climate Risks: IN NZ we will fare better than many other nations with climate change, however we will experience milder versions of the castastrophic droughts, storms and flooding, etc, as is already apparent. Remember. This is only a 0.85 deg C rise in global average temperature causing the current levels of disruption.

How do we address these risks?

Firstly, we need to know as a nation what they are, and their relative importance. The Wise Response Appeal, here in New Zealand, is calling for a non-partisan appraisal of the global risk environment we’re operating in, and asks the question: “As demand for growth exceeds earth’s physical limits, causing unprecedented risks, what knowledge and changes do we need to secure New Zealand’s future wellbeing?”

I think that’s a really good starting point, and will hopefully point central government, and in time, local government, in the right direction if it is allowed to inform policy decisions.

However, in the meantime, and because we may not have that much time, I feel it’s imperative for local government, particularly the likes of our regional economic development body to consider putting some money into heading in the right direction, aside from central government directives. That direction acknowledges that; the oil won’t be with us forever, that it will be very difficult to ‘adapt’ at the point of crisis, and that ‘degrowth’ in economic activity is a reality we’re facing far sooner than the mainstream media will admit (with some notable exceptions:

In Southland, we have some of the most productive farmland in New Zealand, and it’s possible that given our low population density and remoteness from nuclear facilities (try managing the waste at those locations successfully, without the high energy budget our species is currently squandering…), that we have the potential to be a place where humans can continue to thrive. More than that, many people going forwards are likely to recognise these fundamental strengths, and strong inward migration can be expected (a direct contrast to the flatlining immigration projected in the “Southland Region Labour Market Assessment” recently commissioned and published by Venture Southland.

I’ve already posted some ideas regarding how we might enable this under the ‘how’ category on my blog, and will continue to do so. In the meantime, I’d like to add that it would make sense for Venture Southland and the Regional / District Councils to consider the following observation when deciding how much resource to throw at preparation for this probable future:

3. A love/hate relationship with risk. It’s a paradoxical idea, but one way to build resilience, or antifragility, is to keep the vast majority of the business as safe as possible, but then take big risks – ones that may pay off 10-fold or more – with a smaller part of the business.

Think of the famous idea from Clayton Christensen of trying to disrupt or cannibalize your own business before someone else does. Imagine setting up a skunk works to identify major risks to the business stemming from resource constraints or climate change – and then lean into those risks and come up with products and services that avoid them and challenge the core business (for example, a car company investing in car sharing programs which consumers use to save money, but also reduce material and energy use dramatically).”


We already have some independent economic analysis supporting this general direction in the form of the BERL report from 2012: and Venture Southland apparently continues to explore these possibilities:, however, the content of the major development initiatives as outlined in the annual report is mostly lacking in this type of thinking, despite my submission to the draft business plan suggesting some potential avenues to explore

A worthwhile response would move us in the direction of a society as summarised in The Simpler Way’: a vision of how the future could be, if we choose to move in that direction:

We cannot achieve a sustainable and just world order unless we change to:

  • Simpler lifestyles, much less production and consumption, much less concern with luxury, affluence, possessions and wealth.
  • Small, highly self-sufficient local economies, largely independent of the global economy.
  • More cooperative and participatory ways, enabling people in small communities to take control of their own development.
  • A new economy, one not driven by profit or market forces, and a zero-growth or steady-state overall economy, which produces much less than the present economy.
  • Some very different values, especially cooperation not competition, and frugality and self-sufficiency not acquisitiveness and consuming.

The Simpler Way is about ensuring a very high quality of life for all without anywhere near as much production, consumption, exporting, investment, resource use, environmental damage, work etc. as ther e is now. There are many rich alternative sources of satisfaction other than material acquisition and consuming. Consider having much time for arts and crafts and personal growth, living in a rich and supportive community, having to go to work for money only two days a week, living in a diverse and productive leisure-rich landscape, having socially worthwhile and enjoyable work with no fear of unemployment…and knowing you are not contributing to global problems. There is no need to sacrifice modern technology to achieve these benefits.


Response on the specifics of ES’s ‘Big 3’:

All of the comments below should be read in the context of the risk environment I outline above.

1 Water quality and quantity issues

I generally support efforts to sustain and improve water quality. I would sound a word of caution were any plans for large expansion of oil ‘fracking’ or other mineral mining activities to be proposed (such as Longwoods). These activities have well known and reported detrimental effects on water quality and I can provide an extensive list of these if needed.

2 Managing air quality

I have already submitted extensively on Air Quality Issues and refer to my previous submissions, repeated as Appendix 2 to this submission.

3 An increased focus on biodiversity

Biodiversity is important to provide resilience to ecosystems in light of probable climate impacts. I would question whether current thinking is sufficient to provide a high biodiversity for the future, in light of the probability of the probable average temperature changes.

Appendix 1: “Pressures and Risks facing land transport in Otago – 2011”

as referenced on page 127 of the “Draft Otago Southland Regional Land Transport Plans 2015-2021”: [Source]

Section 3.7 of the report states:

3.7 Financial pressures on the transport network

Rising rate levels for roading, and declining public funding for transport outside large urban areas, coupled with ageing infrastructure (especially bridges) and an expanding network, all place financial pressure on Otago’s transport network. Furthermore, while exports from Otago are primary produce, only 8.3 % of the population are employed in agriculture, fishing and farming, which limits the amount of rates funding that rural areas are able to provide for rural roads.

Subdivision is the primary reason why the network is expanding. Unrealised or partially realised subdivision potential around the fringes of settlements threatens the ability of the public sector to maintain infrastructure without a decline in overall level of service to some communities.

Inadequate depreciation reserves for funding renewal and inappropriate revenue-gathering mechanisms add further pressures, as does unsuitable funding arrangements. Revenue-gathering mechanisms for funding capital expenditure with long payback periods are inadequate, especially for areas with small rating bases, such as Queenstown. The challenge is to put in place suitable funding arrangements to ensure that those benefiting from tourism-oriented roadside facilities, infrastructure and services contribute to their funding.

Section 4 of the report states:

4.1 Longer-term global factors: Peak oil and climate change

Changes in the supply and affordability of oil products Transport in Otago, as in the rest of New Zealand, is overwhelmingly dependent on imported oil, with 99 % of transport energy coming from oil products. As well as fuelling vehicles, oil is important in roading infrastructure construction and maintenance, whether as bitumen used for surfaces or as fuel for machinery.

Rising and volatile oil prices and shortage in fuel supplies will affect Otago. Globally, low-cost oil reserves are being rapidly exhausted, forcing oil companies to turn to more expensive sources of oil, and driving the price of oil higher. Oil producers, unable to continue producing oil at an increasing rate as in the past, face what has become known as ‘peak oil’ – the time when the rate of global petroleum extraction has peaked and the rate of production declines towards zero. The actual timing of peak oil is uncertain.

Forecasts suggest that, over the next five years, world oil supply production capacity will remain static, while demand will continue to rise – a situation known as a ‘supply crunch’ – causing the price of oil to ‘spike’ to high levels. This supply crunch may occur as early as 2013, inducing a further global recession.

Over the longer term, international oil prices are likely to rise and remain volatile (with further price spikes), causing a shortage of affordable transport fuels and other oil products. Despite uncertainty over when, exactly, these cycles of oil supply crunches leading to oil price spikes and global economic recession will occur, their effects will almost certainly be felt within the next 30 years, the timeframe for a new regional development strategy.

The current government, which envisages a largely market-led approach, anticipates the uptake of technologies that provide for storage of energy, such as the aggregated use of electric vehicle battery storage, the uptake of more efficient vehicles and low-carbon fuels and technologies, as well as efficiency measures in freight.

As oil-based fuels become more scarce and expensive, our market-based economy will cause these fuels to ‘flow’ to their highest value use, which may or may not be transport. Although low emission energy alternatives such as electricity and biofuels may substitute for oil-based transport fuels to some extent, this substitution may not be adequate to prevent a shortfall in supply.

Short-term disruptions in supply pose a particular risk to Otago. Although the government maintains 90-day oil reserves for use in serious disruptions to international oil supply, adequate supplies may not reach less populated or remote areas – for instance, farms, in much of Otago – in times of oil shortage. The government may need to intervene to reduce the likelihood and severity of major temporary disruptions. Otago does not maintain a strategic fuel reserve to fuel backup generators at essential critical localities, such as in hospitals and rest homes.

Adjustment of the region’s economy, and individual lifestyles, to a new world energy economy will probably be protracted and not without pain, despite the market opportunities that such crises open up. In both their personal and business lives, people will respond to increases in the price of oil by modifying their travel behaviour and choices about where they live and what type of vehicle, if any, they own.

Otago’s key export-generating industries – tourism, forestry, dairy and meat exports – are very vulnerable to oil shocks because of their reliance on affordable international transport. The cost of exporting bulk products is likely to rise dramatically, as are international airfares. The relatively poor fuel economy of the New Zealand’s light vehicle fleet may also place Otago’s tourism industry at a competitive disadvantage, if improvements in the efficiency of rental cars and campervans do not keep pace with improvements in other developed nations.

Rising oil prices, and supply shortages, are likely to challenge the viability of some of Otago’s smaller, more isolated communities connected by road to basic services and facilities. Depending when alternative fuels become mainstream and fuel prices stabilise, these communities might not be able to maintain their current level of mobility.

Experts believe that there are large oil reserves off the coast of New Zealand, probably in difficult-to-access deposits under the Great South Basin and the Deepwater Taranaki Basin. Furthermore, Origin Energy and its partner United States oil giant, Anardako, began seismic surveys off the coast of Oamaru in 2007 and there are plans to begin drilling in late 2011 at prospective sites 65 km off the coast of Dunedin. New Zealand also has a vast resource of lignite coal in Otago-Southland, which could be converted to petroleum products. Domestic oil or petroleum production would not, however, insulate New Zealand users from global oil price shocks because New Zealand is required to pay international prices for oil it uses, regardless of where it is sourced.

The effects of climate change on transport

Local communities will bear the brunt and the cost of climate change in their area, and these will occur regardless of any mitigation measures at that level. Any local efforts to mitigate climate change, such as reducing greenhouse gases, will do little to moderate projected global climate changes. In light of this, adaptation has been the chosen response

by local authorities addressing climate change issues, such as the DCC. Some road controlling authorities in Otago are already incorporating measures such as raising roads, pumping and drainage into their routine management and maintenance programmes.

Another consequence of local climate change is likely to be an increase in the number of storm surges. The risk of such storm surges swamping coastal communities and transport infrastructure could more than double after 2040. Local councils face considerable costs in protecting and strengthening the fore-dunes as the main line of defence against future storm surges at higher sea levels. Some coastal land and infrastructure may have to be abandoned if small coastal communities cannot afford the cost of building and maintaining protection structures. If demand for coastal properties, in particular holiday homes, continues to rise, this could place pressure on councils to continually upgrade coastal routes.

With rising sea levels, an increase in the number of storm surges and higher flood levels due to greater intensity of rainfall in Otago, the transport infrastructure on Otago’s coast or near-river mouths and estuaries will be particularly at risk. If we are to retain coastal roads and the main trunk railway, we may need to raise them by at least 0.3m by 2040.

Climate change may eventually bring about changes in land use. Agriculture and forestry should benefit from longer and better growing seasons, fewer frosts and an increased amount of rainfall. Production from land will increase and a wider variety of crops will become commercially viable (although pest damage may result from a warmer climate).

But, towards 2090 an increase in the incidence of drought in coastal areas north of Dunedin may adversely affect agricultural production there. Although ultimately it is impossible to know how climate change will affect rural production, it seems wise, however, to maintain the existing rural roading network around the Otago region. In the face of this unknown.

Looking around one hundred years ahead, climate change may change settlement patterns. People may be forced to move out of areas such as South Dunedin, the harbour-side and coastal settlements, the lower Taieri plain and populated estuaries along the eastern coast. These matters go beyond the term that is covered by the new regional land transport strategy.

Appendix 2: Nathan Surendran submissions on Air Plan:

Further Submission to the air plan consultation by Nathan Surendran:

General points on process and quality of ES work (questions requiring a response in bold):

  1. Notifications! I missed the original communication about the release of comments for review, and found actually accessing the document to be difficult. Having taken the time to use your electronic system, I’d have at least expected a system email notification! Why was this not done?
  2. Decisions requested. It concerns me to note that your staff have failed to interpret the decisions I requested in the general comments section of my submission, and in several other submitters comments. I noted that you ask for specific recommendations in your notes, and I felt that I gave specifics, although obviously not clearly enough. Several other citizens made implied requests for decisions (although some struggle with the language, the spirit of their comments and the nature of the decision seems fairly obvious), some of which were interpreted in the document and some of which were not. It appears to be very variable, and I would expect a higher standard from the council on this important matter. Please provide an explanation?
  3. I have no idea why you chose to repeat standard submissions from multiple citizens as individual line items in your “summary of submissions” – why not put all the submitters names in a list and put the comment once. Where a standard comment was submitted for multiple sections of the report, your summary should have referred back to the original submission. How will you improve this for future comments processes?
  4. Do you guys have a QA process, and was it followed? Please provide evidence.

My clarifications as to the specific decisions sought in my ‘general comments’ section in my original submission (specific decisions sought in bold, new text in italics):

General comments and/or new provision(s):

We understand that this deadline has been around since 2005 – why is this policy revision only now being introduced? It does not give sufficient time for people to adapt in the timelines outlined. The outcome is likely to be poor people living in colder houses, which will have poorer health outcomes on top of the economic affects and stress related impacts. Other councils have taken a much more proactive approach to the NES, and have reaped benefits.The consultation document reads very much like the council shifting the cost of its inaction onto the community. Questions:

  • What will be the penalty of non-compliance with the target 3 exceedances in 2016? Provide this information publicly as it is not evident in the documentation.
  • Who within the executive at the council bears the responsibility for this cost, and what penalty is there to those responsible for the lack of action that has led to the current situation?

The economic rationale that forms the basis of this report is ‘neo-classical’ in origin. Specifically, the general thinking in the report appears to be that if you put in place limitations on the emissions, the point of use, the effects will ‘trickle up’ the supply chain, as constrained consumers demand better products from the market that enables them to comply. With regard to domestic emissions within the Gore and Invercargill air sheds, this is unwise in a number of respects:

  1. The consumers in this case are domestic households. Placing the onus on them to manage the quality of the fuel they burn places too much emphasis on a time and knowledge poor sector, with no reason beyond punitive punishment to change. The supply side should be managed through regulation to simplify the choices available to the consumer.
  1. The consumer market is heavily marketed to by the heat pump industry in particular. Whilst heat pumps have their place, the replacement of simple solid fuel systems with heat pumps is problematic for a number of reasons. Whilst the equipment is marketed as low installation cost, if a home has an existing solid fuel installation that they are having to replace at the same time, with associated removal of flue, and making good of roofing, etc, then this claim is highly debatable. It would be better to recommend people KEEP their existing solid fuel installation, if they are going to install a heat pump. This also provides a level of resilience that is relevant to the council’s Emergency Management responsibilities. Note the recent power outages relating to weather across NZ, most prominently the 85k homes in Auckland. From a resilience and emergency management perspective, as recent events in Canterbury have made clear, relying on a single source for fundamental needs (water, food, heat) is a highly risky strategy. With increasing disruption in an increasingly unstable world, we should be looking to balance resilience, environmental impacts, and economic considerations (in that order, recognising that the economy should be considered a wholly owned subsidiary of the environment: This is within the council’s remit under the RMA to consider, as a non-functional ecosystem will lead ultimately to a precipitous collapse in the economy.

Whatever is unknown about the future with regard to economic growth / degrowth and future energy supply, the following are incontrovertible statements of fact that can not and should not be ignored when considering this draft policy:

  1. Energy and fuel costs are getting more expensive on a long term trend, short term fluctuations should not be considered evidence to the contrary. The Royal Society’s analysis estimates a 50% increase in electricity prices by 2025 (Pg 10, Fig 4 of Provide evidence that this rise in fuel prices is factored into the economic case for the policy.
  1. The increase in energy costs is a reflection of the declining ‘energy profit’ from energy production activities. This is sometimes also known as Energy Return on Investment (EROI) and an explanation of this was included in the ‘Wood Energy Demand Assessment that Nathan Surendran authored on behalf of EIS Energy for Venture Southland in 2011 ( Basically, as we go for more dispersed (less dense) energy reserves to supply our needs, we have to put a greater proportion of our resources into the extraction and processing of these fuels, which leaves less for us to actually use ( Considered at the global level, current estimates are that we are operating in the region of 20:1, that is to say 20 units of energy back for every unit we put into extracting it. However, that does not tell the whole story. Due to the inexorable decline, certain key fuels, specifically liquid fuels for transport, are getting disproportionately more expensive over time. It is probable that the combination of this reduction in ‘net energy’ available to us, combined with GFC2 (when the current money printing activities lead to a loss of faith in the ability of debts to be repaid, leading to another, more severe global crisis, will significantly reshape the economy going forward. Energy supply will become less certain and more prone to disruption. Diversity of energy sources and reduction in demand are the keys to a less carbon intensive future. Policy response should be cognisant of this reality. Provide evidence that this declining ‘energy profit’ is factored into the economic case for the policy.
  1. Appropriate responses to a probable rather than hoped for future include:
    1. Doing as much as through insulation retrofit programmes and guidance on the economics of beyond code insulation for new build, to reduce demand. This almost always has better economics on a case by case basis, and economies of scale would improve on these. Policies 3.5 and 3.6 refer to this potential, but specific policy should increase funding for insulation retrofit alongside new installations. Benefits include:
      1. Lower energy requirements going forward. Less environmental impact, and lower operating costs.
      2. Significantly reduced size of heater installed – lower captial costs, and reduced environmental impact (less materials, lower embodied energy).
    2. Look to appropriate technologies that can reduce the causes of overnight smoke build up (damped fires). In this regard, rocket mass heater technology (similar to, but distinct from masonry heaters) is a recommended approach as:
      1. it has extremely high efficiency (flue exhaust temperatures well below 100 deg C)
      2. it has extremely low particulate emissions due to the high temperature burn
      3. it offsets the time between the burn occurring and the heat entering the space (similar to the concept of a night store),by storing heat in the thermal mass and releasing it gradually
      4. it uses by preference stick wood, which lends itself to short rotation coppice, and can be collected using manual tools, rather than being reliant on machinery for harvest
      5. much of the information relating to stove designs is open source or available at low cost, allowing a level playing field for local construction / engineering firms to manufacture
      6. construction is low tech, and can make use of recycled and local materials, significantly lowering embodied energy in the appliance
      7. a single barrier to roll-out of this stove type exists – building consent / type approval. This could be addressed through policy to:
        1. give basic manufacturing parameters for these heaters based on a local R&D effort to define these
        2. address the knowledge gap regarding fire engineering that would allow these units to gain consent
    3. Alternatives to the rocket mass heater that are higher tech should also be considered. e.g. large wetback / hot water cylinders with a few radiators.
    4. There are higher tech retrofit options for existing burners that would lower the capital cost of compliance with the particulate emissions – specifically electrostatic precipitators. These should also be investigated as an alternative option. It is understood that Reefton, NZ is currently performing a trial of these units. This would allow the full life of these units to be realised, and would provide a tail off in coal use that would help that industry to adjust.
  1. Given that the economic modelling that the proposed policy is based on was not published with the consultation documentation, there is nothing that can currently be done to assess the economic case that is the basis of the policy draft. It is requested that the economic analysis is published with a commentary, to answer the following questions:
    1. Who wrote the report and conducted the analysis, and why?
    2. Is there any evidence or data from the real world in the analysis? If not, what are the assumptions made?
    3. How have risk and uncertainty been assessed?
    4. How has what would happen without the changes implied by the policy been assessed?
    5. What economic ‘levers’ are being considered by councils? It is understood that ICC have a ‘pilot loan scheme’ under consideration, but no information was provided with this consultation.
  1. Flue dampers that can shut off air flow in the flue when the fire is not in operation to reduce heat losses associated with an open flue. The draft plan identifies this issue in relation to open fires, but ignores it in relation to burners. How should this be addressed?
  1. It is recommended that the regional and local councils put in place a simple email list that you can register with to be notified of consultations. It is crazy that the newspaper, which not everyone reads, many cannot afford, and some choose to ignore, is the sole means of communicating upcoming consultations. There should be multiple contact options on the mailing list, such as an automated voice message option for those without email or newspaper access, including the blind, etc. Given that citizens are engaging in providing feedback as an unpaid activity, the burden is on the councils to simplify the process:
    1. It is good that the current upgrades to the consultation platform mean submissions can be made electronically, direct into the system. Will this be used to notify all registered users of upcoming consultations. Could this be extended to encompass the territorial council consultations using the same platform as the regional council?
    2. You are currently failing to meet the basic standards for disabled access by not providing .doc versions alongside .pdf, for example. How will you address this going forward?
  1. We expect that there will be some submissions that focus on the job impact on the coal industry in the area. We would recommend the ‘Jobs After Coal’ report from Coal Action Aotearoa as a counterpoint to that argument: Ensure that the economic analysis from the ‘Jobs after Coal’ report is used alongside other economic evaluations in re-formulating the policy in response to submissions.

I strongly support the other submissions that were received that make the same points as I raise, and other valid points I’ve not considered. Particularly, I have identified the following submissions as noteworthy (decisions requested in bold, my attempt to summarise the submitters requests):

  • Para 1.15 Dr Mark Smith’s point: Note and include in your economic analysis Air Quality correlation to deaths and other public health costs. Supporting evidence:
  • Para 1.75 Peter Shand’s point: Fund further insulation measures. This is an example where specific decisions were evident, but not noted in the right hand column. Insulation is both a resilience upgrade and a
  • Para 1.82 Chris Henderson’s point: Incentivise coppice planting around the cities for wood fuel should be investigated both to reduce transportation costs of the fuel, but also to have fuel available close to town once the current wood harvesting activities from currently maturing forestry begin to wind down.
  • Para 1.104 Rayner’s point: Perform an economic analysis ESP’s as a mitigation strategy to enable deferment of replacement of existing multi-fuel burners to the end of their economic life, and include this in policy economic considerations.
  • Para 4.4 Jane Forbes’s point: Include further economic analysis of the incentive programmes, and show how this has been considered in the policy that is drafted by way of supporting documentation.
  • Para 5.2 Lloyd Smith’s point: I disagree with Lloyd’s point that the Ecomax coal boiler is a complying appliance – if coal manufacturers could get compliance with the standard without bag filters or ESP’s, there would be complying coal fired appliances on the MfE approved list… The reality of the extra ash from coal (a proportion of which is entrained in the hot flue gases without being visible as smoke) is an incontrovertible fact.
  • Para 6.3 Geoff Corrie’s requested decision: ‘find a unique solution’ – refer to my general comments recommending the council investigates rocket mass heaters as both a solution and an economic development opportunity for the region.
  • 38.17 Bill and Beverley Blakie’s point: The economic and design life of a heat pump is 7-10 years (the Ministry of Education’s experience regarding heat pump installations), and the economic analysis in support of the recommendation to install heat pumps should factor in the need to replace a heat pump installation several times during the life of a well designed and operated solid fuel appliance. Ensure that the economic case that supports the recommendation to install heat pumps correctly factors in both CAPEX and OPEX costs on a LIFE CYCLE BASIS.

My further decisions requested upon reviewing the submissions:

Detail the education strategy that is to be adopted alongside installation of complying appliances, as correct use of existing appliances (combined with insulation upgrades), could solve the issues now.

I will be making these further submissions publicly available on my blog:


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