Eric Crampton: Why revenue bonds could be a better option than Three Waters reform

New Zealand’s proposed Three Waters reform, which would force the amalgamation of council water services into four large providers under convoluted governance arrangements, is an attempted solution to a real problem. Just not a very good one.

I wonder about a better alternative.

A very short piece of legislation could allow councils here to follow local governments in America in issuing revenue bonds – debt backed by revenues from a project, rather than by ratepayers more generally.

It could deal to the real underlying problem Three Waters aims to solve, without forced amalgamations and without messy ownership structures. It could provide more diligent monitoring of infrastructure maintenance. And it would unlock opportunities for building other valuable infrastructure.