NZIER report to the New Zealand Fish and Game Council, Forest and Bird and Greenpeace.
Many of New Zealand’s waterways are now degraded.
A major and growing source of this degradation is the leaching of nutrients – nitrogen and phosphorous – from intensive dairy farming.
The government is proposing regulations…
The government has released a discussion document that details proposals to address this situation. Some of these proposals will place restrictions on farming activity in the form of limits on the amount of nutrients that can leach into the soil.
…which will likely spur innovation
Experience here and overseas with environmental regulation is that often unimagined innovations result, reducing the costs and increasing the effectiveness of those regulations. But innovation is bigger than big inventions or new technology. At the farm level, it includes adopting advanced management practices already used on the best farms.
The dairy sector is one part of a growing economy
While output from the dairy sector has been increasing, looking below the top-line figures of gross export receipts reveals a nuanced picture of its direct contribution to the New Zealand economy.
Between 1991 and 2017, the average combined direct contribution of dairy farming and dairy manufacturing was 3.09% of GDP. It is now about the same size as the tourism sector.
Since 1945, the total number of people employed in the agriculture sector has stayed largely stable.
In 2013, farmers and farm managers represented 2.92% of the national workforce, while farm, forestry and garden workers represented a further 2.26%.
Likely impact on national GDP
Due to the relatively small size of the dairy industry, the impacts of the government reforms are unlikely to be major at the national level, and not felt for many years due to the long lead in times proposed.
A reduction in GDP from intensive dairy would, however, have uneven local effects, given the regional distribution of the sector.
The dairy sector has, however, been changing
There was been a marked shift in farming away from beef and sheep towards dairy, especially in the South Island. Irrigation and fertiliser use have also increased dramatically.
The combined result has been a steady increase in the amount of nitrogen from dairy farms leaching into waterways.
Getting the balance right
Tighter regulation of water quality will have costs as well as benefits.
New Zealand does not face stark choices between having a dairy sector versus having clean waterways. Experience shows that, by focusing on profits, not production, farms can increase their economic returns and reduce their impact on the environment.
New Zealand’s best farms are already doing this.
There are, however, some places where even the most efficient dairy farming will have an adverse environmental impact.
The government should be providing more information
As it works through the reform process, the government should be focusing on further study of the following areas:
- The behavioural responses of farmers to regulation.
- How well good management practice is being taken up.
- The barriers to changing behaviour.
- The level of compliance to the new policies and regulations.
- The performance of Councils in implementing, monitoring and enforcing the new policies and regulations.
- The current distribution of farm profitability.
- The relationship between soil types and nutrient leaching.
The results of this work should be made readily available to farmers, councils and the general public.
New Zealand’s new fresh water regulation rules will have no major impacts on the national economy, according to an independent report just out.
The report by independent economic consultancy New Zealand Institute of Economic Research shows that dairying represents about 3% of national GDP and is behind tourism in export earnings.
The study, commissioned by Forest & Bird, Greenpeace, and Fish and Game, found the impact on national GDP of the proposed reforms were unlikely to be major, stating that: “Due to the relatively small size of the dairy industry, the impacts of the government reforms are unlikely to be major at the national level, and not felt for many years due to the long lead in times proposed.”
It found that in 2013, farmers and farm managers represented 2.92% of the national workforce, while farm, forestry and garden workers represented a further 2.26%.
The NZIER report states that “Experience shows that by focusing on profits, not production, farms can increase their economic returns and reduce their impact on the environment.”
Forest & Bird’s Fresh Water Advocate, Annabeth Cohen says “The contribution of dairying to GDP does not account for the destruction to rivers, lakes and wetlands and the billions of dollars spent cleaning up the mess from intensive dairying and poor farm practices.
“The real backbone of the economy is the environment. Most importantly a clean environment provides the essentials – the air we breathe, the water we drink and mahinga kai.
“Our precious freshwater fish, birds, and invertebrates are priceless,” Ms Cohen says.
Greenpeace campaigner Gen Toop said the report comes at a crucial moment for New Zealand’s rivers, as the Government is currently consulting on new freshwater rules.
“This report should put an end to the exaggerated claims that new water rules will end pastoral farming or have a major impact on New Zealand’s economy.”
“Far from ‘throwing farmers under the tractor’ the report reveals that new rules to protect our rivers will likely spur greater innovation in farming to reduce its environmental impact,” Ms Toop says.
It adds that the ‘New Zealand farming community is proud of its tradition of innovation, and there is no reason to suppose it will not rise to the challenges of the new environmental rules.’
The study was commissioned to show the relative size of the farming sector within the New Zealand economy and to gauge the potential impacts of the freshwater reforms announced earlier this month.
A copy of the report can be found here
Front page image of Geraldine organic dairy Clearwater Farm