This paper uses an economic catchment model, NZ-FARM, to assess changes in land use, enterprise distribution, nutrient loading levels and Green House Gas emissions from a series of policies that introduce nutrient reduction caps on land-based production in Hurunui plains region of North Canterbury.  

Estimates are made of changes in net revenue, land use, enterprise mix, and environmental outputs when landowners in the Hurunui plains sub-catchment must reduce their aggregate nitrogen and phosphorous loading targets of 15% and 30% below baseline levels.  Furthermore, investigations are made of the potential differences when farm nutrient budgets are derived primarily from two different biophysical models, OVERSEER and SPASMO, as well as a hybrid approach that combines estimates from these two models and other literature.

 

Methodology

The following input data has been used:

Soil type, land type, enterprise (type of farming), irrigation scheme, fertiliser regime, mitigation option, variable costs, fixed cost, product output, environmental indicators, product inputs

 

There are a total of six policy scenarios: 

  • OVER_15 = scenario with a cap of 15% below baseline levels of N and P outputs calculated with OVERSEER leaching rates dataset 
  • SPAS_15= scenario with a cap of 15% below baseline levels of N and P outputs calculated with SPASMO leaching rates dataset 
  • HYBRID_15= scenario with a cap of 15% below baseline levels of N and P outputs calculated with HYBRID leaching rates dataset 
  • OVER_30= scenario with a cap of 30% below baseline levels of N and P outputs calculated with OVERSEER leaching rates dataset 
  • SPAS_30= scenario with a cap of 30% below baseline levels of N and P outputs calculated with SPASMO leaching rates dataset 
  • HYBRID_30= scenario with a cap of 30% below baseline levels of N and P outputs calculated with HYBRID leaching rates dataset

 

Outputs

Results show that the proposed environmental targets can be met with relatively modest declines in total net revenue for the region, ranging from 0.5% for the SPASMO data with a required 15% reduction in N and P, to more than 6% for a 30% decline in N and P when using the data derived primarily from OVERSEER.  The difference in absolute changes in revenue can vary significantly though, depending on which set of leaching rates are used to derive the nutrient budgets.  The hybrid dataset constructed from ‘most reasonable’ estimates of per hectare leaching rates for the 18 feasible enterprises in the region yields changes in net revenue in between the SPASMO and OVERSEER data sets, resulting in an estimated reduction of 1% and 4% for the two nutrient policy scenarios.  Estimated changes in enterprise area were not always consistent across the three data-

 

Recommendations

The findings from this study suggest that environmental targets can be met with relatively modest changes in total net revenue for the region, but the difference in absolute changes in revenue can vary significantly depending on which estimated leaching rates are used to develop the nutrient budgets.   Further research must be conducted to assess whether our assumptions to construct the ‘most reasonable’ hybrid dataset are indeed accurate for the Canterbury region and whether the same approach can be transferred to other catchments in New Zealand.

 

Associated Models

References

Oshadhi Samarasinghe, Dr Adam Daigneault, Dr Suzie Greenhalgh, Robyn Sinclair: Modelling Economic Impacts of Nutrient Reduction Policies in the Hurunui Catchment, Canterbury. Landcare Research, Auckland, New Zealand
 
Selected paper prepared for presentation at the New Zealand Association of Economists Annual Meeting, Wellington, New Zealand 29 June-1 July, 2011
http://nzae.org.nz/wp-content/uploads/2011/Session4/42_Samarasinghe.pdf

Estimating the Impacts of a Multi-Policy Initative at the Catchment Level  - A Daigneault PPT Presentation 2001 - www.landcareresearch.co.nz/__data/assets/pdf_file/0008/47753/impacts_multi_policy_initiative.pdf

Daigneault, A. (2011) Introducing a Nutrient Reduction Policy in Hurunui Catchment, North Canterbury, Landcare Research, Aucland, Sept 2011, 6p.