Environmental and Resource Economics

, Volume 69, Issue 4, pp 763–785 | Cite as

Economic Impacts of Multiple Agro-Environmental Policies on New Zealand Land Use

  • Adam Daigneault
  • Suzie Greenhalgh
  • Oshadhi Samarasinghe


This paper investigates the implications of policy on farm income, land use, and the environment when New Zealand landowners face multiple environmental constraints. It also looks at the interaction between climate and nutrient reduction policy and the extent to which one policy can be used to meet the other’s objectives. We use a non-linear, partial equilibrium mathematical programming model of New Zealand land use to assess the economic impacts of climate and water policies at the New Zealand territorial authority level. The spatially explicit agro-environmental economic model estimates changes in land use, agricultural output, land management, and environmental impacts. The policies investigated include a range of carbon prices on land-based emissions ($0–30/tCO\(_{2\mathrm{e}}\)) as well a range of prices on nitrogen leaching from diffuse sources ($0–30/kgN). We estimate that implementing stand-alone greenhouse gas and nutrient emissions reduction policies for the agricultural and forestry sectors will create environmental benefits outside the scope of the policy. However, not all environmental outputs improve, and net farm revenue declines by between 0 and 11%. Simultaneously implementing the two policies results in the desired goals of reductions in nitrogen and greenhouse gas emissions with a marginal economic burden on landowners (i.e. 1–2% additional loss in farm profit relative to a stand-alone policy).


Agriculture and forestry modelling Environmental policy Climate change Water quality Greenhouse gas emissions Nutrient leaching 

JEL Classification

Q15 Q52 Q53 



Funding for this research was provided by Landcare Research and the NZ Ministry of Primary Industries. Kanika Jhunjhnuwala provided valuable assistance collecting and formatting data. Anne-Gaelle Ausseil supplied the detailed national-level land use map that underpins this analysis. Michael Hauss developed the model’s spatial interface. We appreciate useful comments from Pike Brown, as well as feedback on a earlier draft from participants at the New Zealand Association of Economists Annual Meeting and the Ohio State University Environmental Policy Initiative Seminar Series. Any remaining errors are ours alone.


  1. Adams T, Turner JA (2012) An investigation into the effects of an emissions trading scheme on forest management and land use in New Zealand. For Policy Econ 15:78–90CrossRefGoogle Scholar
  2. Adams DM, Alig RJ, Callaway JM, McCarl BA, Winnett SM (1996) The forest and agricultural sector optimization model (FASOM): model structure and policy applications. Res Pap PNW-RP-495. U.S. Department of Agriculture, Pacific Northwest Research Station, Portland, p 60Google Scholar
  3. Ausseil AG, Dymond JR, Kirschbaum MUF, Andrew RM, Parfitt RL (2013) Assessment of multiple ecosystem services in New Zealand at the catchment scale. Environ Modell Softw 43:37–48CrossRefGoogle Scholar
  4. Anastasiadis S, Nauleau M-L, Kerr S, Cox T, Rutherford K (2014) Does complex hydrology require complex water quality policy? Aust J Agr Resour Econ 58(1):130–145CrossRefGoogle Scholar
  5. Bateman IJ et al (2013) Bringing ecosystem services into economic decision-making: land use in the United Kingdom. Science 341(6141):45–50CrossRefGoogle Scholar
  6. Beef and Lamb New Zealand (2014) Compendium of New Zealand farm facts 2014. Accessed 14 May 2015
  7. Cortignani R, Severini S (2009) Modeling farm-level adoption of deficit irrigation using positive mathematical programming. Agric Water Manag 96:1785–1791CrossRefGoogle Scholar
  8. Daigneault A, Greenhalgh S, Samarasinghe O, Jhunjhnuwala K, Walcroft J, de Oca Munguia OM (2012a) Sustainable land management and climate change—catchment analysis of climate change: final report. MPI Technical Paper No: 2012/XGoogle Scholar
  9. Daigneault A, McDonald H, Elliott S, Howard-Williams C, Greenhalgh S, Guysev M, Kerr S, Lennox J, Lilburne L, Morgenstern U, Norton N, Quinn J, Rutherford K, Snelder T, Wilcock B (2012b) Evaluation of the impact of different policy options for managing to water quality limits. MPI Technical Paper No: 2012/46Google Scholar
  10. Daigneault A, Samarasinghe O, Lilburne L (2013) Modelling economic impacts of nutrient allocation policies in Canterbury—Hinds catchment. Final report. Landcare Research Contract Report LC1490 for Ministry for the EnvironmentGoogle Scholar
  11. Daigneault A, Samarasinghe O, Lilburne L (2014) Modelling economic impacts of nutrient allocation policies in Canterbury: Selwyn-Waihora Catchment. Landcare Research Contract Report LC1491 for Ministry for the Environment Landcare Research, p 142Google Scholar
  12. Dake CKG (2011) The econometrics of New Zealand pastoral agriculture: with special reference to greenhouse gas emissions. MAF Technical Paper No: 2011/38. Ministry of Agriculture and Forestry, Wellington, New ZealandGoogle Scholar
  13. de Frahan BH, Buysse J, Polomé P, Fernagut B, Harmignie O, Lauwers L, Van Huylenbroeck G, Van Meensel J (2007) Positive mathematical programming for agricultural and environmental policy analysis: review and practice. In Weintraub A, Bjorndal T, Epstein R, Romero C (eds) Handbook of operations research in natural resources, vol 99. Springer, Berlin, pp 129–154Google Scholar
  14. Doole G, Pannel D (2011) Empirical evaluation of nonpoint pollution policies under agent heterogeneity: regulating dairy production in the Waikato region of New Zealand. Aust J Agr Resour Econ 56:82–101CrossRefGoogle Scholar
  15. Doole GJ, Marsh D, Ramilan T (2013) Evaluation of agri-environmental policies for reducing nitrate pollution from New Zealand dairy farms accounting for firm heterogeneity. Land Use Policy 30(1):57–66CrossRefGoogle Scholar
  16. Dymond JR, Ausseil A-GE, Parfitt RL, Herzig A, McDowell RW (2013) Nitrate and phosphorus leaching in New Zealand: a national perspective. N Z J Agric Res 56(1):49–59CrossRefGoogle Scholar
  17. Dymond JR, Betts HD, Schierlitz CS (2010) An Erosion model for evaluating regional land-use scenarios. Environ Modell Softw 25(3):289–298CrossRefGoogle Scholar
  18. Fallow B (2013) Dilemma of dairy income or environment. The New Zealand HeraldGoogle Scholar
  19. GAMS (2015) GAMS—the solver manuals. GAMS corporation, Washington, DC. Accessed 14 May 2015
  20. Grocott M (2013) Farmers’ concerns growing over cost effects of one plan. Manawatu Standard. 1 May 2013Google Scholar
  21. Heckelei T, Britz W, Zhang Y (2012) Positive mathematical programming approaches-recent developments in literature and applied modelling. Bio-based Appl Econ 1(1):109–124Google Scholar
  22. Howitt RE (1995) Positive mathematical programming. Am J Agric Econ 77:329–342CrossRefGoogle Scholar
  23. Hendy J, Kerr S, Baisden T (2006) Greenhouse gas emissions charges and credits on agricultural land: what can a model tell us? Motu economic and public policy research working paper 06-04. Wellington, New Zealand, p 11Google Scholar
  24. Hutching G (2014) Quality of river raises passions. New Zealand Farmer. 21 August 2014Google Scholar
  25. Johansson R, Peters M, House R (2007) Regional Environment and Agriculture Programming Model, TB-1916. US Department of Agriculture, Economic Research Service, Washington, DC, p 117Google Scholar
  26. Kerr S, Olssen A (2012) Gradual land-use change in New Zealand: results from a dynamic econometric model. Motu Working Paper 12-06. Accessed 14 May 2015
  27. Lilburne L, Webb T, Ford R, Bidwell V (2010) Estimating nitrate-nitrogen leaching under rural land uses in Canterbury. Environment Canterbury Report No. R10/127Google Scholar
  28. Lynn I, Manderson A, Page M, Harmsworth G, Eyles G, Douglas G, Mackay A, Newsome P (2009) Land use capability survey hand-book—a New Zealand handbook for the classification of land. Agresearch: Hamilton, Landcare Research: Lincoln, GNS Science: Lower HuttGoogle Scholar
  29. Merel P, Bucaram S (2010) Exact calibration of programming models of agricultural supply against exogenous supply elasticities. Eur Rev Agric Econ 37(3):395–418CrossRefGoogle Scholar
  30. Ministry for the Environment (MfE) (2014a) New Zealand’s Greenhouse Gas Inventory 1990–2011. Accessed 14 May 2015
  31. MfE (2014b) National policy statement for freshwater management 2014. Accessed 14 May 2015
  32. Ministry of Internal Affairs (2014) About local government. Accessed 14 May 2015
  33. Ministry for Primary Industries (MPI) (2013a) Situation and outlook for primary industries. New Zealand, MPI Policy Publication, WellingtonGoogle Scholar
  34. MPI (2013b) Farm monitoring report. MPI Publication, Wellington, New Zealand.
  35. Newsome PFJ, Wilde RH, Willoughby EJ (2008) Land resource information system spatial data layers—data dictionary. Landcare Research New Zealand Ltd., Palmerston North. Accessed 14 May 2015
  36. New Zealand Forest Owners Association (2013) New Zealand plantation forest industry facts and figures 2012/2013.
  37. Parfitt RL, Percival HJ, Dahlgren RA, Hill LF (1997) Soil and solution chemistry under pasture and radiata pine in New Zealand. Plant Soil 191(2):279–290CrossRefGoogle Scholar
  38. Parfitt RL, Stevenson BA, Dymond JR, Schipper LA, Baisden WT, Ballantine DJ (2012) Nitrogen inputs and outputs for New Zealand from 1990 to 2010 at national and regional scales. N Z J Agric Res 55(3):241–262CrossRefGoogle Scholar
  39. Parliamentary Commission on the Environment (PCE) (2013) Water quality in New Zealand: land-use and nutrient pollution.
  40. Pattanayak SK, McCarl BA, Sommer AJ, Murray BC, Bondelid T, Gillig D, DeAngelo B (2005) Water quality co-effects of greenhouse gas mitigation in US agriculture. Clim Change 71(3):341–372CrossRefGoogle Scholar
  41. Statistics New Zealand (2013) Agricultural production statistics: June 2012 (final). Accessed 14 May 2015
  42. Tarrant A (2012) Government to leave agriculture out of Emissions Trading Scheme until at least 2015, Climate Change Minister Groser says. Rural News. 2 July 2012Google Scholar
  43. University Lincoln (2013) Financial Budget Manual 2012/13. Lincoln University Press, ChristchurchGoogle Scholar
  44. WRI (2014) CAIT 2.0: WRI’s climate data explorer. Accessed 14 May 2015

Copyright information

© Springer Science+Business Media Dordrecht 2017

Authors and Affiliations

  • Adam Daigneault
    • 2
  • Suzie Greenhalgh
    • 1
  • Oshadhi Samarasinghe
    • 1
  1. 1.Landcare Research New ZealandAucklandNew Zealand
  2. 2.University of Maine School of Forest ResourcesOronoUSA

Personalised recommendations