Farm Profits To Fall But Benefits Worth It Says Water Quality Analysis

Sunday, 14 June 2020, 3:34 pm
Article: NZ Energy and Environment Business Week

First published in Energy and Environment on June 4, 2020.

Farm profits will reduce by $133m a year and council costs would increase by $135m annually due to the changes to freshwater quality and management standards announced last week. However, the benefits to the environment would far outweigh this, according to the Ministry for the Environment.

A regulatory impact statement on the ‘Action for healthy waterways Package’ says on its own the value NZers place on improved swimmability resulting from E. coli reductions from fencing out stock has been estimated at $883m.

It said the main cost to farmers will be stock exclusion. It notes the impacts will not be felt evenly across the country. In terms of impacts on farm profits, which includes mitigation costs and reduced profits from changing land use, the most affected regions will be Canterbury, Waikato and Otago. Due to the likelihood of variability in impacts for individual catchments, some catchments within relatively unaffected regions could also be materially affected.

The main cost to councils will be largely from higher staffing costs for planning and monitoring relating to improving ecological outcomes from river flows and water levels. “We expect that some councils will face higher costs than others – particularly Canterbury, Southland and Waikato.”

Social impacts

The main negative social impacts are:

• job losses – these are not expected to be significant at a regional or national scale, but may be significant in some catchments as land use changes. Communities affected by job losses may experience a reduction in total population numbers and, over time, in local services available (eg, schools, health services, self-organised community activities)

• mental health pressures, particularly for the dairy sector – from uncertainty about change, including financing arrangements

• stress levels for regional council staff – due to the likely increase in workload.

However the “estimated benefits of the changes greatly exceed the costs. The modelled cost for most regions is very low, but considerably higher for the dairy farming sector in certain regions”.

Officials said there were a number of uncertainties around the analysis, but if anything it possibly underestimated environmental benefit.

Ministers were also told the reformed freshwater standards were only bottom lines and some councils may impose tougher standards where there was community acceptance and this was happening in Hawke’s Bay.

An article with more detail on the Regulatory Impact Statement is elsewhere in this week’s Energy and Environment.

First published in Energy and Environment on June 4, 2020.

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