Methane and Metrics: From global climate policy to the NZ farm

Stroombergen and Reisinger’s (2012) modelling suggests global pricing of all greenhouse gas (GHG) emissions, including agricultural emissions, would be beneficial for the New Zealand economy, with higher GHG prices leading to greater economic benefit. Though this inference may seem counter-intuitive for a country in which agriculture is economically important, when the effects of GHG charges flow on to global commodity prices, the rise in global prices more than compensates NZ for the costs of our GHG emissions. These conclusions rest on a single set of models and several assumptions; however, the broad direction of the conclusions makes sense given the relatively low GHG emissions intensity of agriculture in NZ and the high importance of global commodity prices for NZ’s economic fortunes. In this paper we investigate the implications of Stroombergen and Reisinger’s (2012) results for a model NZ dairy and model NZ sheep and beef farm. We consider three climate policy scenarios that differ by whether agricultural emissions are included and priced globally, and in NZ. We find that NZ farmer interests generally align with NZ’s economic interests, though farmers are more greatly affected by differing international policy scenarios compared with the NZ economy as a whole. We find that the impact of the choice of metric (that is, how agricultural emissions are traded off against carbon dioxide emissions) is minor, especially when compared with the differences between international and domestic policy scenarios. On balance, our results suggest that long term, the best scenario for NZ and our farmers is to fully price global agricultural emissions within an international climate change agreement that allows NZ farmers to exploit their competitive advantage

Methane and Metrics: From global climate policy to the NZ farm

Stroombergen and Reisinger’s (2012) modelling suggests global pricing of all greenhouse gas (GHG) emissions, including agricultural emissions, would be beneficial for the New Zealand economy, with higher GHG prices leading to greater economic benefit. Though this inference may seem counter-intuitive for a country in which agriculture is economically important, when the effects of GHG charges flow on to global commodity prices, the rise in global prices more than compensates NZ for the costs of our GHG emissions. These conclusions rest on a single set of models and several assumptions; however, the broad direction of the conclusions makes sense given the relatively low GHG emissions intensity of agriculture in NZ and the high importance of global commodity prices for NZ’s economic fortunes. In this paper we investigate the implications of Stroombergen and Reisinger’s (2012) results for a model NZ dairy and model NZ sheep and beef farm. We consider three climate policy scenarios that differ by whether agricultural emissions are included and priced globally, and in NZ. We find that NZ farmer interests generally align with NZ’s economic interests, though farmers are more greatly affected by differing international policy scenarios compared with the NZ economy as a whole. We find that the impact of the choice of metric (that is, how agricultural emissions are traded off against carbon dioxide emissions) is minor, especially when compared with the differences between international and domestic policy scenarios. On balance, our results suggest that long term, the best scenario for NZ and our farmers is to fully price global agricultural emissions within an international climate change agreement that allows NZ farmers to exploit their competitive advantage

Modelling Changing Rural Land Use in New Zealand 1997 to 2008 Using a Multinomial Logit Approach

Rural land use in New Zealand is an important driver of economic activity and has clear implications for the environment, including for biodiversity, climate change emissions and water quality. The spatial distribution and aggregate shares of rural land use is always changing, but change occurs slowly. To better understand the drivers of rural land use change, this paper addresses three questions using the popular multinomial logit modelling approach. First, do recent commodity prices have any predictive power on land use conversions? Second, is recently sold land more likely to change use? Third, does land which is marginal between uses have identifiable characteristics? The data used consists of the New Zealand Landcover Database version 3 (LCDB3), with observations in 1997, 2002 and 2008; 6 year average profitability data for dairy, sheep and beef and forestry; QVNZ land sales data; and I control for land quality and Maori tenure. In answering the first and third questions, I evaluate the predictive power of a spatially explicit land use share multinomial logit model, estimated from 2002 cross-sectional variation. To supplement the land use share multinomial logit for questions one and three, and to address question two, I use a land use transition multinomial logit, estimating the likelihood of transition from a single starting land use between 1997 and 2002, similar to Lubowski et al. (2008). Finally, I compare the two modelling approaches

Implications of global emission policy scenarios for domestic agriculture: a New Zealand case study

<p>Agricultural GHG mitigation policies are important if ambitious climate change goals are to be achieved, and have the potential to significantly lower global mitigation costs [Reisinger, A., Havlik, P., Riahi, K., van Vliet, O., Obersteiner, M., & Herrero, M. (2013). Implications of alternative metrics for global mitigation costs and greenhouse gas emissions from agriculture. <i>Climatic Change</i>, <i>117</i>, 677–690]. In the post-Paris world of ‘nationally determined contributions’ to mitigation, the prospects for agricultural mitigation policies may rest on whether they are in the national economic interest of large agricultural producers. New Zealand is a major exporter of livestock products; this article uses New Zealand as a case study to consider the policy implications of three global policy scenarios at the global, national and farm levels. Building on global modelling, a model dairy farm and a model sheep and beef farm are used to estimate the changes in profit when agricultural emissions are priced and mitigated globally or not, and priced domestically or not, in 2020. Related to these scenarios is the metric or GHG exchange rate. Most livestock emissions are non-CO₂, with methane being particularly sensitive to the choice of metric. The results provide evidence that farm profitability is more sensitive to differing international policy scenarios than national economic welfare. The impact of the choice of metric is not as great as the impact of whether other countries mitigate agricultural emissions or not. Livestock farmers do best when agricultural emissions are not priced, as livestock commodity prices rise significantly due to competition for land from forestry. However, efficient farmers may still see a rise in profitability when agricultural emissions are fully priced worldwide.</p> <p><b>Policy relevance</b></p> <p>Exempting agricultural emissions from mitigation significantly increases the costs of limiting warming to 2 °C, placing the burden on other sectors. However, there may be a large impact on farmers if agricultural emissions are priced domestically when other countries are not doing the same. The impacts of global and national climate policies on farmers need to be better understood in order for climate policies to be politically sustainable. Transitional assistance that is not linked to emission levels could help, as long as the incentives to mitigate are maintained. In the long run, efficient farmers may benefit from climate policy; international efforts should focus on mitigation options and effective domestic policy development, rather than on metrics.</p

The optimal diffusion of mitigation options for environmental management

A new direction for evaluating pollution policy is proposed, focused on optimal investment pathways for mitigation capital. The approach allows practitioners to draw directly from key principles in the diffusion literature. A two-stage, policy development framework is introduced. The first stage consists of empirical modelling to assess optimal diffusion pathways for diverse mitigation options. The second involves determining the relative strengths of different policy actions to address diffusion rates or maximum levels of adoption that diverge from optimal levels. The advantages of this new approach are demonstrated in an agri-environmental context, concerning the off-site impacts of intensive agriculture on water quality. The viewpoint provided by the novel approach establishes the importance of adoptability – alongside the traditional measures of abatement effectiveness and cost – for mitigation practices in policy assessment. The key role that durable mitigation capital plays in addressing dynamic externalities is demonstrated, alongside the importance of structured diffusion cascades for alternate mitigation options