- 1. Introduction
- 2. The environmental benefits of agricultural policy reform
- 3. Reforms in environmental policy
- 4. Other agri-environmental policy developments
I - AGRI-ENVIRONMENTAL POLICY IN NEW ZEALAND
1. Introduction
The subject area of agriculture and its effect on the environment is of considerable importance to New Zealand, given the major role of agriculture in the economy. For the year ended March 1993, agriculture and related industries accounted for 14% of Gross Domestic Product, and agricultural products accounted for 56% of New Zealand exports of goods [ Situation and Outlook for New Zealand Agriculture , Ministry of Agriculture and Fisheries, Wellington, June 1994, Tables 36 and 33. As used in this report, the term "agriculture" includes horticulture, but excludes forestry.] . Of New Zealand's 27 million hectares, 13.9 million hectares (51%) are in agricultural use.
The relatively rapid development of New Zealand over the past century has raised the usual range of environmental issues, although agriculture in New Zealand is generally much less intensive than in other countries. In some areas of New Zealand, significant soil erosion problems have resulted from removal of the natural forest cover. This sediment, along with nutrient runoff and discharge of agricultural wastes, has also contributed to water quality concerns in some areas. Water allocation and protection of minimum flows is assuming increasing importance as more land has been converted to horticultural and dairy production. These issues are addressed under the Resource Management Act 1991, with its single purpose of promoting sustainable management of natural and physical resources.
Preservation and sustainable management of indigenous flora and fauna also remains a high priority. This is reflected in the 28% of New Zealand protected in national parks, forests, and reserves [ Department of Conservation, estimate.] , and led to the 1993 amendment to the Forests Act 1949 to ensure the sustainable management of indigenous forests where these are managed for sawlog production. The management of introduced pests has been addressed by the Biosecurity Act 1993, and new legislation covering the registration of agricultural chemicals and other hazardous substances is also scheduled. Finally, while New Zealand's policy on emission of greenhouse gases has focused on carbon dioxide sources and sinks, the contribution of methane from agriculture is also under consideration.
In many cases, environmental problems associated with agriculture can be attributed to conflicting government policies. For example, government-funded price support programmes can undermine environmental objectives by encouraging over-intensive use of chemical inputs and other physical resources. The broad philosophy of the New Zealand Government towards agriculture and its effect on the environment is to create a balanced and coordinated set of policies which provide for sound environmental management undistorted by government support programmes for agriculture.
2. The environmental benefits of agricultural policy reform
Government assistance to New Zealand farmers, which reached a peak in 1984, was drastically reduced over the remainder of that decade. Price supports, tax concessions, loan subsidies, input subsidies and free advisory services were all eliminated, and cost-recovery implemented for government inspection services. The Effective Rate of Assistance (ERA) to farmers is estimated at negative 2% of agricultural production in 1994, down from an average of +25% for the period 1979-86. Remaining spending on quarantine, research and pest control is more than offset by costs imposed on agriculture through protection of input industries. Farmers in New Zealand receive by far the least government assistance of any OECD country.
In 1990, the New Zealand Government prepared a report to the OECD assessing the environmental impacts of the removal of government assistance to farmers. [ "A Case Study of the Environmental Impacts of Reduced Production Subsidies: The New Zealand Experience," ENV/EC/AGR(90)4. Also published as "The Environmental Impacts of Reduced Agricultural Subsidies," R. Reynolds et al, MAF Policy Technical Paper 93/12, Ministry of Agriculture and Fisheries, Wellington, 1993.] The report noted that land use and input use decisions responded to the removal of subsidies, with positive implications for the environment, as decisions were determined based on market forces undistorted by government assistance. Among other things, subsidies had been capitalised into land values, pushing farming into more marginal land.
Several trends were evident following the removal of subsidies:
- a decline in sheep numbers, resulting in less pressure on hill country pasture;
- an increase in afforested area, mainly due to planting on farmland;
- a decrease in the use of fertilisers;
- a decrease in the use of pesticides.
Since 1990, the decline in sheep numbers has continued. This has been partially offset by an increase in numbers of dairy cows, but total stock units still declined by over 8% during the period 1985-1993. Meanwhile, the increase in planted forest area has also continued, with a cumulative increase for the 1985-1992 period of 22%. The increase in forest planting has been driven by a number of factors including the increased returns to forestry, especially relative to the declining returns to pastoral farming. The removal of agricultural subsidies allowed this divergence in returns to be fully reflected in farm profitability and land prices. This has contributed to the increasing rate of forest plantings, with its positive implications for soil conservation, water quality and absorption of carbon dioxide.
The decrease in the use of fertilisers and agrichemicals has been halted, however, as product prices in some sectors recovered. Fertiliser use in particular has increased since 1990, with 1994 sales reaching their highest levels since 1980. This is probably due to the fact that farm incomes have risen somewhat, and many pastoral farmers are applying fertiliser to hill country for the first time in many years.
The recent increase in fertiliser and pesticide use confirms that input use is sensitive to farm incomes and, by inference, the level of government assistance. If New Zealand had not removed its agricultural subsidies, input use would have been higher during the 1985-1993 period, and probably higher than it is today.
Also in 1984, the New Zealand Government instituted macroeconomic reforms which resulted in an appreciation of the New Zealand dollar and a sharp increase in interest rates. For some farmers with high debt levels, the combination of these reforms with the removal of subsidies caused considerable financial and personal stress. Some left farming, others significantly reduced capital expenditure, and some depleted their financial and natural resource asset base.
The removal of subsidies is a necessary, but not sufficient, policy to address the environmental impacts of agriculture. As the 1990 report stated, to achieve sustained environmental benefits, agricultural policies also need to be coordinated with policies affecting macroeconomic conditions, environmental management, and disaster relief. Since 1990, New Zealand has made considerable progress in developing a coordinated and balanced set of policies with the core objective of sustainable use and development of the nation's natural resources.
3. Reforms in environmental policy
The principle of sustainable management is embodied in the Resource Management Act 1991 (RMA), which replaced all or parts of 75 previous statutes and brought all activities relating to the management of land, water, air, and the coastal environment under one Act. The RMA has one clear and overriding purpose: to promote the sustainable management of New Zealand's natural and physical resources for the benefit of present and future generations.
Under the RMA, most environmental responsibilities are assigned to local government. As a result, the majority of resource management programmes relevant to agriculture are now carried out at the regional level. These include soil conservation activities, water quality monitoring and control, pest management, etc. In many cases, it is difficult to isolate the extent to which an environmental problem is caused by agricultural practices. The next section of this report provides a detailed summary of agri-environmental programmes at both the national and regional level. Policy in this area is still evolving, however, as regional and district councils continue with the environmental planning process initiated by the RMA.
4. Other agri-environmental policy developments
The New Zealand Government has in the past played a significant role in providing relief to farmers affected by climatic disasters. It is now recognised that disaster relief can itself encourage environmental degradation if it removes the incentive for land managers to plan for such disasters. For example, livestock farmers need to destock when drought becomes a real possibility, and also need to keep grazing pressure down to a level that will better enable hill country pasture to sustain heavy rainfall. The Government now has a policy of encouraging individual landholders to manage climatic risks. Support will still be provided when an adverse event is beyond the ability of the local community to deal with, but support is provided in a manner that does not reduce individual responsibility for managing risk. As noted in the next section, government expenditure on disaster relief has declined from an average of $26.4 million per year during the period 1986/87-1990/91, to $5.6 million in 1992/93 and only $574,000 projected in 1994/95.
European settlers brought with them a number of plants and animals that have thrived in the New Zealand environment, proved difficult to control, and quickly developed populations to pest levels. The Biosecurity Act 1993 provides for pest control operations under national or regional pest management strategies, which must specify the costs and benefits of control, who benefits, and proposed funding mechanisms. Any individual or group can propose a pest management strategy, which takes effect if it is approved by the Minister of Agriculture (for national strategies) or the relevant regional council.
The New Zealand Government has announced its intention to enact in 1995 legislation covering all environmental risks posed by hazardous substances and new organisms. The purpose of the Act will be to manage the harmful effects of hazardous substances and new organisms so as to enable maximum net national benefit to be achieved. This Act will be coordinated with new legislation covering registration and use of agricultural chemicals.
The New Zealand Government released a position paper on sustainable agriculture in 1993, as part of a wider policy on sustainable land management. Sustainable agriculture is defined as the use of farming practices which maintain or improve the natural resource base, and any parts of the environment influenced by agriculture, are financially viable, and allow people and communities to provide for their economic and cultural well-being. The Ministry of Agriculture and Fisheries has undertaken a facilitation programme designed to encourage the adoption of sustainable agricultural practices, and regional councils are also promoting sustainable agriculture as part of their responsibilities under the Resource Management Act. Meanwhile, grassroots "landcare" groups have been established in many parts of New Zealand. These groups have the potential to make a key contribution to sustainable agriculture, although many are still identifying their relationship with central and local government agencies.
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