The Economics of Drought in New Zealand

Post written by H. Griffin.

The drought earlier this year was the worst New Zealand has seen in decades. Measures of soil moisture deficit were at their highest since the 1970s and a drought zone was declared over the entire North Island and parts of the South Island. With climate change the likelihood of more frequent and severe droughts is increasing. With this, so too is the need to better understand how the New Zealand economy reacts to such events.

 

The Reserve Bank of New Zealand (RBNZ) has recently released a paper exploring the macroeconomic impact of droughts in New Zealand. It focuses on the direct impacts to the agricultural sector as well as the indirect flow-on effects to other parts of the economy.

Their models predict that the 2013 drought will lower economic growth by 0.4% in the second quarter. Annual GDP (the average across all four quarters) is predicted to be 0.3% lower than without the drought. Beyond this, they predict GDP will recover to normal over the following years.

The RBNZ paper highlights the complexity of economic reactions to climatic events. Their models show that drought in New Zealand is associated with higher world dairy prices. The models predicted that the drop in export volumes following the drought in 2013 would be initially followed by a rise in export prices. With this, the models suggest nominal GDP (GDP not adjusted for inflation) could rise following the 2013 drought. Such increases have the potential to offset some of the initial negative economic implications of a drought.

Food Security and Climate Change

A recent article in the Guardian highlights the increasing importance of food trade globally. Of the countries investigated in the study, 66 currently do not produce enough food to feed their people - roughly 16% of the global population. By 2050 the study predicts that over half of the world’s population will rely on imported food – making global food security more reliant on international trade. The predictions do not take into account the impact of climate change on food supply which could exacerbate the situation.

It is now thought that climate change is going to significantly impact our global food system by shifting where food is grown, in what seasons and in what quantities. Including these possibilities into the predictions of global food security is a necessity if we are to think ahead.

A new study in New Zealand is aiming to look into these issues for our own country. The CCII or Climate Change Impacts and Implications for New Zealand study led by NIWA and Landcare Research will explore the consequences of different climate trends for New Zealand so we can better prepare for these coming issues. The study will generate improved climate projections for New Zealand based on the latest global modelling and evaluate key pressures on and responses of five important environments (alpine, hill-country, lowlands, coastal and marine). The study will also explore feedbacks, cumulative impacts and limits at the national level from the interaction of climate, population, land-use change, economic development, and increase the relevance of climate change in decision making processes. The aim of this project focuses on extending New Zealand's foresight into the issues of climate change and how primary industries such as agriculture can respond to these challenges.

Another part of the equation of global food security is that New Zealand is currently a global food producer. If these predictions come to play and the world is significantly dependent on imported food - New Zealand may be a source of those food supplies for other countries. The increase in demand may offset the economic losses resulting from lowered agricultural production from extreme weather events. The potential negative and positive impacts of these shifts in agricultural production show how complex these issues are.

For more information, check out these condensed and interesting resources on what we know in New Zealand about the interactions between climate change and agriculture.

New Motu Note: Tackling Agricultural Emissions - Potential Leadership from a Small Country

Post written by R. Cretney.

A new and exciting Motu note has been released by Suzi Kerr and Zack Dorner addressing the issues of tackling agricultural emissions in New Zealand.

This is one of the outcomes from the AgDialogue process which gathered together individuals from across New Zealand farming, policy and science sectors to discuss issues of climate change and agriculture. In this paper, Suzi and Zack detail the challenges and potential solutions to integrating agricultural emissions in an Emissions Trading Scheme that emerged as a result through this process. They also emphasize the important role a small nation, such as New Zealand, can play in the global community to reduce emissions from agriculture through collaboration and innovation.

Check out the new paper here and let us know your thoughts on New Zealand's role in the global community for reducing emissions in the comments section.

The complexity of the diet and climate change debate

Post written by R. Cretney.

You are what you eat – or so the common saying goes. But as a global community are we what we eat? The issue of how our personal dietary choices effects social and environmental issues has long been a contentious issue. Considering the recent critique of  the undesirable impacts of quinoa’s popularity on poverty in Bolivia, it is understandable that many are left confused over what is the best choice, socially and environmentally. While the increase of organic, fair trade products has eased the social conscience of some, the issue of greenhouse gases, and in particular meat consumption, has proved a more tricky issue to deal with.

Some advocate that a world dominated by vegans and vegetarians is the only possible way to sustain the human population on a planet with finite resources. But what does the science say to support this?

Let us start with the issue of meat. As is quite well known, particularly in New Zealand, ruminant animals release Methane and Nitrous Oxide into the environment. These greenhouse gases (GHGs) contribute to our emissions profile as a country and as individuals. But is the complete elimination of meat and dairy products from our diets necessary?

A paper by Jennie MacDiarmid and others released in 2012 suggests otherwise. In this paper, the authors look at the optimum diet that maintains ideal standards of nutrition while maximising the possible GHG reductions in the United Kingdom. Food such as most vegetables, fruits and grains were considered low greenhouse gas emitters, certain fruits and vegetables, eggs, chicken, dairy products, nuts and sweet foods were considered moderate greenhouse gas emitters while red meat, turkey, cheese, pork and fish were considered high greenhouse gas emitters.

This backs up what many have argued, that red meat contributes significantly to our carbon footprints. But the issue is far from clear cut – the MacDiarmid (2012) article suggests that actually the most nutritious yet low GHG diet includes red meat but in smaller quantities than is currently consumed. Another recently released study by Darmon and others in the American Journal of Clinical Nutrition also suggested that moderation was key. This research studied the entire life cycle of the food and took into account all GHGs produced except those resulting from transport from the store to the home. The authors found that overall the emissions for meat products were 15 times that of fruit and vegetables. However, when taking into account the amount of energy in kilocalories that the food provided, meat products only emitted 3 times the GHGs as a comparable amount of energy derived from fruit and vegetables.

Darmon’s paper has been criticised by some proponents of vegetarianism who pointed out that most vegetarians do not eat the large quantity of vegetables that were used to compare emissions to a small portion of meat. Instead they argue that because they eat less vegetables than the nine pounds used, their carbon footprint is lower than the study suggests. Regardless, Darmon’s research is still useful, especially in combination with the MacDiarmid paper as both studies look into the increasingly grey area of the impact of our food choices on climate change.  

Here are some New Zealand figures that compare the GHG per kilogram of meat or milk solids as food for thought. The studies referred to before deal largely with European food production systems. As Saunders and MacDonald (2011) note, several types of meat production in New Zealand, such as lamb, are produced with much less emissions than those produced in Europe. This information shows that unlike the MacDiarmid study, New Zealand poultry and pork are actually low emitters (as opposed to moderate emitters in Europe) while sources of red meat are still high emitters. To put this data in context, a flight from Wellington to Auckland would release approximately 67.1kg of Co2 per passenger. The source of this data is the latest New Zealand legislation for emissions trading and the Air New Zealand carbon calculator.

Type of food	Kilograms of Co2 e/per kg at slaughter (See Climate Change (Agricultural Sector) Amendment Regulations 2012 Legislation)
Sheep, Beef and Goat	12.7kg
Milk solids	8.5kg
Poultry	0.20kg
Deer	21.0kg
Pork	1.76kg

While we may not be able to expect the entire world to become strict vegetarians, in the long run, a shift towards less red meat intensive diets could encourage a reduction in GHG emissions while acknowledging the importance of consuming meat for many economies and cultures. In the meantime there are less GHG intensive farming options to explore such as the adoption of more efficient farm management techniques. These options can be explored by farmers in New Zealand who will be able to market their products to those wishing to remain meat eaters while watching their carbon footprint (Clark et al 2011).

 Articles cited:

Clark, H.; F. M. Kelliher and C Pinares-Patino. 2011. "Reducing CH4 Emissions From Grazing Ruminants in New Zealand: Challenges and Opportunities", Asian-Australian Journal of Animal Science, 24:2, pp. 295-302.

Vieux, F., Darmon, N., Touazi, D., & Soler, L. G. (2012). Greenhouse gas emissions of self-selected individual diets in France: Changing the diet structure or consuming less?. Ecological Economics, 75, 91-101.

Macdiarmid, J. I., Kyle, J., Horgan, G. W., Loe, J., Fyfe, C., Johnstone, A., & McNeill, G. (2012). Sustainable diets for the future: can we contribute to reducing greenhouse gas emissions by eating a healthy diet?. The American journal of clinical nutrition, 96(3), 632-639. 

Saunders, C., McDonald, H., Driver, T. 2011. “Enhancing Value for New Zealand Farmers by

                        Improving the Value Chain”, Agribusiness and Economics Research Unit Report No. 324.

       Accessed From: http://www.motu.org.nz/files/docs/Saunders_McDonald_Driver_Value_Chain.pdf

Positive Environmentalism - the role of fun and games

"Consultant Paula Owen hopes the 12-month study will encourage people to change their behaviour and reduce their environmental impacts. She said that people did not engage with 'doom and gloom' messages, leaving them feeling powerless."

One recent article by the BBC has highlighted the role of positive thinking and games in encouraging pro-environment behaviour. These games are targeted at people who have not been involved with environmental issues before. Researchers found anecdotal evidence that through engaging with the games in a positive way environmental education and awareness was improved, now they working on quantifying this evidence.

The games in this research are similar to the environmental games that were used in the AgDialogue meetings. These games were created by Motu to facilitate understanding of emissions and water trading schemes. Players of the game 'run' a dairy or sheep/beef farm (water quality) or a smelter or power plant (emissions). Changes to regulations are introduced in the game and players have to respond by altering the operation of their farms/facilities. You can find more information on these games here.

The reasoning behind using games to increase environmental awareness is also being re-enforced by a new area of psychology that looks into the psychology of sustainability. Niki Harré’s recent book "Psychology for a Better World" highlights this research and discusses the importance of positive emotions in driving shifts in behaviour. Her work is more related to personal behavioural actions but it is easy to see how her work supports the importance of the fun and playful ways of learning about environmental issues. Below is a quick introduction to her book and short film.

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Post written by R. Cretney.

What does wine, coffee and chocolate have to do with climate change?

Post written by R. Cretney.

Recent news articles have been taking a popular angle in raising awareness of the effects of climate change on agriculture and food production.

Research released today, in the Proceedings of the National Academy of Sciences in the United States shows that Californian, Chilean and Mediterranean grape producing regions will be hit hard by shifts in growing conditions due to climate change

 Other recent research has shown that other popular food items such as coffee, honey and chocolate are at risk from increasing severe weather events, pests and diseases as a result of a shifting climate. Even Starbucks acknowledged the risk of climate change in 2011 and began lobbying the Obama administration to work on the issue.

 But the news is not all bad for New Zealand. The climactic changes may make it easier to grow grapes here. The author's model shows land suitable for grape growing increasing by 168%. This could provide a new industry for agricultural production that is negatively affected by other shifts in the climate and may increase our already strong brand as a wine producing nation.

 For other industries though the authors recommend using increasingly creative farming techniques and less water intensive means of production. So who knows about the future of coffee and chocolate, but at least the future of global wine production shows promise for New Zealand. Next week we are going to have a look at how your personal food choices can affect the global climate but investigating different dietary choices.

Nitrogen Bomb - Mike Barton on Country Calendar

Post written by R. Cretney

Mike Barton from AgDialogue has just been featured on New Zealand's Country Calendar show. The show aired on the 30th of March and can be seen from the TVNZ Ondemand website.

Mike and Sharon Barton's branded beef products have been launched in response to the Waikato District Council placing a cap on the amount of nitrogen able to be released into Lake Taupo.  As a result the Bartons cannot increase their production as they would have previously - this led them to look for other ways to raise a similar income from fewer animals, and so Taupo Beef was born. By creating their own brand the Bartons have assured customers that the beef they are eating is from a local farm that isn't damaging the lake.

As this branding adds value to the product, the meat sold by Taupo Beef goes for a premium. The Barton's creativity has allowed them to maintain the profitability of their farm while keeping it within environmental limits. This is an exciting area for New Zealand agriculture with many opportunities both nationally and abroad.

To see the full story watch the Country Calendar show here.