Emerging solutions The who, why and how of acting on agricultural emissions

1. Emerging solutions The who, why and how of acting on agricultural emissions Suzi Kerr Motu Economic and Public Policy Research August 2012

2. Who acts? Government Non-government Why act? environment, efficiency, equity, perception, co-benefits What can we do? Land use change, output reduction, emissions per unit output Solutions: how can we facilitate action? Concern, trust, agency Capability, technology, ability Regulation, incentives, actions Timing Evolution of cooperation and acceptance Gradual diffusion of technology and ideas

3. Who acts? National Central government Iwi Industry (Fonterra, Fed farmers, Beef+Lamb, MIA, Ballance...) Banks Universities CRIs NGOs Regional Local government Universities ITOs Fed farmers Rural women Iwi Banks Community Fed Farmers Rural Women Cultural groups Iwi Schools Sports clubs Urban communities? Local firms Individuals Farmers – Companies, corporations, and individuals Managers Workers Owners

4. Why act? • Global climate effects: environment Mitigate sustainably Learning about policy and mitigation Build integrity and trust • Country has target – mitigation allows the country as a whole to meet it at lower cost: efficiency • Country has target – if there is no policy, costs will fall on tax payers: equity • NZ wants to demonstrate its efforts to be clean-green: perception • Country has target and by mitigating we can also address water quality issues: co-benefits

5. Things to watch for If NZ wants to provide leadership on Ag emissions we must show that we can mitigate while avoiding adverse consequences • Food security • Farmers and rural communities • Agricultural sector – NZ economy • Tax payers • Leakage

6. What can we do? • Change land use • Forestry / Natives • Other food crops • Reduce production intensity • Reduce emissions per unit of output

7. Land use change

8. Net emissions fall from land use change~4% over 20 years from AgETS Gg CO2

9. Land use change • There is likely to be some land use change • It is mostly driven by changes in forest/native returns • It is very slow • There could also be change to other crops: e.g. oats, hazelnuts…

10. Reduce Production Intensity • Modeling is unclear • Probable distortion toward intensity as a result of not having a capital gains tax

11. Farmer uptake of existing mitigation options Existing options: • Methane: Farm management • Productivity improvements • Manure management – plug-flow digesters and covered anaerobic lagoons • Nitrous oxide: also soil management • Nitrogen inhibitors: DCDs – significant relatively certain impact on N2O; Urease inhibitors • Reduced fertiliser use • Effluent management • Grazing off poorly drained soils in winter (need to be careful to account for animals elsewhere). • Feed pads

12. Dairy: range of MS per tonne emissions

13. Adjusted distribution – for physical heterogeneity among farms

14. 2.4% reduction in emissions – small shift in distribution

15. 2.4% reduction in emissions – small shift in distribution

16. How can we act? 3 Cs • Concern changing attitudes and encouraging action • Capability Knowledge, access to resources • Contracting legal agreements or regulation Focusing really on government action

17. 3 Ts These are critical for building cooperation. Probably done best at a community level

18. 3 As Can be done working with individuals

19. Matrix of actions

20. Future Proofing NZ Farming Branding / appellation Farmer accreditation • Future proofing farming • Graduated standards (eg gold standard) • Best practice • All environmental values + profit • Science based • Outcome based Important groups Incl Maori, formal training, local government (incl regulation), banking Local Extension -Community support -Expert input Promotion Public Inter-national Managing standards to develop, improve over time Financing of development and implementation

21. AgDialogue prototypes • Simplified Gold Standard • Farmers working together locally & improved OVERSEER • 100% Pure Food brand • Alternative financing mechanisms • Proactive banking • Sustainable Cooking TV competition • Kiwi farming game • Infusing the syllabus (“farming academy”) • KapaHaka competition

22. Key points • Many actors can take leadership on agricultural emissions • Objectives should drive action • A complex problem requires many different strategies for solution

23. Time frames • International agreements and action will evolve • Domestic cooperation builds over time • New technologies will emerge • Existing technologies will gradually disseminate • Current actions will depend on current concern, capability and incentives but also expectations of future incentives/regulation Solutions need to be responsive to current situation while maintaining and building a long-term strategic vision

24. (very) Long term vision International Complete and stable (sufficiently stringent) international agreement NZ policies and mitigation practices understood and used where appropriate: integrity and demonstration Stable regulation in other countries Within NZ Full climate cost imposed on marginal emissions Fair compensation for land value changes – or historical grievance accepted Communities and workers have fully adjusted Farmers are knowledgeable Ongoing research and dissemination of ideas Other key environmental resources well managed This probably involves a farm-scale ETS.

25. Short term • Don’t delay but don’t rush • Keep long term in mind • Create and maintain options • Focus on long-term efficiency • Focus on fair process • Experiment and learn • Integrity • High quality information • Broad set of actions on all three components: concern, capability, contracting

26. Short term package of actions ‘Future proofing NZ farming’ • 9 prototypes as seeds for many more by actors at all levels Processor level ETS considered ineffective and possibly damaging NZ Units required for N fertiliser sales • rebate for use of N inhibitors Explore use of capital gains tax on rural land • lack of tax causes distortion that may increase emissions • could be used to contribute to NZ cost-bearing out of future gains rather than past equity • could be used to fund standards, accreditation, extension and promotion of NZ brand.

27. www.motu.org.nzwww.climatechange.govt.nz