Transcript Impacts of Environmental Policies on Land Management in

NZ Forest and Agriculture
Regional Model (NZFARM)
Adam Daigneault
Landcare Research
Motu Climate Economics Research Workshop
Wellington
20 March 2012
This research was made possible by the generous funding of MSI & MAF-SLMACC
New Zealand Forest And Agriculture
Regional Model (NZ-FARM)
• A comparative-static, non-linear, partial equilibrium
economic model of NZ land use
– Objective is to maximize income from land-based activities
– Sub-region/zone-level spatial scale
– Key outputs include changes in income, land use, GHG
emissions, and nutrient leaching
• Assess impact of changes in commodity prices,
technology, resource constraints on agricultural output
• Evaluation of farm, resource or environmental policy on
economic and environmental performance indicators
• Parameterised for Hurunui/Waiau and Manawatu
catchments
Objective Function
• Model Objective:
– Landowners maximize net revenue from activities
conducted on all major farm enterprises in catchment
• Subject to constraints:
–
–
–
–
–
–
Market Output Prices
Costs of Production
Physical Inputs Available
Land Available
Irrigation Water Available
Regulated Environmental Outputs and Taxes
• Model separates catchment into regions/zones
and also major soil types
– Important to characterise land productivity
– Nutrient leaching can differ across soil types
Calculating Net Returns in NZ-FARM
Maximizing net revenues is calculated as:
Output Price*Output Quantity
– Livestock Input*Unit Cost
– Variable Cost*Units Used
Max NR =
– Annualized Fixed Cost
𝑟,𝑠,𝑙,𝑒,𝑚,𝑖𝑜
− Environmental Tax ∗ Units Emitted
– Land Conversion Cost*Hectares Converted
Where:
r = region
s = soil type
l = land use
e = enterprise
m = Mitigation Option
io = activity inputs and outputs
NZ-FARM – Key Components
• Land-use/enterprises:
–
–
–
–
–
Pastoral: dairy, sheep, beef, deer
Arable: wheat, barley, maize
Horticultural: potatoes, grapes, berryfruit
Forestry: pine, eucalyptus, native
Other: scrub and DOC land
• Environmental outputs:
– Nutrients: nitrogen and phosphorous
– GHGs for farm and forest activities
– Water use: irrigation area and type
• Farm Management Options:
–
–
–
–
–
Keep status quo and pay regulatory tax
Change enterprise or land use
Adjust fertilizer and stocking rates
Add dairy feed pad or apply DCDs
Enter forest carbon sequestration programme
Enterprise Mix
Stocking Rate
Irrigation Scheme
Mitigation Option
Fertilizer Regime
Land
Management
Land Use
Class
Environmental
payments
Nutrient
Loads
NZFARM
Environmental
Constraints
Water
Land
Conversion
Costs
Maximise π,
subject to input
constraints
GHG
Emissions
Economics
Input Costs
Output Prices
Soil Type
Environmental Outputs
Soil
Erosion
Water
Yield
GHG
emissions
Economic Output
Agricultural Production
Livestock
Products
N and P
leaching
Land-Based
Profit
Environmental
Costs
Forestry
Products
Crops and
Horticultural
Products
Structure of NZFARM Nest and CET
Functions
Catchment Area
σS
Soil Type
Soil Typei
Balmoral Soil
σL
Land Use
Pasture
Forest
σE
Land Usej
Enterprise
Dairy
σM
Sheep & Pastoral Enterprisek
Beef
Land
Management
Land
Managementl
Irrigation with
Feedpad
σP
Agricultural
Production
Milk Solids
Calves
Productm
Data Needs
• Land area (ha) – Land use databases
• Soil type – Fundamental Soil Layers
• Enterprise type (ha) – Land use maps and
Agribase
• Inputs – various sources
– Water (mm/day)
– Fertilizer (kg/ha/yr)
– Stocking rates (units/ha)
– Animals purchased (units/ha)
Data Needs
•
•
•
•
•
Yields – various sources
Variable costs – various sources
Fixed costs – various sources
Output prices – MAF prices for all of NZ
Environmental outputs
– N and P leaching rates – from OVERSEER
and/or SPASMO
– GHGs – Calculated from farm-level inputs and
NZ GHG Inventory data and equations
Baseline
Hurunui/Waiau Catchment
Total Area:
582,100 HA
Dryland Area:
559,900 HA
Irrigated Area:
22,200 HA
Baseline Enterprise Mix
Sub-Zones within Hurunui/Waiau
Catchment
Note: area differentiated by productive capability/land use classification
Key Components of NZ-FARM – Hurunui Catchment
Region
Plains
Foothills
Hills
Soil Type
Lismore
Balmorals
Hatfield
Templeton
Land Type
Pasture
Cropland
Horticulture
Forest
Scrub (ManukaKanuka)
Dept of
Conservation
Enterprise
Irrigation
Scheme
3 Cows per ha, Irrigated Land
wintered on
Dry Land
farm
3 Cows per ha,
wintered off
farm
3.5 Cows per
ha, wintered
on farm
3.5 Cows per
ha, wintered
off farm
4 Cows per ha,
wintered on
farm
4 Cows per ha,
wintered off
farm
Deer
Pigs
Mix of Sheep
and Beef
Grazing
100% Sheep
Grazing
100% Cattle
Grazing
Grapes
Berryfruit
Wheat
Barley
Pine Radiata
Fertilizer
Regime
Mitigation
Option
100% rec. all
nutrients
80% rec. N,
100% rec. all
other
nutrients
60% rec. N,
100% rec. all
other
nutrients
50% rec. N,
100% rec. all
other
nutrients
No N, 100%
rec. all other
nutrients
0% rec. Lime,
100% rec. all
other
nutrients
No fertilizer
applied
Change stocking
rate
Change fertilizer
regime
Payments for
forest carbon
sequestration
Add DCDs
Construct Dairy
feed Pads
Variable
Costs
Beef stock
replacement
costs
Sheep Stock
Replacement
cost
Deer Stock
replacement
cost
Dairy Stock
replacement
cost
Pig stock
replacement
cost
Wages permanent
Wages - casual
Animal Health
Dairy shed
breeding
Electricity
Cartage
Fertiliser
Fertiliser
application
Fuel
Shearing
Seeds
Imported Feed
costs - hay &
silage
.
.
.
.
Fixed Costs
Property taxes
Insurance
Land prep
Tree planting
Forest harvest
Cultivation
Forest
management
fee
Herbicide
application
Fungicide
application
Pruning
Thinning
Harvest costs
Harvest
preparation
DCD Application
Feed pad
construction
Product
Output
Environmental
Indicators
Milk solids
Dairy calves
Lambs
Mutton
Wool
Cull cows
Heifers
Steers
Bulls
Deer: hinds
Deer: stags
Deer: velvet
Pigs
Berryfruit
Grapes
Wheat
Barley
Logs for
pulp and
paper
Logs for
Timber
Other Misc.
N leached (kg N)
P leached (kg P)
Methane from
animals (kg CO2e)
N2O emissions –
direct excreta and
effluent (kg CO2e)
N2O emissions –
indirect excreta and
effluent (kg CO2e)
CO2 emissions - N
fertiliser (kg CO2e)
CO2 emissions – Lime
(kg CO2e)
N2O emissions –
direct and indirect N
from fertiliser (kg
CO2e)
CO2 emissions – fuel
(kg CO2e)
CO2 emissions electricity use (kg
CO2e)
Annual Forest C
Sequestration (kg
CO2e)
Product Inputs
Dairy calves
purchased
Lambs purchased
Rams purchased
Ewes purchased
Cows purchased
Heifers purchased
Steers purchased
Bulls purchased
Pigs purchased
Dry matter
Electricity used
Fertiliser used Urea
Fertiliser used Super
Fertiliser used Lime
Fertiliser used other
Nutrients used -N
Nutrients used P,K,S
Nutrients used Lime
Nutrients used Other
Fuel used – Petrol
.
.
.
.
Model Outputs
Net Revenue
($)
$250,336 ,000
Total GHGs
(tons)
1,531,000
Net GHGs
(tons)
924,000
N Leaching
(tons)
3,040
P Leaching
(tons)
45
Enterprise Area
Baseline Catchment Enterprise Area,
200
180
Natural/DOC
160
Scrubland
thousand hectares
140
Dryland Other Pasture
120
Irrigated Other Pasture
100
Dryland Sheep and Beef
Irrigated Sheep and Beef
80
Dryland Dairy
Irrigated Dairy
60
Irrigated Arable
40
Forest
20
0
Hurunui
Hills
Hurunui
Plains
Hurunui
Foothills
Waiau Hills
Waiau
Plains
Waiau
Foothills
Regional Production (tons or k m3)
Baseline Regional Production
100000
Timber
Pulp Logs
Barley
Wheat
Grapes
Berryfruit
Pigs
Velvet
Deer Stags
Deer Hinds
Bulls
Steers
Heifers
Cows
Wool
Mutton
Lambs
Dairy Calves
Milk Solids
90000
thousand kg or m3
80000
70000
60000
50000
40000
30000
20000
10000
0
Hurunui
Hills
Hurunui
Plains
Hurunui Waiau Hills
Foothills
Waiau
Plains
Waiau
Foothills
Average N Leaching Rates
N leaching rates by enterprise
45
kgN/ha
40
Plains
35
Foothills
30
Hills
25
20
15
10
5
0
GHG Emissions
600000
Hurunui/Waiau Baseline GHGs
500000
400000
300000
C Sequestration
CO2 Electricity
tCO2e
200000
CO2 Fuel
100000
N2O Fertilizer
N2O Grazing
0
N2O AWMS
-100000
CH4 Manure
-200000
CH4 Enteric
-300000
-400000
Hurunui Hurunui Hurunui
Hills
Plains Foothills
Waiau
Hills
Waiau
Plains
Waiau
Foothills
Change in N leaching intensity
with nutrient reduction policy
Change in N leaching rates by enterprise
0%
-5%
kgN/ha
-10%
-15%
-20%
-25%
-30%
-35%
15% Reduction
30% Reduction
Marginal Abatement Costs- GHG Price
GHG Mitigation (t/ha) - Hurunui Foothills
$40
$40
$30
$30
CH4 Enteric
Fermentation
CH4 Manure
Management
N2O Animal Waste
Mgmt Systems
N2O Grazing
$20
GHG Price ($/tCO2e)
GHG Price ($/tCO2e)
GHG Mitigation (t/ha) - Hurunui Plains
CH4 Enteric
Fermentation
CH4 Manure
Management
N2O Animal Waste
Mgmt Systems
N2O Grazing
$20
N2O Fertilizer
N2O Fertilizer
$10
$10
Carbon Sequestration
Carbon Sequestration
Total
Total
$0
$0
0
2
4
6
Mitigation (t/ha)
8
10
12
0
2
4
6
8
10
Mitigation (t/ha)
Level of per hectare abatement varies across regions and mitigation options.
- Carbon sequestration, enteric fermentation are lowest cost options
- Most mitigation from tree planting, reducing stocking and fertilizer app. rates
- Additional mitigation from DCDs and feed pads for dairy
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