Agricultural production affects both nutrient and greenhouse gas emissions. Environmental policy designed to reduce one type of pollution may interact in positive or negative ways with efforts to reduce other types of pollution. In this paper we explore complementarity of abatement practices in the Lake Rotorua catchment in New Zealand (NZ) using an agro-environmental economic model, NManager.
The application presents an ideal case study since the local government is considering the implementation of a nutrient trading scheme (NTS) to reduce nutrient discharges to the lake from non-point sources such as farmland. At the same time, the national government is reviewing whether to include greenhouse gas (GHG) emissions from the agricultural sector at a farm scale in a GHG emissions trading scheme (ETS).
The abatement costs, the environmental impacts, and the distribution of costs and benefits under three different types of initial N permit allocation in the agricultural sector are evaluated under three policy scenarios:
Results illustrate that
The GHG ETS alone resulted in no land-use change, the NTS alone resulted in no remaining dairy, while the dual policy setting (GHG ETS and NTS) made dairy, a highly profitable but also N intensive farm activity, to be economically viable once again; suggesting that there could be gains from an additional regulation.
This manuscript is related to the following two papers: