An integrated model for economic analysis of greenhouse gas reduction in New Zealand Dairy systems

J E Keeys

No 260798, 2016 Conference, August 25-26, Nelson, New Zealand from New Zealand Agricultural and Resource Economics Society

Abstract: The New Zealand dairy industry is associated with significant greenhouse gas emissions, and although food production is crucial to feed a growing world population, being accountable for climatic impact is an increasing responsibility. An integrated modelling process was used for an environmental and economic analysis of various greenhouse gas mitigation options, individually and combined. OVERSEER® and Farmax Dairy pro were integrated in conjunction with modelling calculations on Microsoft excel to adjust both basic farm management changes such as nitrogen application, stocking rate and supplementary feed; and incorporate more complex reduction initiatives such as forestry and soil carbon sequestration methods. The most significant greenhouse gas reduction occurred through agro-forestry land-use option for lower production areas on-farm and a mechanism for carbon sequestration. A simulation with a 10ha increase in forestry resulting in an 18.9% reduction in greenhouse gas while decreasing economic surplus by only 4.1%. Reducing each of nitrogen application, supplementary feed and stocking rate also affected the performance measurements used, enabling a decrease in the greenhouse gas cost per dollar of economic surplus and per kilogram of milk-solid production. The modelling process indicated that a combination of halving nitrogen application across the farm, doubling palm kernel expeller offered, and a stocking reduction of 10% in addition to effective crop rotation, conservation tillage and nutrient cycling practices provided the most cost effective result. This combination of strategies gave a potential 22.4% decrease in total on-farm emissions, while maintaining a 1.8% increase in economic surplus, and 4.7% increase in production. This result of increased economic surplus and production while significantly reducing greenhouse gas production is a combination of output changes which has not previously been achieved.

Keywords: Agribusiness; Crop Production/Industries; Environmental Economics and Policy; Land Economics/Use; Livestock Production/Industries; Productivity Analysis (search for similar items in EconPapers)
Date: 2016-08-25
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nzar16:260798

DOI: 10.22004/ag.econ.260798

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