Friday, June 29, 2007

Climate change: dealing with the sacred cows

One of the central myths of New Zealand climate change policy is the difficulty in reducing agricultural emissions. It's loudly proclaimed by the dairy industry whenever anyone points out that they effectively enjoy a $300 million a year subsidy from the New Zealand taxpayer, and it has formed a central plank of climate change policy since at least 1999. But as the Sustainability Council points out, it's simply not true. The dairy industry has options available which would significantly reduce dairy emissions at negative cost. And these options can likely be applied to the wider agricultural sector as a whole to produce even greater savings.

Their report, A Convenient Untruth: Towards a lighter agricultural footprint [PDF], summarises research on nitrification inhibitors. These inhibit the breakdown of nitrogen from animal urine and fertiliser in the soil, thus reducing emissions of Nitrous Oxide, a very powerful greenhouse gas. According to current research on their use on dairy farms, nitrification inhibitors reduce N2O emissions by an average of 70%. If every dairy farm in New Zealand used them, we could reduce emissions by 3.7 MTCO2-e a year - or 18.5 MTCO2-e over CP1, almost half of our expected Kyoto liability. And because they also promote pasture growth, dairy farmers would make a profit by doing so.

They also suggest another technology: "standoff pads" - basically keeping cows on a patch of sawdust for most of the time during winter. This reduces emissions by reducing the amount of nitrogen excreted; it apparently pays for itself by allowing the waste to be collected and used as fertiliser.

So why aren't farmers using these techniques? Partly, its because they're new. But mostly, it's because the profits to be made from them are so small as to not be worth the hassle (yet another nail in the coffin of the theory that we are omniscient rational economic actors). So how do we get around this inertia in the system? One option is to stick a price on agricultural emissions, thus providing farmers with a far greater incentive to reduce them. But given the difficulty of measuring those reductions, it would be more effective to regulate, by requiring resource consents for farming (a highly polluting activity which is currently exempted) and making nitrogen reduction a condition of consent through a National Policy Statement or the planning system. Unfortunately, and in another example of New Zealand's longstanding ideological preference for market-based solutions, the government seems to be going for a variation on the first, less effective option.