Evaluating nutrient abatement policies for a pastorally farmed catchment-lagoon ecosystem: A New Zealand case study

Abstract

Anthropogenic nutrient input is one of the greatest causes of freshwater and coastal eutrophication worldwide. In many catchments, nutrient losses must be reduced to meet the water quality outcomes sought by communities and regulators. To achieve this, policy makers must find an acceptable balance between the economic value of land use activities and sustained health of the receiving ecosystem. Abatement policies for an intermittently closed and open lagoon catchment ecosystem in the Southland region of New Zealand were evaluated. The objective was to assess the cost-effectiveness of different policies aimed at reducing nutrient loads entering the lagoon while minimizing reductions in farm operating profit by considering production losses and costs of mitigations. An economic-environmental optimization model that selects farm system (e.g., reduced fertilizer input and stocking rate) and edge-of-field (e.g., constructed wetlands) mitigations most suitable to each pastoral farm (dairy, dairy support, sheep and beef) was developed. Three optimization strategies, either with a focus on nitrogen (N), phosphorous (P), or both, were evaluated: a differentiated strategy considering nutrient loss and profitability differences between farms; a uniform strategy requiring a similar proportional reduction for all farms; and a nutrient cap strategy requiring all farms to achieve losses below a set cap in kg ha−1 year−1. Results indicate that it will be a challenge to achieve the currently recommended target of 50 % reduction in the load of both nutrients. When N was the focus, the best outcomes achieved around 50 % and 30 % reduction in N and P loads respectively, but it required a reduction in total farm income, before interest and tax, of 22–38 % (approximately NZ$5–9 M year−1 at current prices). The catchment-wide differentiated policy was the most cost-effective from a farmer and economic point of view, but still required land retirement for approximately 30 % of the farm businesses. A double nutrient cap strategy of 40 kg ha−1 for N and 1 kg ha−1 for P only achieved around 20 % reduction in both nutrients at 10 % reduction in farm income. Another option, a nutrient cap strategy of 40 kg ha−1 for N and 0.8 kg ha−1 for P, resulted in 30–35 % reduction in both nutrients at around 17 % reduction in profit (NZ$4 M year−1). The work demonstrates the importance of evaluating the cost-efficiency of nutrient loss mitigations at farm scale when evaluating different abatement policy options at catchment scale. It demonstrates utility for other similar sites by showing how the focus can be on individual farm businesses, while searching for balanced environmental and economic outcomes at the larger scale.