Ecologists shame dairy industry but facts show otherwise

Economists will be surprised to learn the economic costs of environmental deterioration caused by the dairy industry are greater than the 2012 dairy export revenue.

The calculations were done by ecologists targeting fertiliser, feed supplements and irrigation as causing damage that is “left to the public to deal with.”

Although the research hit the news on Christmas Eve, the original paper was presented at the annual conference of the New Zealand Agricultural and Resource Economics Society (NZARES) in Nelson at the end of August. It was not hailed as ground-breaking work at the time because it was not deemed valid.

“The research addressed some important issues,” says Frank Scrimgeour, Professor of Economics at the University of Waikato, “but no credible framework for analysis was used, no distinction was made between total, marginal and average costs, and there was no effort to compare apples with apples.”

In short, economists have not engaged in debate because there is no sensible starting point for critique.

The research does point out that intensification in the dairy industry has enabled increased outputs per unit area.

Over the past decade StatisticsNZ has hailed the sector as having the greatest productivity gains, per hour worked and per unit input. In fact, year-on-year it is the agricultural sector overall that leads New Zealand’s economic growth and which has, overall, enabled improved lifestyles.

The record sales this Christmas (Paymark recorded $403 million in transactions on Christmas Eve and Boxing Day alone) reflect the boomer year in dairy exports last year.

The new research by ecologists suggests that “the community” is left to deal with the cost of the effects of intensification, such as the cost of cleaning up pollution or the cost of having a degraded environment. 

“Costs are in the form of government remediation funded by public taxes, or public health costs associated with an unhealthy environment of contamination, among many others,” they say.

New Zealand, has, however, an environment that is highly-ranked in terms of “clean” globally. In addition, the public health issues are not to do with clean water, air quality or degraded environment but with obesity, smoking and family violence.

The 2014 Yale Environmental Performance Index (EPI) ranks New Zealand 16th of 178 countries. Household air quality ranks lower than outside air quality because of smoking. Poor health impacts in the Index are to do with child mortality – which is to do with violence in New Zealand, not malnutrition or disease.
Access to drinking water and sanitation is rated 100% in the EPI, as it is by the OECD. 
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The EPI no longer ranks water quality in rivers and lakes but New Zealand local and national government is monitoring quality and alerting people to hot spots. Considerable expenditure by farmers means that these are rarely in rural areas, as shown by the pre-Christmas beach alerts.

The ecologists’ research presented at the NZARES conference has confirmed the importance of the dairy industry, the work that dairy farmers are doing for the country, and the fact that in order to solve big problems, experts from different disciplines – for instance economics and ecology – must work together to achieve credible results.

Those results might then provide the foundation for a solution.

Jacqueline Rowarth is Professor of Agribusiness, The University of Waikato