Monday, 2 June 2014

Carbon farming

There will surely be gasps as people read the Greens' carbon tax proposal, especially from those who emit lots of bad air.

The first-resort counter-argument is that NZ's emissions are a drop in the ocean so we don't matter, so we don't have to do anything. Or in plain English "this is a global problem - we don't give a shit".

Fair enough, but there are counter-arguments. Relative to a carbon tax, the benefit of doing nothing is that everyone gets a quiet life - business as usual if not more so. Costs include...
  • Less innovation in low-carbon technology. The proposed taxes certainly would stimulate innovation in New Zealand and that innovation might end up having value in some international market.
  • Demand-side risk, such as the possibility that some valued trading partners might one day stop buying from us because they don't like our production methods.
I look forward to hearing views on this trade-off/social-choice (evidence would be even better!). But my current view is that I'd prefer the proposed tax even though (as dairy farmers) we'd be paying it. Here's why. 

Firstly, the level seems about right. The proposed tax works out to a bit under 2% of revenue depending on how efficient (pdf) dairy farmers are. 

That's about $12,500 for a 100,000 kgms farm. Far from crippling, but certainly enough to notice and worth responding to, so a fairly sensible tax rate I reckon. Others will no doubt argue: "we can't do anything about it". But that's just a truism, isn't it? Anyone who says they're helpless is in fact helpless, by definition. 

Last week we put a mob of cattle onto a hill block containing literally tonnes of feed. We were back there yesterday, and 3/4 of the mob were away off over-the-back, stuffing themselves full. The rest were hanging around the gate mooing and making out they were starving. We tried to help them by coaxing/shooing them up towards the food. My point is that even if there is a lot of mooing at the gate, there will also be quite a few innovators looking for opportunities.
What would such dairy farmers do if faced with a carbon tax? That's easy: we'd ask DairyNZ* how to reduce emissions and whether we could get paid to sequester carbon in the soil. DairyNZ won't have a clue of course, but they'll be obliged to find out. So we'll start to get research funds directed that way, which will lead to innovation, etc.

Directing effort this way is broadly efficient unless you are a climate change denier. It seems a huge improvement on the current practice for allocating research funds at the agriculture/climate nexus, which looks more like corporate welfare to me.

Also, the mooing-at-the-gate-mob might eventually realise that there is actually food out there. Higher farming profits are available from a more nature-centric way of farming, and it will also help with that whole "townies-hate-us" issue. Here for example is what the Soil Science Society of America says about the wider benefits of sequestering soil organic carbon (SOC).
Soils gaining SOC are also generally gaining in other attributes that enhance plant productivity and environmental quality. Increases in SOC generally improve soil structure, increase soil porosity and water holding capacity, as well as improve biological health for a myriad of life forms in soil. In general there is a favorable interplay between carbon sequestration and various recommended land management practices related to soil fertility (e.g., adding mineral fertilizers, manures, sludges and biosolids), tillage, grazing, and forestry.
Recommended agronomic, grazing land and forestry practices also enhance land sustainability, wildlife habitat and water quality. In most locations, especially environmentally sensitive settings, these practices also result in decreased water and wind erosion that degrade soil carbon stocks. The same positive relationship that exists between carbon sequestration and recommended land management can, in some settings, improve water quality and aid wildlife habitat restoration.
In saying all of this, I am of course assuming goodwill on the part of the Greens and any government they are part of. They could just impose the tax and do nothing about the potential upside with sequestration. 

* I've been monitoring DairyNZ for the number of results for searches on "legume" and "urea" on their website. This is an indicator of whether DairyNZ cares much about alternative ways of delivering nitrogen. The search function has now been removed from the DairyNZ website (gee thanks) so I had to use google to search within the site this time. Results followed the time-honour pattern though: Legume = 73 hits, Urea = 1520 hits. This shows just how much DairyNZ's work is captured by or at least just strongly sympathetic to the fert industry. They seem to have zero interest in other farming systems.


  1. Nice piece John. I appreciate your analysis and pragmatic response. I'd also add that the policy includes a certification scheme to allow farmers to claw back some of the tax if they can demonstrate practices that mitigate or reduce their emissions. Activities like riparian planting, and better management of nutrients, effluent etc should all qualify.

    Oh, and the riparian planting that doesn't currently qualify for forestry carbon credits, would, under our policy. Not coincidentally, the credit of $12.50 per tonne applies to forestry.

  2. Yes these things will all help, though my view is that actual soil building is at least as important. It has been in the too hard basket previously, but there could be huge benefits from getting this right, including to farm profitability.