Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Paying farmers not to pollute

Paying farmers not to pollute


Providing incentives to farmers not to pollute could be more effective than fining them when they do says University of Waikato economist Professor Les Oxley.

He has some ideas about managing freshwater resources, but says agriculture should not have to bear all of the costs when the benefits are more widespread. He’ll be expanding on his ideas at a public seminar at this year’s National Fieldays at Mystery Creek.

Professor Les Oxley says one way to tackle fresh water pollution would be to create a set of incentives that encouraged people not to pollute waterways.

“Let me be a little more radical and say rather than simply punish the farmers for polluting, let’s consider paying them not to. We would still retain the fundamental environmental law principle of 'polluter pays' if they do pollute, but let’s give them an incentive not to do the things we don’t want them to do, rather than punishing them for doing the things that they may decide to do, simply because they’re interested in production rather than profit.”

Professor Oxley says economists understand incentives and how to achieve certain actions by encouraging people to do things that we actually want them to do, rather than telling them what to do or not to do. “Economists try to find solutions where there are fewer or even no losers.”

Water differs from other commodities such as petrol or electricity, he says. “Because these things have a price you pay when you want more, and you can identify what your preference for these things is by how much you’re prepared to pay for it.”

With water, it is effectively a free resource for many people (aside from a fixed annual charge), and they can use as much as they want.

“Not surprisingly, people’s use of water reflects the price that they are actually facing when they want more, in this case, zero. Where's the incentive to economise on water use here?”

However, when there are water shortages, “it leads to some sort of dictat from the regional council that says it’s a hose pipe ban. What do your neighbours do? They turn their hoses on at night when no one is watching”.

Telling people to do the right thing doesn’t necessarily always work. “In the water market, understanding why we have supply constraints, understanding the effects of urbanisation, understanding the costs of infrastructure on that supply, and its interaction with those living in the cities, with those working on the land, with those creating output for us to share, those interactions
are markets.

“If it’s profitable for them (farmers) not to pollute and we made it even more profitable by giving them a subsidy, then that solution is both radical and different but the reality is it’s incentive-compatible with what we want farmers to do. Punishment is ex-post, (and we would still have this for
those that do offend) whereas these are ex-ante attempts to change behaviour,” he says.

Professor Oxley will be speaking at Fieldays on Friday June 13 at 12:45 – 1:30pm.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Gareth Morgan: The Government’s Fresh Water Policy – Revisited

Fresh water quality is the latest area to be in the sights of Gareth Morgan and his research organisation The Morgan Foundation... They found that the fresh water policy was a bit murkier than the Environment Minister let on. More>>

ALSO:

Interest Rates: RBNZ Hikes OCR To 3.5%, ‘Period Of Assessment’ Now Needed

Reserve Bank governor Graeme Wheeler raised the official cash rate as expected, while signalling a pause in rate hikes to assess the impact of moves so far this year. The kiwi dollar sank after Wheeler said its strength was “unjustified” and that the currency could have “a significant fall.” More>>

ALSO:

Fonterra: Canpac Site 'Resize' To Focus More On Paediatrics

Fonterra is looking at realigning its packing operations at Canpac, in the Waikato, to focus more on paediatric nutritionals... The proposed changes could mean around 110 roles may not be required at the site which currently employs 330. More>>

ALSO:

Scoop Business: Postie Plus Brand Gets 2nd Chance With Well-Funded Pepkor

The Postie Plus brand is getting a new lease of life after South Africa’s Pepkor bought the failed retailer’s assets out of administration and said it will use its purchasing power to reduce costs of stock and fatten margins. More>>

ALSO:

Warming: Warming Signs From State Of Climate Report

Climate data from air, land, sea and ice in 2013 'reflect trends of a warming planet' -- says the latest State of the Climate report, launched by U.S. and New Zealand scientists. More>>

ALSO:

Scoop Business: Embrace Falling Home Affordability, Says NZIER

Despair over the inability to afford a house is misplaced and should be embraced as an opportunity to invest in more wealth-creating activity, says the principal economist at the New Zealand Institute of Economic Research, Shamubeel Eaqub. More>>

Productivity Commission: NZ Regulation Not Keeping Pace

New Zealand regulators often have to work with out-of-date legislation, quality checks are under strain, and regulatory workers need better training and development. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news