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

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news