Scoop has an Ethical Paywall
EDS report shoots down DairyNZ conclusions re freshwater
The Environmental Defence Society (EDS) has released a
memorandum from respected University of Auckland economist
Professor Tim Hazledine, which analyses the economic
modelling commissioned by DairyNZ. He concludes that DairyNZ
has misinterpreted its economic modelling and misrepresented
the impact of the freshwater reforms.
“We were concerned that DairyNZ had not accurately described what the modelling it commissioned said, and that it was putting a self-serving spin on the data,” said EDS CEO Gary Taylor.
“It is our contention, supported by Professor Hazledine, that DairyNZ grossly overstated the potential negative impacts of the reforms on the sector and on the wider New Zealand economy, when its own modelling shows the opposite. In our opinion DairyNZ is trying to avoid having to meet mandatory freshwater limits and is instead seeking to substitute what it euphemistically calls “good management practice” which is not going to cut the mustard.
Professor Hazledine was commissioned by EDS to review whether there was a reality gap between the model outputs and the DairyNZ conclusions.
“My conclusion is that the computable general equilibrium (GCE) models used by Sense Partners and Infometrics showed the same result: that New Zealand’s economic wellbeing would be slightly improved by the imposition of the proposed freshwater quality standards,” said Professor Hazledine.
“In its press release DairyNZ focused on scenario 3 which it said resulted in a cost to New Zealand of $6 billion a year by 2050 and a 24% reduction in milk production.
“With respect to the first point, New Zealand overall is forecast in the modelling to be slightly better off in economic terms as a result of the freshwater policies. Table 1 of the Infometrics report forecasts that Real Gross National Disposable Income will be about $1 billion / year (0.2% of GDP) higher even under Scenario 3.
“With respect to the second point, the modelling shows that a reduction in milk production will not lead to diminished returns from the sector: if we cut back the quantity supplied, we would move up the demand curve, getting a better price from fewer resources committed to the dairy sector – called ‘improved terms of trade’ (Infometrics, pp 4, 9; Sense Partners, page ii).
“Overall it is my prediction that we will be significantly better off economically from the implementation of the policy scenarios – even before factoring in the environmental benefits that these policies are purposed to achieve,” Professor Hazledine concluded.
Environmental Defence Society
EDS speaks for the environment. It has influence.
Since 1971, EDS has been driving environmental protection in Aotearoa New Zealand
through law and policy change. That's why it's one of this country's most influential non-
profit organisations when it comes to achieving better environmental outcomes.
EDS has expertise in key disciplines including law, planning, landscape and science. It
operates as a policy think-tank, a litigation advocate, and a collaborator – bringing together
the private and public sectors for constructive engagement.
EDS runs conferences and seminars on topical issues, including an annual Environmental
Summit and the Climate Change and Business Conference.
EDS is a registered charity and donations to it are tax-deductible.
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