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The economics of water

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The Southland Economic Project has just released the first of two reports on the economics of water for limit-setting in Southland.

The Agriculture and Forestry Report brings together research that industry groups and Environment Southland have undertaken for farms in Southland. It was the first time these industry groups have all collectively been involved in research of this type. It was also the first time that such research has been done for farms from across a region.

The aim of the research was to investigate the relationship between managing a farm’s nutrient losses and farm profitability.

Project manager Emma Moran said the report, and the research it is based on, is the product of a huge amount of hard work over several years on behalf of Southland farmers and growers.

The set of 95 farms studied forms one of the most extensive datasets of its type in New Zealand. “The dataset gave us a range of farm systems and environmental conditions across Southland and we will be using them to understand economic impacts for all the farms in the region,” Emma said.

“The report recognises that agriculture, forestry and the environment are closely connected and influence each other.”

“Agriculture’s share of Southland’s economy is far bigger than in any other region. It is clear that the rural and urban communities rely on each other, and what happens in one community is likely to impact on all Southlanders.”

Emma said a wealth of information in the report and it will be an important resource during limit-setting in Southland. She noted two findings:

First, within an industry, there was no clear relationship between a farm’s existing nutrient losses and its profitability. For example, farms with lower nutrient losses were just as likely to be profitable as farms with higher nutrient losses.

Second, when we modelled on-farm actions to reduce nutrient losses, it usually resulted in lower profitability as the farm production systems adjusted to change.