New Zealand Agricultural &
Resource Economics Society (Inc.)

Sarah Wheeler is a natural resource and agricultural economist who is a Professor of Water Economics and the Associate Director of Research, Centre for Global Food and Resources, University of Adelaide. She has undergraduate degrees in economics (honours) from the University of Adelaide, and a PhD from the University of South Australia in 2007. Sarah was an Australian Research Council Future Fellow (2014-2018), and has over 130 peer-reviewed outputs in the research areas of irrigated farming, climate change, Murray-Darling Basin, organic farming, water markets, water scarcity, mental health, crime and gambling. She is an Associate Editor of the Australian Journal of Agricultural and Resource Economics, and has been past Associate Editor of Water Resources and Economics and guest editor for a special issue of Agricultural Water Management, and is on a number of editorial boards for water journals. Sarah has an agricultural family background, having been born on a fifth generation family dairy farm in NSW. She has worked as an economist both nationally and internationally, in places such as Rural Solutions South Australia, ESCAP United Nations (Bangkok), Environment Agency (UK) and the South Australian Centre for Economic Studies, and has been a member of AARES for the past two decades.

Within the last year, two major amendments to the Climate Change Response Act 2002 have reshaped the future policy landscape for Aotearoa’s response to climate change. The 2019 Zero Carbon Act defined a 2050 emission reduction target and created a systematic process for government decision making on both mitigation and adaptation. It also established the Climate Change Commission to provide independent expert advice to the government. The 2020 Emissions Trading Reform Act has outfitted the New Zealand Emissions Trading Scheme (NZ ETS) with new features so it can better deliver on the 2050 target. While these groundbreaking amendments provide a destination and tools for Aotearoa’s climate change journey, they leave open what route we will take. This presentation will review the key features of these amendments and explore some of the challenges facing the future operation of the NZ ETS that could obscure our pathway.

We assess the impact of some of the proposals and final decisions. The proposed DIN and DRP attributes were not expected to apply across most of the region due to naturally elevated nutrient levels or sensitive receiving environments requiring more stringent reductions. Although these attributes were not included in the NPS-FM, the option to include them later remains open. Restrictions on land use intensification are expected to provide strong protection, although high risk land use changes are expected to be rare. The exclusion of conversions to irrigated horticulture (e.g. kiwifruit) in the final decision is positive. That type of land use change would generally be expected to result in better financial and environmental outcomes, subject to growers adhering to GMP. Farm plans would generate baseline information, potentially improve financial performance, and tailor practice changes to maximise environmental benefits. Capacity constraints are the main risk to successful implementation. Farm plan development and auditing costs were estimated to be $3.6m per year, while implementation of GMP was estimated to cost $35m. Stock exclusion costs were estimated at $39.2m across the region, and lost profit in retired setbacks was estimated at $2.9m per year. The final decision exempts fences that are already in place from the buffer requirements. These costs are now therefore likely to be over-estimated. Model farming/growing systems are used to illustrate the impact of the stock exclusion and farm plan requirements on annual profit. The proposed E. coli national bottom line for swimming sites/bathing season would be a significant change from the status quo. In some locations, it would potentially be very costly and challenging to achieve, yet the expected benefits are unclear. Likewise, the N fertiliser input limit of 190 kg/ha is expected to result in no significant benefit as the vast majority of farmers are understood to operate well below this limit already.

Soil erosion is a significant environmental issue in New Zealand. Erosion reduces soil fertility, land productivity, water quality, and biodiversity, among other impacts. Although several studies have been conducted to assess the physical damage that erosion could pose on crop and forest productivity, there is a lack of research into the monetary value of this damage. In this study, we employ a bio-economic analysis to estimate the monetary value of productivity loss due to soil erosion. The analysis integrates spatially explicit information on soil erosion and farm revenues alongside potential productivity loss rates due to soil erosion. The results show that the mean marginal cost of erosion (cost of one tonne per year) is estimated at $1.2 with a minimum of $0.003 and maximum of approximately $4. The impact of erosion is highly dependent on land use, and our analysis illuminates some important variation in the underlying factors. Our findings also show that the marginal cost of surficial erosion is higher than the marginal cost of mass movement erosion. Our results could ultimately be used to provide aggregated cost estimates for soil erosion at the national, regional or catchment level. By illuminating important costs and tradeoffs, these estimates should be a significant contribution to governmental planning and analysis related to mitigating the adverse impacts of soil erosion.

Most New Zealand sheep are a dual-purpose breed, such as Romney, producing lambs for meat and coarse wool (fibre diameter > 30 micron; µm). Data suggests crossbreeding a Romney ewe flock with Merino sires to achieve a second cross ¾ Merino ¼ Romney (¾M¼R) flock would reduce wool fibre diameter to take advantage of increasing mid-micron (fibre diameter > 24 µm and < 30 µm) wool prices and multi-year supply contracts. A bio-economic system-dynamics model was developed to simulate the breed transition with low or high selection intensity (24% vs. 35% of crossbred ewe lambs not selected) and either consistent or breed specific lambing rate (132% for all flocks vs. lower for crossbred flocks). The Romney flock (average wool fibre diameter of 36 µm) was replaced with an equivalent ¾M¼R flock with either an average fibre diameter of 26 µm after seven years, or 24 µm after 10 years of transition, with low or high lamb selection intensity, respectively. The proportion of total farm feed consumed by sheep increased from an initial level of 60%, up to 82% during the transition when sheep numbers peaked and it was assumed the beef cattle herd on-farm reduced in size. Post-transition the feed demand returned to the initial 60:40 sheep to cattle ratio when the desired ¾M¼R flock size was achieved. Although profit was always greater post-transition compared with pre-transition, the increased sheep numbers during transition increased expenses which reduced profit below that of the base Romney flock. Profit was greater with high lamb selection intensity and consistent lambing rate. Net Present Value analyses demonstrated that overall cashflow of the breed transition was up to 26% greater than continuing with the base Romney flock. However, scenarios with low lamb selection intensity and breed specific lambing rate had relatively small or no economic benefits over the Romney flock. The results can inform farmers and consultants considering using crossbreeding in a breed transition strategy of potential appropriate lamb selection intensities, effects of differing lambing rates, time taken to replace the base flock, and changes in production and profit during transition.

I evaluate the effectiveness of regulation to correct an externality under the presence of commercial lobbying. My empirical setting concerns a fishery shared by recreational and commercial fishers. An externality arises because commercial fishers harvest too many fish, which the regulator corrects by setting a commercial quota. Ideally, the regulator sets a tight quota to balance the marginal value of recreational and commercial fishing. Commercial fishers, however, lobby to guarantee a minimum quota causing a misallocation. I quantify the lobbying misallocation by estimating a fishing model incorporating commercial and recreational fishing decisions and include dynamics through the fish population. Using the model, I calculate the commercial profits and recreational utility resulting from no quota, optimal quota, and quota subject to the lobbying constraint. I find the optimal quota increases total welfare four-fold as compared to no quota with recreational fishers benefiting significantly more than commercial fishers do. The lobbying constraint, however, acts to reallocate fishing effort away from recreational fishers to commercial fishers causing a significantly welfare redistribution and welfare loss.

We examine the effects of smoking on productivity among agricultural workers in riverine islands (locally known as chars) of northern Bangladesh, where the prevalence of tobacco consumption is around 80% compared to 35.3% nationally. There is a high correlation between physically-demanding occupations and smoking, wherein farmers and day laborers are among those most likely to smoke. This means the opportunity cost of smoking is potentially very high for people employed in the labor-intensive agriculture sector. We use primary data from the Bangladesh Chars Tobacco Assessment Project 2018 survey for our empirical analyses. The effects of smoking on agricultural productivity is modeled using a standard Cobb-Douglas production function, with an additional parameter to capture the effect of the primary farmer’s smoking status on productivity. We estimate the effects using a two-stage non-linear least squares (NL2S) model through its impact on effective family labor. Our results show that smoking by the primary farmer reduces productivity of effective family labor input by 60-62%. Public policy objectives to improve labor productivity in the riverine islands of Bangladesh should actively target smoking behavior of agricultural households.

The increasing conflict between farmers and herdsmen has caused many injuries and deaths on both sides and the widespread destruction of property in Nigeria. In this paper, we investigate how the risk perception of farmer-herdsmen conflict influences the production decisions of rural farmers, using the data of 401 farmers collected from the North Central and South-East geo-political zones of Nigeria. Based on an augmented production function with a shock from the risk perception of farmer-herdsmen (F-H) conflict, we test the proposition that rural farmers with higher risk perception of F-H conflict are less likely to use fertilizers and pesticides. Findings show that a unit increase in the risk perception of F-H conflict reduces the likelihoods of investing in fertilizers by 8.9% and the amount spent on fertilizer per acre of cultivated land by about 51.8%. Farmers’ risk perception of F-H conflict does not have a significant impact on pesticide use. Our findings suggest that the continued resource-use conflicts due to the encroachment of grazing land, arising from population growth and climate change, need to be addressed to reduce the detrimental effect on production and consequently food insecurity. Keywords: Risk perception; farmer-herdsmen conflict; production decisions; farm households; Nigeria. JEL codes: Q12, D13, Q34, D81.

Planning for climate change adaptation is challenging due to the inherent uncertainty associated with future climate changes. Despite this uncertainty, adaptation decisions may need to be made now, to effectively reduce future vulnerability to climate change. We apply an economic approach for making decisions under uncertainty, Real Options Analysis (ROA), to an irrigation water storage investment decision. Our case study site is the Canterbury region of New Zealand (NZ), where water availability is currently under considerable pressure, and is likely to increase further under climate change. Using the full range of climate model and warming scenario combinations available in New Zealand (24), we develop estimates of water requirements out to 2090 for the chosen location. The ROA involves the development of a decision tree with different decision points (2018 and 2050), so that the size of the reservoir in 2018 will be sufficient to provide water availability until 2050, and have the capability to be extended if necessary at the next time period to provide water availability until the end period (2090). The most economically efficient storage size is sensitive to the discount rate and the milk price, both of which result in larger reservoirs being more cost-effective in the first time period, as well as the likelihood of the different climate scenarios. This analysis illustrates the benefits of ROA when the future is uncertain – by enabling decision-makers to revise their decisions over time rather than locking themselves into a decision made now that has long-term consequences.

Governments use policy interventions such as education, incentives, and regulations to change peoples’ behaviour and thereby achieve their policy objectives. The success of these interventions depends, in part, on how committed people are to make the changes that are desired by policy makers. Consequently, understanding and predicting the willingness of people to change their behaviour is critical in assessing the likely effectiveness of proposed intervention. In this paper we present a general framework for understanding and predicting the motivation of people to change their behaviour in response to the introduction of a policy intervention. The framework is draws on the marketing concept of ‘involvement’, a measure of motivation. Peoples’ willingness to change behaviour in line with the policy objective is hypothesised to depend on (1) their ‘involvement’ with the policy objective, and (2) their ‘involvement’ with and attitude towards the intervention itself. Through application to a biosecurity case study we show how the framework may be used to predict peoples’ responses to a policy intervention and how these predictions might assist agencies to develop strategies to promote behaviour change.

Primary industry exports and tourism make up the bulk of New Zealand's economic output. The marine economy is a part of this and this work mapped the interconnectivity of three sectors of the marine economy - wild fisheries, farmed fishers and tourism. CLDs were used as an accessible tool for helping a wide variety of audiences understand the relationships within their sector, and to explore risks relating to those sectors, particularly as that may relate to transitioning to a sustainable 'Blue' marine economy in the future.

Water sensitive practices are widely promoted as a means of improving water quality and city liveability. However, the extent to which these practices improve the social welfare of residents is not well researched. We contribute to this knowledge gap by using Singapore’s Active, Beautiful, Clean Waters (ABC Waters) Program as a case study. Singapore’s National Water Agency launched the ABC Waters program in 2006, and as part of the program several drains, canals, and reservoirs have been renovated, restored, and integrated with the surrounding environment. We analyse more than 50 thousand real estate transactions within 2°km of 13°canals that were renovated between 2008 and 2016 as part of the ABC Waters program. We find the value of residential flats increased by 1.5%–1.8% within 500°m of renovation sites due to the renovation. Our empirical strategy involves estimation of both a difference-in-differences hedonic price model and a difference-in-difference exact matching model. As a falsification test, we shift the restoration project dates to false dates and re-estimate the models. Combined, the empirical strategy and the falsification test results support a causal interpretation of the effect of canal restoration projects on flat prices close to canals. The total uplift in value for all flats within 500 m of canal upgrading projects is between S$420 and S$504 million, which is substantially more than the combined costs of all ABC Waters projects. This demonstrates that the urban waterway renewal projects have generated benefits far greater than the costs.

New Zealand dairy farms have long been among the lowest cost producers of the dairy products in the world. However, annual pasture harvest, a source of competitive advantage, has plateaued, while some other grazing-based dairy producers around the world have been closing the gap. Additionally, when considering the economic cost of dairy production (including the opportunity cost of capital) the US dairy sector has reduced the gap in cost of production over the last decade and a half to a point that is likely to constrain the length of time that above average milk prices can persist.

Understanding international consumer preferences and attitudes towards credence attributes in food products is important for countries like New Zealand that depend heavily on food exports. Over the last few decades, New Zealand’s export focus has changed from almost all exports going to Europe, to more into Asian markets, in particular to China. It is therefore important that different cultures and preferences in these markets are considered and understood and how they may have changed over time. This paper will present results from consumer surveys in the UK, China and Japan in 2015, 2019 and 2020. The surveys focus on how consumers in different markets respond to different attributes in food products and the importance of factors affecting the key attributes of environmental quality, animal welfare, human health, social responsibility, traditional cultures and food safety and the relationship between them. Results showed preferences for food attributes differ between countries but they did not change much between the years. The 2020 survey was undertaken during the global Covid19 pandemic, and results showed that during the pandemic consumers still considered credence attributes as very important in food.

Erosion has many social and economic impacts in New Zealand. To design effective erosion control policy, we need tools for measuring the benefits and costs of different policy options. However, the New Zealand (and international) literature contains very few studies with spatially explicit estimates of erosion-related damages. This study uses insurance claims from the Earthquake Commission EQC to monetise some of the property damage-related impacts of erosion. We obtained a database of over 33,00 claims from the EQC, representing all claims in their LSF (Landslide, Storm, and Flooding) category from 1996 to 2019. To explore the impact of erosion on damages, the EQC data were matched to several other datasets in our empirical analysis., including Census, Land Cover, and Landslide data from GNS’s Landslide Database. We use several empirical methods to model EQC damages as a function of local characteristics. Econometric results suggest that in areas with no landslides, erosion does not significantly affect EQC damages. However, in areas of higher elevation and more landslide incidence, erosion is significantly associated with higher EQC damages. In meshblocks with the highest quartile of landslide incidence, an additional tonne of erosion is associated with $100-$200 in additional EQC damages. These results are consistent across several different econometric specifications. Our study is the first to link erosion and property damage at a spatially-explicit level. We find that in some areas the impact of erosion is far higher than existing aggregate estimated. Furthermore, these results are likely an underestimate since they do not account for non-residential properties or other forms of insurance. These results should help identify the benefits of erosion control in areas with erosion and landslide hotspots, allowing a more spatially-explicit approach.

Little is known about the reverse causality between agricultural productive services and farmers' income. To address this research gap, in this study, we analyze the impact of agricultural productive services on rural incomes, using the data derived from the China Household Income Survey (CHIP) and an instrumental variable-based quantile regression model. The results show that the usage of agricultural productive services has a positive and significant impact on farmers' income, and there exerts a Matthew effect. In particular, the income effects of agricultural productive services are higher for farmers at higher income quantiles. Our findings suggest that promoting agricultural productive services and diversifying the service extension modes can help further increase rural incomes.

Changes in farm systems and land use were modeled using Farmax, Overseer, and Forecaster on 4 case study farms (2 dairy, 2 sheep & beef) to investigate the impact of such changes on greenhouse gas emissions and farm profitability.The GHG emissions were differentiated between methane and nitrous oxide so as to measure reductions relative to the ZCA targets. The results showed that farm system change can get close to achieving the 10% methane reduction, but land use change is necessary to achieve the 2030 nitrous oxide target, and the 2050 targets. It also showed that any reductions in stocking rate had to be accompanied by improvements in per animal productivity in order to maintain farm profitability.

Rare empirical evidence has been explored on the pathway through which agricultural training affects farmers’ adoption of the resource conservation technology in farming practices. This study employs the mediation model to analyse the role of three factors, including farmers' absorptive capacity, social interaction and active learning, in bridging agricultural training and farmers’ adoption of the drip fertigation system (DFS) based on the primary data of 632 banana farmers collected in South China. The results show that agricultural training has significantly increased farmers’ adoption of the DFS in banana cultivation. The mediating effect of the three factors appears statistically significant. Specifically, farmers’ active learning contributes to the effect of agricultural training on encouraging their adoption of the DFS by around 60 percent; farmers’ absorptive capacity and social interaction contribute about 30 and 10 percent, respectively. We also find that agricultural training can stably increase farmers’ adoption rate of the DFS by 18.75 percent after the potential endogeneity problem has been addressed using the treatment effect model (TEM). Our findings suggest that agricultural training can promote farmers' adoption of the resource conservation technology through improving their absorptive capacity, social interaction and active learning. Understating these mediating factors would enable extension agency to design effective agricultural training programs and better promote resource conservation technologies in developing countries.

Each year the Economics team at DairyNZ produces the Economic Survey, detailing the economic performance of New Zealand Dairy Farms. Traditionally the main output formats have been a hardcopy book and a pdf document available online. This year, the Economic Survey was rebuilt in R Markdown, with a web-first philosophy, utilising the ability to have interactive figures and downloadable tables, while still retaining pdf and hardcopy versions. Here we describe the approach, challenges, benefits and demonstrate the output.

Soil acidity is a major limiting factor for crop production in many farming systems worldwide. Lime application is the most common practice to mitigate soil acidity. There are complex economic interactions between application of lime and nitrogen fertilizer, with the greenhouse gas emissions associated with the use of these inputs adding further complexity. We employ a non-linear dynamic optimization model to determine economically optimal application strategies for lime and nitrogen fertilizer accounting for the social cost of the resulting emissions of greenhouse gases. The model is applied in three zones with different rainfall levels, in the northern wheatbelt of Western Australia. Rainfall has important influences on results through its effect on the dissolution and leaching of lime, leaching of nitrogen, and the yield potential of crops. Results show that nitrogen-related decisions, such as the type of nitrogen fertilizer and crop rotation, have a substantial impact on optimal lime application rates and resulting emissions. For example, the use of ammonium sulfate, rather than urea, reduces emissions. Similarly, by allowing a reduction in nitrogen fertilizer use the incorporation of legume crops like lupin can reduce emissions by 50%, relative to a wholly non-legume crop rotation. Although carbon pricing reduces emissions, the magnitude of the reductions is modest in all modeled scenarios. The private cost to farmers of a carbon tax in this case study region is small, although the net social benefit of the carbon tax in this case study is smaller still, even without accounting for the transaction costs of operating the tax system.

Greenhouse gas (GHG) emissions from the Bay of Plenty increased by 12% between 2007 and 2018, the largest increase of any region over that period. The Bay of Plenty also experienced the greatest level of economic growth of all regions over that period. Although population growth in the region over that period was also among the highest in the country, other regions with comparable population growth actually decreased their GHG emissions. This paper presents the results of three case studies for Regional Council initiatives already adopted, or being considered, in the Bay of Plenty to reduce emissions; i.e., impact investment for clean heating and solar energy systems, electric buses for public transport and electric vehicles for a corporate fleet. The results suggest that: - solar energy systems can make both financial and environmental sense (a reduction in emissions of up to ~1 ton of CO2-e per household per year), although financial viability is dependent on a range of variables including upfront installation cost, system capacity relative to electricity demand, grid power costs, power buyback rates, location, power use patterns and finance; - small scale loans for uptake of clean heating technology result in significant environmental (a reduction in emissions of ~3,500 tons CO2-e per year in the Rotorua District) and health benefits, for a relatively modest cost; - electric buses for public transport make financial sense, although their environmental impact is highly dependent on patronage levels (indirect emissions are ~78 ton CO2-e per bus per year lower than direct emissions from a diesel bus); - compact electric vehicles also make financial and environmental sense (indirect emissions are 3.65 ton CO2-e per car per year lower than for a comparable diesel vehicle), with the difference in upfront costs estimated to be “paid back” through lower running costs in about 6 to 8 years.

Adoption of sustainable agriculture practices (SAPs) has been recommended by many experts and international institutions to address food security and climate change problems. Global support for the Sustainable Development Goals (SDGs) has focused attention on efforts to up-scale the use of SAPs in developing countries where growth in populations and incomes is compromising the resilience of natural resources. Little is known about the effects of these practices in West Africa. This study examined the effects of SAPs adopted by smallholders in northern Ghana, and their impacts on household income and food security. The study draws on survey data collected in 2014, covering 1284 households and 5500 plots, for the Africa RISING project. The data was analysed using a multinomial endogenous switching regression model to identify context-specific information about factors that constrain or encourage smallholder use of SAPs and how adoption of SAPs impact household income and food security. The study found social demographics of the households, plots characteristics, location, extension, satisfaction with extension and membership in Africa RISING FBO, influence the adoption of multiple SAPs. The research also found that adopting all the SAPs simultaneously, have a higher positive impact on household income and food security than adopting individual SAPs. The study advocates for the policies that enhance the quality of extension service and strengthening FBOs for a wider dissemination of adequate SAP information. Farmers should be encouraged to adopt SAPs as a comprehensive package for maximum benefits in household income and food security.

It is commonplace for regulators to apply a cost-benefit assessment of the likelihood of (non)compliance when they are introducing new regulations. However, empirical studies have shown that generally people are much more likely to comply than a calculation of their benefits and costs might imply. Early behavioural studies into peoples’ (non)compliance initially took a dualistic approach assuming that people would either fully agree or disagree with implementing regulations. This has been shown to be too simplistic to address the complexities involved in understanding peoples’ actual behaviour when they are responding to new regulations. In this paper a Social-Cognitive Model (SCM) is proposed for providing an understanding of peoples’ compliance behaviour and predicting their likely responses to regulatory interventions affecting their lives. The SCM’s strength is that it integrates three existing theories describing peoples’ policy motivation, social contract alignment, and personal dissonance. In the model, compliance behaviours are encouraged when the regulations appeal to intrinsic motivations, when people have a trusted relationship with the regulator, and when people want to support the intent of the regulation. In contrast, noncompliance behaviours are more likely when the regulation appeals to extrinsic motivations, when in peoples’ experience the regulator appears to be unfair, and when the regulation is perceived to be a threat to the majority of peoples’ existing behaviours. The type and level of enforcement can then be matched to the factors that can encourage compliance and reduce noncompliance.

Investments in forestry are long-term and thus subjective to numerous sources of risk. In addition to the volatility of log prices, forestry investments are directly exposed to impacts from climate change. We examined how diversification of management regimes can mitigate the expected risks associated with future forestry activities in New Zealand based on the application of Modern Portfolio Theory. Uncertainties in the responses of Pinus radiata plantations to climate change, from 2050 to 2090, were simulated with 3-PG, a physiological process-based forest growth model, based on future climate scenarios and Representative Concentration Pathways. Log price forecasts were constructed with autoregressive moving average (ARMA) models and generalized autoregressive conditional heteroskedasticity (GARCH) processes. Outputs from 3-PG and the ARMA-GARCH models were combined to compute annualized forestry returns across P. radiata regimes. This information was then used to construct optimal forestry portfolios that either minimize investment risks or maximize risk-return ratios. While current P. radiata regimes in New Zealand are largely homogenous, our results suggest diversification of forest management to mitigate the risks imposed by climate change. Nevertheless, optimal portfolio composition varies substantially across future log price and climate scenarios. Application of this framework can help forest managers and stakeholders to better manage forestry activities under the uncertainties of climate change.

New Zealand is a geographically isolated country that relies heavily on maintaining market access for its exports of agricultural products. This export focus has shifted from traditional European markets to other international markets, particularly in Asia. This shift has highlighted the importance of understanding consumer use of digital media and smart technology in target markets for New Zealand food and beverage exports as a means of maintaining and enhancing market access via novel marketing and sales channels. This paper presents the results of consumer surveys conducted in China, Japan and the United Kingdom in 2015, 2019 and 2020 examining consumer attitudes to and the use of a range of digital media and smart technology tools for access information about and purchasing food and beverage products. This includes the use of online shopping, social media and mobile devices, as well as interactions with product barcodes, QR codes and microchip reading technology (RFID/NFC). Results showed growth in the use of all digital media and smart technology for this purpose over time across all markets, particularly China. The 2020 survey was undertaken during the COVID-19 pandemic, with results showing only marginal changes in technology use. This research can assist New Zealand industries by informing them of possible opportunities for increasing their export returns by improving their market access via digital marketing and sales strategies.

This study investigates the impacts of institutional risk on risk-averse land users in New Zealand. As an institutional risk, I consider the carbon price fluctuations under the New Zealand Emissions Trading Scheme. The New Zealand Forest and Agriculture Regional Risk Model (NZFARM-Risk) is developed and uses the mean-variance approach with different risk aversion levels of primary industries. The risk aversion levels primary industries were collected through the Survey of Rural Decision Makers. I analyse the effectiveness of three climate policy scenarios under conditions of risk, such as payments for carbon sequestration in forestry, levies for carbon emissions from agriculture and their combination. Findings show that the effectiveness of policies is responsive to the risk-aversion level of land users: the greater the level of risk aversion, the greater are the net GHG emissions in the carbon payment and combined scenarios. This is because the carbon price risk increases the forestry profit risk and reduces its attractiveness for strongly risk-averse land users, and in turn they have less increase in forestry and decrease in pastoral areas. In contrast, the carbon emission levy increases forestry and reduces pastoral areas with greater risk aversion, although the magnitude of change is small. In overall for all three scenarios, the policies lead to lower economic returns for the greater risk-averse land users, especially the combined policy can substantially reduce the net revenues of primary sector.

This paper examines the heterogeneous effects of agricultural cooperative membership on farm income. We employ a two-stage predictor substitution model combined with an unconditional quantile regression model to address the endogeneity of membership variable and analyze data collected from banana farmers in China. Results show that cooperative membership affects farm income heterogeneously. Farmers at the higher-income quantiles tend to benefit more from agricultural cooperatives than their counterparts at the lower-income quantiles.

New Zealand’s agricultural industry faces the challenge of maintaining its contribution to the tradable economy under increasing public scrutiny. In particular, public scrutiny makes it hard for primary industry to maintain its ‘social license to operate’ (SLO), i.e. the informal approval or acceptance communities grant to a business or industry. Adopting good management practices (GMPs) to meet societal expectations of environmental and social performance of farming is central to obtaining SLO.
Yet what if GMPs are unobservable or otherwise hidden from the public eye? Do farmers feel the same pressure to pursue GMPs? To date, studies on the relationships between road frontage and SLO have been restricted to qualitative analysis, and to our best knowledge, none have focused on farmers’ adoption of GMPs.
Therefore, we use the 2019 Survey of Rural Decision Makers Data, a large-scale survey of farmers, foresters, and growers from across New Zealand, to analyse the effects of farms (sheep&beef and dairy) being situated on busy roads on the adoption of GMPs. We employ principle component analysis on 51 GMPs to reduce the dimension to 10 components while still explaining 99% of the variance in the data. Based on the component scores, we use k-means cluster analysis to determine the best number of farm clusters, which is 7 in our case. The clusters are then used as outcome variables in a multinomial regression model to analyse the causal effects of busy road frontage on adoption of GMPs, considering different farm and farmer characteristics (e.g., type of farm, education, and profitability).
The regression results show, compared to the group of farms that have high adoption of almost all GMPs, those farm groups only focusing on one or two types of GMPs (e.g. fertiliser management) are less likely to be in front of busy roads. The findings of the study indicate that being observable to the public (farms fronting a busy road) stimulates the adoption of GMPs.