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Abstract
In New Zealand the Resource Management Act 1991 has put standards in place
regarding surface and ground water quality. Nitrogen leaching from dairy effluent
compromises these standards; consequently the nation-wide aim is to have all dairy
farms operating land-based effluent disposal. An estimate has been made of the cost
of this to the New Zealand dairy sector.
An Applied General Equilibrium approach (GTAP) is used to look at the possible
impact of these additional production costs on New Zealand’s dairy export trade.
This analysis is conducted under two scenarios, the first being that New Zealand acts
unilaterally in imposing water quality regulations. The second scenario assumes that
New Zealand’s three main dairy export competitors, the EU, Australia, and the US
also enforce their own water quality regulations and internalise the cost of such
regulations.