Co-effects of sediment and climate policies on agriculture in New Zealand

Sediment mitigation policies are closely linked with other agri-environmental policies and practices that control sedimentation can have impacts to a range of ecosystem services. It is therefore critical to understand the synergies and tradeoffs between sediment and other policies. Our case study is New Zealand, since it has an established emissions trading scheme and other climate and sediment policies. This paper employs an economic simulation model and non-market valuation techniques to explore the benefits and costs of sediment and climate policies in the form of payments for carbon sequestration in afforestation, highlighting the role of climate policy and its cascading effect on sediment reduction and other environmental impacts. We simulate a national sediment policy under different carbon prices and analyse the resulting impacts on water quality, greenhouse gasses, carbon sequestration, and agricultural incomes. Results indicate that the magnitude of the sediment outputs and agricultural incomes are strongly affected by climate policy, stressing the importance of jointly considering overlapping agri-environmental policies. Without climate policy, sediment loads reduce by 13.2% from the baseline, while having payments of $10/tCO2e for carbon sequestration in afforestation reduces sediment loads by 68.7% due to increase in afforestation area. In addition, agricultural incomes reduce without climate policy. Agricultural incomes become larger than in the baseline when having joint sediment and climate policies with a carbon price of $25/tCO2e and considering environmental benefits. However, marginal increase in afforestation area and incomes, and marginal decrease in sediment loads diminish with higher carbon prices.