National and regional economic impacts of climate-driven pasture decline

Abstract

Declining pasture and crop harvests is increasingly evident across several New Zealand regions. Milk production per cow has continued to increase over the past two decades, driven largely through increased use of supplementary feed. This may mask the true effect of declining pasture and crop harvested, which remains fundamental to profitable dairy production. Pasture is the cheapest form of feed for a dairy farm, and relying on other feeds will erode New Zealand’s
competitive cost advantage. This study quantifies the national and regional economic costs of declining pasture and crop harvested and estimates the potential value of strategic investment in forage and farmsystem solutions. Using the Dairy Sector Pathways model, parameterised with DairyBase and Dairy Statistics data, four scenarios were simulated to 2064/65: a baseline holding pasture and crop harvested constant; a business‑as‑usual scenario with declining pasture and
crop harvested; a strategic mitigation scenario slowing the decline; and an improvement scenario increasing pasture and crop harvested. Outcomes were assessed using discounted net present values of operating profit for dairy farms. Nationally, pasture decline imposes an estimated net present value cost of $10.5 billion to the 2064/65 season, relative to a Baseline net present value of $98.6 billion. Strategic investment generates positive economic returns relative to business-as-usual, valued at $0.5 billion under mitigation and $2.6 billion under improvement. Benefits depended strongly on the timing and extent of technology uptake, highlighting the importance of early and widespread investment to
sustain pasturebased dairy systems.