The economics of transformation toward sustainable hill country land use: Whatawhata case study

Abstract

Abstract The Whatawhata integrated catchment management project generated a substantial amount of data on the biophysical impacts of land use and management change - livestock enterprise performance, terrestrial biodiversity, water quality etc. The question has been posed: What was the impact of the changes on the financial viability of the catchment farm system? Farm operating budgets before and after land use changes, enterprise gross margins, costs associated with tree planting, and farm system modelling with FarmaxPro® have been integrated to give a whole-system view of farm business viability over the long term (1995-2030). This information compared the existing system (1990s) with the new system implemented in 2000. Annual operating profit for the 296 ha breeding ewe and breeding cow system in the late 1990s was between $25 000-$30 000 reflecting the size and land use capability distribution of the block. Changes to the livestock enterprises improved farm surplus from ca. $100/ha to ca. $330/ha in the first 3 years, but on a reduced pastoral land area (150 ha). This gave an annual operating profit (EFS) of ca. $50 000. Much of this difference reflected product price movements. The cost of land use change was approximately $969 000 over the first 10 years. Selective intensification of hill lands can improve per ha profitability in the short-medium term. Two key financial issues, the transformation cost and medium term viability, need to be addressed in implementing land use change to move toward hill land sustainability. Keywords: integrated catchment management, land use change, sustainable hill country