Some External Costs of Dairy Farming in Canterbury

Intensification of agricultural practices is occurring in Canterbury. Dairy farm conversions continue with land use increasing 132% since 1995. Current concerns emanate predominantly from issues of water quantity and quality, in particular the degradation of lowland streams. These and other costs are not transmitted through markets for dairy products, these negative externalities represent allocation and equity concerns for regional policy makers. This study canvassed regional policy administrators, assembled available valuation studies and performed rudimentary calculations based on reviewed New Zealand literature to form an estimate of the external costs of dairy farming in Canterbury. External costs are estimated at $28.7 to $45 million annually. Using 146,000 hectares of dairy in Canterbury, external costs per hectare is calculated at $196.59 to $308.23. Damage to air resources from CO2 equivalent emissions is the largest category and is estimated to be $24.2 to $40.4 million per year