The top global 100 externalities published in Natural Capital at Risk (Teeb for Business / Trucost 2013) confirmed that water pollution costs world-wide are dominated by the impact of eutrophication - excessive plant growth due to the enrichment of ecosystems with chemical nutrients - which is caused by the use of phosphate and nitrate fertilizers. It highlighted grain production in Asia (large production volumes) as well as North America and Europe (high fertilizer application rates). And while cattle farming in South America was singled out for its land use impact, the impact of fertilizer use and dairy farming in countries such as New Zealand is starting to raise eyebrows.
Over the last two decades farmers in New Zealand have increasingly been turning from farming sheep to farming cattle, especially cows. Since the mid-1990s some 300,000 hectares of traditional sheep as well as beef producing farms have been converted to dairy farming. Even more might be converted during the coming decade, as demand in Asian economies such as China for milk powder and other dairy or beef products continues to grow. More intensive farming is accompanied by extensive usage of nitrogen fertilizer to boost grass growth. Inevitably the resultant mass production brings costs, as traditional pastoral farming methods reminiscent of the 1950s struggle to effectively manage radically different stocking and production rates. Some experts are increasingly alarmed by the growing levels of nitrogen levels entering freshwater bodies annually, damaging water quality as increasing algae and bacteria kills animal life and toxicity limits may be exceeded.
Recently an old farmer in New Zealand showed me the impressive lands managed by him and his sons in South Island. A practical man of few words, he most likely was one of those farmers who opposed Government's attempt in the early 2000s to introduce what the farming community labelled "fart tax" – the agricultural emissions research levy which was considered to address methane emissions originating from livestock farming. Still, nearing retirement, he displays a natural feeling for the environment and acknowledges new practices by his sons and their peers that worry him. One is the massive shift from sheep to dairy farming. Another, applied in the drive for productivity (not necessarily efficiency) in all livestock farming, is the tendency to overuse fertilizer and agrichemical sprays to clear undesired vegetation rather than ploughing, the old method he grew up with. He suspects his sons are encouraged by an agrichemicals supplier to use these products.
Two cases reported recently in the New Zealand Listener ("The Dairy Dilemma" by Rebecca Macfie, 11.01.2014) illustrate what can be accomplished by innovate farmers who change course from business as usual:
Farmer 1 was concerned about the impact that excess nutrients from cow urine on his expanding dairy farm were having on local water tables. He therefore invested in a new infrastructure of "herd homes" where his cows could spend several hours a day to escape from either heat or cold. With roofs over their heads, they stand on a grated floor through which their urine and manure fall into a concrete bunker. From this the owner collects effluent that – under appropriate soil and climate conditions – is sprayed onto the farm's maize crops. The results have been impressive, and the business case more than clear. The volume of nitrogen leaching from his fields has dropped to 40 per cent below the regional average, even though he is maintaining high stock rates. The owner is saving money on artificial fertilizer, the grass on his fields grow better due to less damage from cow hooves, plus his animals are under less climate-related stress and produce more milk (production up by 25 per cent). His payback period is three to five years.
In a similar position, Farmer 2 has decided not to maintain high stock rates and invest heavily in capital infrastructure, but to rather keep stocking rates lower than the area average. The farming couple involved sticks to a stocking rate of 2.5 cows a hectare, which reminds of standard practice three decades earlier. Furthermore, they use little fertilizer and limited amounts of palm-kernel extract for feeding. They also improved their pasture and animal management, by measures such as spreading their dairy herd effluent across their land with appropriate timing. They have cut their nitrogen leaching rate by up to 50 per cent, and are maintaining profitability. Their farm recently won a regional farming business of the year award.
Our two farms have managed to escape what local consulting firm Headlands has called the high-input-high-output management approach, a vicious cycle or treadmill that brings high environmental and social costs. World-wide though, their behaviour remains the uncommon. And as Hardin (1968) stated: "Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit - in a world that is limited. Ruin is the destination toward which all men rush…"
Most farmers today are not dealing with pastures open to all. Common land has been divided into properties they own. But in transboundary natural resources, such as clean water and air, they enter the domain of common or public goods. Faced with the inherent logic of the commons, argued Hardin, each rational farmer concludes that the best course of action for him to pursue is to add more animals and use more resources (fertilizer, agrichemicals, water). This is due to two considerations, with the first outweighing the second. In the words of Hardin:
- The positive component is a function of the increment of one animal. Since the herdsman receives all (most of - ed.) the proceeds from the sale of the additional animal (and its products), the positive utility is nearly +1.
- The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all, the negative utility for any particular decision-making herdsman (farmer - ed.) is only a fraction of -1.
Thankfully, agriculture has learned from experience and introduced new practices such as rotational grazing. But transboundary resources (i.e. ecosystem services) present cases where the ideas of neither private property nor commons present workable solutions. This poses the need for what Hardin called "mutual coercion mutually agreed upon" – social arrangements that produce responsibility. An example is taxation, the type of tool New Zealand farmers opposed in the early 2000s.
Time for collective agreement on regulatory arrangements is running out, and the wastefulness of business-as-usual productivity cries out for a solution. Research under UN auspices have signalled that eutrophication caused by high-nutrient loads is the most significant water quality problem globally. The UN-commissioned report Our Nutrient World (2012) by the Global Partnership on Nutrient Management (GPNM) and the International Nitrogen Initiative (INI) confirmed that the nitrogen (N) and phosphorus (P) cycles of the world are out of balance, causing major economic, health and environmental problems world-wide. While areas in Africa still suffer from insufficient access to nutrients in land management and food production, regions such as the Americas, Europe and Asia suffer from inefficiency and overuse. Up to 80 per cent of N and P used end up lost in the environment, wasting the energy used to prepare them, causing air pollution through the release of the greenhouse gases nitrous oxide (N2O) and ammonia (NH3) to the atmosphere, as well as losses of nitrate (NO3), phosphate (PO4) and organic N / P compounds to water.
Where human and ecosystem health thresholds are exceeded, a "nitrogen cascade" of environmental impacts and damages is triggered. The overuse or underuse of nitrogen poses five key threats related to:
- Water quality (including coastal and freshwater deadzones),
- Air quality (including shortening of human life),
- Greenhouse gas balance (climate change & ozone depletion)
- Ecosystems and biodiversity (notably its life supporting capacity), and
- Soil quality (such as loss of fertility and erosion)
A range of collective action experiments to steer away from yet another tragedy of the commons have emerged from New Zealand in the last decade. These include local community river patrols to monitor water quality, business initiatives by for example world largest dairy exporter Fonterra to help farmers improve the efficiency with which they use natural resources, self-regulatory initiatives such as the Sustainable Dairying - Water Accord, a multistakeholder Land and Water Forum, and calls for a global initiative in cooperation with others such as the like-minded JUSCANZ group of countries. Experience has shown that global initiatives are good at defining problems, but that decentralized initiatives are best at defining practical, local solutions. Whatever "clean green" solutions agriculture in New Zealand comes up with, the lessons unfolding are relevant to agribusinesses worldwide.
*Garrett Hardin (1968) "The Tragedy of the Commons" in Science 162, 13 December 1968.