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ThepriceoffeelinggoodAreviewoftheemissiontargetoptionsin‘Ourclimateyoursay’
September2018
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AboutTailriskeconomicsTailriskeconomicsisaWellingtoneconomicsconsultancy.Itspecialisesintheeconomicsoflowprobability,highimpacteventsincludingfinancialcrisesandnaturaldisasters.Tailriskeconomicsalsoprovidesconsultingserviceson:
• Theeconomicsoffinancialregulation
• Advancedcapitaladequacymodelling
• Stresstestingforlargeandsmallfinancialinstitutions
• Regulatorycomplianceforfinancialinstitutions
• Generaleconomics.
Tailriskispreparedtoundertakeeconomicsanalysesofpublicpolicyproposalsonadiscountedorprobonobasis.PrincipalIanHarrison(B.C.A.Hons.V.U.W.,MasterofPublicPolicySAISJohnsHopkins)hasworkedwiththeReserveBankofNewZealand,theWorldBank,theInternationalMonetaryFundandtheBankforInternationalSettlements.Contact:IanHarrison–PrincipalTailriskeconomicharrisonian52@gmail.comPh.0221753669043848570
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ContentsAbourTailriskEconomics…………………………………………..………………….2Contents……………………………………………………………...……………………….3Introduction…………………………………………………………..………………………4Keyconclusions…………………………………………………………………………….4Whataretheoptions?..................................................…………………7TheNZIERanalysis………………………………………………………………………10ThecostofclimatechangeforNewZealand………………………………19Whyhavewesigneduptofightclimatechange………………………….26Theco-benefitsfromclimatechangepolicies………………………………27Thechoicebetweenthezerocarbonandzeroemissionstargets…32Alternativeactions………………………………………………………………………38References…………………………………………………………………………………40Appendix………………………………………………………………………………………43
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Thepriceoffeelinggood
IntroductionAspartoftheconsultationprocessonNewZealand’sgreenhousegasemissiontargetstheMinistryfortheEnvironmentissuedadiscussionpaper‘OurClimateYourSay:ConsultationontheZeroCarbonBill’(OurClimate).Purportedly,themainpurposeofOurClimatewastosetouttheoptionsandtoprovideinformationthatwouldhelpNewZealandersunderstandtheissues.
ThispaperdiscussesthefollowingissuesthatarisefromtheanalysisanddiscussionsinOurClimate.
• TheabatementtargetoptionssetoutinOurClimate
• Theeconomicanalysisoftheoptions
• Theimportanceofco-benefits
• ThecostsandbenefitsofglobalwarmingforNewZealand
• TheprosandconsofNewZealandbeingagloballeaderingreenhouseemissionabatement.
Finally,itsuggestssomepoliciesthatwillsecuresomeofthebenefitsof‘globalleadership’,butatamuchlowercost.
KeyConclusionsTheZeroemissionsby2050targetisa$200billion‘feelgood’projectComparedtothealternative,zerocarbon,target,thezeroemissionstargetcouldcostanadditional$200billion;isunlikelytohaveamaterialimpactonthebehaviorontherestoftheworld;oninnovationinNewZealand;orgeneratesignificant‘co-benefits’.Themajorbenefitwillbea‘feelgood’factorforsomepeople,atleastuntiltheeffectsofthepolicystarttobite.
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TheconsultationontheoptionswasashamOurClimatedidnotprovideanassessmentoftheprosandconsofthethreeoptions:zerocarbon;zerocarbonwithacaponotheremissions;andzeroemissions,thatwerepresented.Thedocumentonlypromotedwhatappearstobethepreferredoptionofzeronetemissionsby2050.Thereportingoftheeconomicanalysiswasfabricatedtomakeitappearthatthethreeoptionshadbeenconsidered.TheeconomicmodellingwasmanipulatedtoreducetheeconomicimpactofthezeroemissionstargetThemarginalcostofemissionsreductionsfallswithatoughertarget.Thisdoesn’tmakesense.Lowercostemissionimprovementsshouldoccurfirst,sotheadditionalreductionsunderthetoughertargetwillhaveahighercost.Thelowermarginalcostoutcomewasachievedbyrestrictingtheamountofafforestationoffsets(whicharecostlessinthemodel)forthe50percentreductiontarget,andgivingthezeroemissionstargettwicetheallocation.Theeffectofthiswastopushmostoftheeconomiccostsintothelowertargetoption,reducingthemarginalcostofthezeroemissionsoption.ThereportingoftheeconomicanalysisobscuredmanyofthenegativeeconomicimpactsMostoftheresultswerepresentedasthedifferencebetweena50percentemissionstargetandazeroemissionstarget.Thisobscuredthelossesingettingfromourcurrentpositiontoa50percentfallinemissions.Someofthemodellingimpacts,withprudentassumptionsabouttechnicalchange,aresevere.Forexample,pastoralfarmingoutputsfallby60percent,andhouseholdincomescouldfallinabsolutetermsasthepolicybites.TheeconomicmodellingisdeficientandneedstodoneagainfromscratchThecriticalvariableinanyanalysisistherateofconversionoffarmlandtoforestry,butthishasnotbeenmodelled.Thereisnoanalysisoftheoptimaltimingofemissionreductions.Theimpliedcarbonpricesappeartobeunrealisticallyhighwhichmakesitdifficulttodrawconclusionsfromtheanalysis,ClimatechangemayhavepositiveeffectsonNewZealandthiscenturyTheMinistryhasnotproducedareportonthecostsofclimatechange.Ourassessmentisthatclimatechangemayhaveasmallpositiveimpactthiscentury.ThemainreasonisthatmoreCO2intheatmospherepromotesplantgrowthandincreasesoutput,whichissignificantforaneconomywithalargelandbasedsector.Thisoutweighstheeconomicallyrelativelyminorimpactsfromchangesinweatherpatterns,andthecostofmitigatingtheimpactofsealevelrises.
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ChangesintheincidenceofextremeweathereventshavebeenexaggeratedOnlymoderatechangesinextremeweathereventshavebeenprojectedintheUNIntergovernmentalreportonClimateChange.Forexampleontheincidenceofstormsthereportsays‘Increaseinintensityofcyclonesinthesouthinwinterbutdecreasingelsewhere.Increaseinconditionsconducivetoconventionstorm
developmentisprojectedtoincreaseby3-6percentby2070-2100comparedto
1970-2000.’
ThebenefitsofinnovationsthatwillgiveNewZealandan‘earlymover’competitiveadvantagehavebeenexaggeratedMostofthereductionsinemissionswillcomefromforestplantings,importedtechnology(suchaselectriccars),closingbusinessessuchasNewZealandSteel,andbyreducinglivestocknumbers.Mostofthisdoesnotinvolvemuchinnovation.AMinistryconsultantdescribedthisinnovationoptimismthisway.Topresumethat
climatepolicycouldmakethedifferencewouldbeakindofexceptionalismanda
seriousleapoffaith.
EconomiccostsofzeroemissionstargetaresignificantTheeconomiccostofthezerocarbontargetcouldbeintheorderof$75billion.1Theadditionalcostofthezeroemissionstarget,whichrequirestwicethenetabatementsatahigheraveragecost,couldbearound$200billion.NewZealand’ssacrificeunlikelytochangetheworldTheargumentforzeroemissionsisthatitwillencourageothercountriestomeettheircommitments.Theargumentthatgoingfromazerocarbontargettoazeroemissionstargetwillmakeamaterialdifferencetotheactionsofotherisatbestanother‘seriousleapoffaith’.Dependingonyourviewpointthezeroemissionstargetiseithera$200billionvanityproject,oranoblesacrifice.Therearemuchcheaperwaysoftryingtoinfluenceworldopinion.CheaperwaystoinfluenceworldopinionFourwaysofgettinginternationalattentionandpromotingthefightagainstclimatechangearesuggested.Theyare:Taxesoninternationalairtravel;abanonofficialbusinessclassairtravel;virtualattendanceatclimatechangeconferences;traveltoWellingtonairportbybicyclebyofficals.
1Theseestimatesarepresentvaluescalculatedwitha5percentdiscountrate.
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Whataretheoptions?IntheforwardtothediscussionpapertheMinisterfortheEnvironment,JamesShawsaid….In2015,we,alongsidealmostallcountriesintheworld,decidedthattheworldshould
achievenetzerogreenhousegasemissionsbythesecondhalfofthiscenturythroughthe
ParisAgreement.ThisGovernmenthascommittedtosettinganetzerotargetforNew
Zealandtomeetby2050.
OurClimateexplainsthatthereareactuallytwodifferentversionsofnetzeroby2050,dependingonhowthezerogreenhousegascommitmentbythesecondhalfofthecenturyisinterpreted.Itsetsoutthefollowingdiscussion.
Threemainelementsneedtobeconsideredwhensettinganew2050target:
theParisAgreement,becauseNewZealandhassignedandratifiedthisglobalagreement
thescienceofshort-livedandlong-livedgases,giventheimportantdifferencesbetweenthe
impactofthesegasesontheclimate
economicimpacts,meetingthedifferenttargetshasimplicationsforNewZealand’s
economyoverthecomingdecades.
TheheadlineemissionsreductionobjectivesoftheParisAgreementare:
• holdingtheincreaseintheglobalaveragetemperaturetowellbelow2°Cabovepre-
industriallevelsandpursuingeffortstolimitthetemperatureincreaseto1.5°Cabove
pre-industriallevels”–Article2.1(a)
• ‘[i]nordertoachievethelong-termtemperaturegoalsetoutinArticle2[...]to
achieveabalancebetweenanthropogenicemissionsbysourcesandremovalsby
sinksofgreenhousegasesinthesecondhalfofthiscentury’–Article4.1(ie,
achievingnetzeroemissions).
AnydomesticactionneedstobeconsistentwithourcommitmenttotheParisAgreement
goals.Byhonouringourcommitments,wearebetterplacedtoencourageothercountriesto
keeptotheirs,includingcountrieswithmuchgreateremissionsthanourown.
TherearetwoscenarioswhereNewZealand’sdomesticemissionsimpactonglobal
temperaturescouldbedefinedaszero.
• Reducinglong-livedgreenhousegasemissionstozeroandstabilisingourshort-livedgases,
whichwouldmeanourdomesticemissionswouldnotcontributetoanyfurtherincreasein
globaltemperatures.
• Reducingallgreenhousegasemissionstonetzero,whichwouldmeanourdomestic
emissionswouldhavenoimpactontheclimatefromthatpointforward.Hypothetically,if
bothscenarioswereappliedworldwidethenglobaltemperatureswouldstabiliseineach
case,buttheywouldstabiliseatalowertemperatureunderthesecondscenario.
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Itthenturnsoutthattherearethreenottwooptions.
1.Netzerocarbondioxideby2050:thistargetwouldreducenetcarbondioxideemissionsin
NewZealandtozeroby2050(butnotothergaseslikemethaneornitrousoxide,which
predominantlycomefromagriculture).
2Netzerolong-livedgasesandstabilisedshort-livedgasesby2050:thistargetwouldreduceemissionsoflong-livedgases(includingcarbondioxideandnitrousoxide)inNew
Zealandtonetzeroby2050,whilestabilisingemissionsofshort-livedgases(including
methane).
3.Netzeroemissionsby2050:thistargetwouldreducenetemissionsacrossallgreenhouse
gasestozeroby2050.
Theaboveexplanationissomewhatmisleading.Itleavestheimpressionthatitisopentocountries,undertheParisAgreement,toselecttheirownmeasureofgreenhousegasemissions.Theycanselectjustlong-livedemissions,orbothlongandshort-livedemissions.WhiletheParisAgreementisopentocountryinterpretationwedoubtthatitisthatelastic,andNewZealandhasalreadyagreedtoincludeagriculturalemissions.Technicallythough,thefirstoptionis‘Pariscompliant’becauseitisjustastatementabout2050,andleavesopenwhatwewilldointhesecondhalfofthecentury.
However,thefirstoptionimpliesthatwewillnotseektoreduceagriculturalemissionsatall,whichisnotreallycredible2,beggingthequestionofwhyitwaspresented.
Underthesecondoption,wearesignalingthatwearedoingsomethingaboutagriculturalemissions,butthefocusto2050willbeonthedemanding,butmoretechnicallyachievable,targetofreducingcarbonemissionstonetzero.Wewillmoresubstantivelyaddressagriculturalemissionspost2050,whenitismorelikelythateconomictechnicalfixeswillbecomeavailable.
Thismakessense.Thereisnocurrenttechnicalsolutiontosubstantiallyreducinganimalgreenhouseemissionswithoutgettingridoftheanimals.Azeronetemissionstargetscanbeachieved,mostlybyverylarge-scaleforestryconversions
2Notethatacasecouldbemadeforexcludinganimalemissionsfromtheemissiontargetframework
altogether,oratleastamendthewayitistreatedtoreduceitssignificance.Non-Carbonemissionswillincreaseglobalwarmingbyonlyabout0.2degreesCattheendofthiscentury.Itonlyassumesimportance,becauseofthetighttemperatureincreasetarget.A2Cdegreeslimitfrompre-industriallevelsleaves1degreeinhand,andthe1.5Cdegreetargetonly0.5.The2degreestargetissometimesrepresentedasthetippingpoint,orthepointatwhichtemperaturebecomes‘dangerous’.Theseareoverstatements,thetargetisbestthoughtofasasomewhatarbitraryrallyingpointnecessarytobuildaglobalcoalitionforaction.Thecaseforomittingagriculturalemissions,ormoreacceptablyprovidingafreeallocationforemissionlevelsupto,say,1990,isthat:mostcountieswillnotcomplyeveniftheysaytheywill;theconversionofthegasestoC02equivalentsiscontroversial;andactualreductionswillhaveatrivialimpactonglobaltemperaturechange.
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andasignificantreductioninsheepandbeefand(toalesserextent)dairynumbers,butthiswouldbeverycostlyandwouldachievelittle.AnyreductioninanimalemissionsinNewZealandwilllikelybeoffsetbyincreasedemissionselsewhereasothercountriesreplacethefallinNewZealandproduction.Therewillbelittleimpactonglobalemissions,whichistheultimateobjective.
Thisstagedapproachalsolevelstheplayingfieldwithadvancedcountries.Animalemissionsarenotassignificantforthem,sotheirtasksubstantiallyreducestoreducingcarbonemissions.
Sothesecondoptioncouldbeinterpretedasfollows.NewZealandwillreduceitscarbonemissionstozeroby2050,andonabestendeavorsbasis,toreduceitsemissionszeroby,say,2070or2080.ThisisconsistentwithourobligationsundertheParisagreement.
Thusthechoicecouldbedescribedasfollows.Zeronetemissionsby2050,orzeroemissionsby2070or2080,withawaypointforcarbonemissionsofnetzeroby2050.
Thereareofcourse,otheroptions.2050isnotamandatorydate,althoughithasbecomesomethingofafashion.ItisopentoNewZealandtoselectalater(orearlier)date.Wecouldalsobesomewhattougheronshort-termemissions.Theycouldbelimitedtonofurtherincreasefromnow,oranearlierdatesuchas1990,withanyexcessemissionsbeingconvertedtoC02equivalentsandaddedtothezerocarbonrequirement.
MostlythisisnotspeltoutinOurClimate.Andthereisalmostnosubstantivediscussionofthekeyconsiderations,andoftheprosandconsoftheoptions,thatwouldbeexpectedinaseriousconsultationdiscussiondocument.
OurClimatedoessaysthatitstudiedtheeconomicimpactsoftheoptions
Wehavelookedataseriesofmodelsandotherstudies,toassesstheimplicationsforthe
NewZealandeconomy.11Thisworkcangiveageneralsenseoftherangeofeconomic
impactsofourtargetoptions.Thisincludeshowtheymightaffectdifferentsectors,regions
andhouseholds.
Thesestudieshavebeencarriedoutbyarangeofsources,includingindependentexternal
expertsandgovernmenteconomists.
Underanyofthe2050targetoptions,oureconomycancontinuetogrow,possiblyjustnotas
quicklyasitmighthavedonewithoutanyfurtherclimateaction.Table2providesasummary
oftheeconomicopportunitiesandchallengesthatcouldresultfromfurtherclimateaction
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Thisdescriptionismisleading.ThecentrepieceoftheeconomicanalysiswastheNZIERreport,buttheNZIERdidnotanalysetheoptionssetoutinOurClimate.Theylookedatpercentagereductionsinemissionlevelsof50,75and100percent.The50and75percentoptionsincludedpastoralfarmingemissions,buttheyshouldhavebeenexcludedfromconsiderationunderthezerocarbonoptions.The50percentreductionmayprovidesomeguidanceonthezerocarbonoption,whichexcludesagriculturalmethaneandnitrogenemissions,becauseagriculturalemissionsarenearly50percentoftotalemissions,butwecannotbesure.The75percentreductionisnotrelevanttoanyoftheoptions.TheMinistryhassimplyfailedtoanalysealloftheoptionstheypresented.
TheMinistrytriedtopaperoverthisomissionbypresentingasummaryofkeyresultsfromtheNZIERanalysisintablefourofOurClimate.Theheadingsfortheoptionsare:Zerocarbon,Netzerolongtermemissionsandstabilisedshort-termemissions;andzeronetemissions.Thistableisafabrication.TherewasnosuchpresentationofthisdataintheNZIERreport,becausetheydidnotdotheanalysis.Footnote11directsthereadertotheappendixformoreinformationonthestudiesusedtoassesstheeconomicimpacts.TheonlycontentintheappendixwasmoredetailontheNZIERstudy.Therewerenoothereconomicstudies.Theconsultationonthe‘options’wasasham.Theonlyoptionthatwaseffectivelyonthetablewasthepreferredzeroemissionstarget.Thebulkofthediscussionandanalysiswasdirectedtopromotingit.
TheNZIEReconomicanalysisTheeconomicanalysispresentedinthepaperisalmostentirelybasedontheNZIERreporttotheMinistry,‘Economicimpactanalysisof2050emissionstargets’June2018.Thissectioniscomplicated,aswepickapartanalysisthatwasdesignedtohideratherthathighlightsomeofthekeyresults.Thereaderwhowantstopushonmightwanttoskiptothenextsectionandtakeourkeyconclusionsetoutaboveatfacevalue.
Theeconomicmodellingwasmanipulatedtoreducetheeconomicimpactofthezeroemissionstarget
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ThedescriptionoftheNZIER’sresultsinOurClimateThesummarydescriptionofthemodellingresultsisasfollows.Overall,themodellingsuggeststhefollowing.
• Theeconomyandhouseholdincomeswillcontinuetogrowbutpossiblynotasquickly.Achievinganetzeroemissionstargetby2050couldcauseaverageGDPtogrowlessquickly,withtherateofgrowthdependingonthetargetweaimforandhowinnovation
inkeyemittingsectorsdevelops.
• Astrongeconomywillrequireinnovationandalotoftrees.Emissionspricescouldbe
higherandgrowthrateslowerifwedonotplantenoughtreesorcontinuetoinnovate,
ortheimpactscouldbemilderifweplantmoretreesorinnovatefaster.
• By2050,perhouseholdnationalincomewouldstillhaveincreasedby40percent,
insteadof55percent.Supportinglowerincomehouseholdswillneedtobepartofourapproach–otherwisetheimpactsonthesehouseholdscouldbedisproportionate.
• Theeconomicimpactscouldstillbesignificant.Somesectorsmayfaceagreater
challenge,unlesstherearetechnicalbreakthroughsorsupport,particularlythosewithhighemissionsandthosecompetingininternationalmarketsand/orthathavelimited
opportunitiestoreducetheiremissions.
• Thedifferenceineconomicimpactofmovingfromthecurrentdomestictargettoanet
zeroemissionstargetisnotsubstantial.Theannualgrowthratecouldslowbyabout0.2
percent.
Mostlythisisanodynestuff,designedtoreassure,ratherthaninform.Noonewillbeworseoffthanthearenow,andtheeffectofontheannualgrowthrateofanetemissionsemissionstargetis‘notsubstantial’.Andifthereisaproblemwithlowerincomehouseholds,itcanbefixed.
Inaddition,theMinistryfurtherdownplaystheseverityoftheNZIERresults.Thefocusinthewiderdiscussionisonthe0.2fallinthegrowthrate.Itissuggestedthattheimpactscouldbelessthatthis.ItisnotedthattheC02priceestimatesofanalysisintheVivid3reportaresubstantiallybelowtheNZIER’s.
Wecaninferthat,attheemissionspricesVividsuggestsnecessarytomeetthetargets,the
impactoneconomicgrowthwouldbemilderthantheNZIERresultsindicate.
And
GiventhedifferenceinmodellingapproachesacrossVividandNZIER,andtherangeof
scenariosconsidered,wethinkitisplausiblethattherelativecostsandbenefitsoftransition
mayfallsomewhereinbetweentheVividandNZIERresults.
3Vivid2017
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Thisdoesn’tmakesense,Vividdidnotestimaterelativecostsandbenefitssothereisno‘inbetween.’
Further
ItcanalsobearguedthattheNZIERfiguresmaybeoverestimatesoftheeconomicimpacts
becauseitisdifficulttoassesstheresponsesofhouseholdsandbusinessestochangesinthe
economy.
Itcouldalsobeargued,rathermoreconvincingly,thattheNZIERfiguresunderestimatetheeconomicimpactsbecausetheyuseanequilibiummodelthatisbestsuitedtoanalysingrelativelysmallshockstoaneconomy.Itmayunderstatetheimpactoflargestructuralshocks.
TheNZIERmodellingindetailWenowturntothedetailedNZIERmodelling.Herewehavesomeverysignificantconcerns,andsomequestions.
TheNZIERanalysisiscomplicatedbecausetheyhaveacombinationofthreetargets:50,75and100percentreductions,andthreeinnovationlevels:energyinnovation;agriculturalinnovation,whichassumesthatacostlessvaccinetoreducemethaneemissionswillbediscoveredby2030anddeployedby2035;andacombinationofbothinnovations.Tosimplifythediscussion,wecanignorethe75percenttarget,andwefocusononeoftheinnovationassumptions,energyinnovation.Thisistheleastoptimisticinnovationassumption,whichiswethinkappropriatehere,becausepolicydecisionsshouldnotrestonacostlessearlypartialsolutiontothedifficultmethaneemissionsproblem.Thereisprobablyenoughoptimismbuiltintotheenergyinnovationscenariotocoverimprovementsinagriculturalemissionsthroughchangesinmanagementpractices.
MarginalcostofabatementfallswithtoughertargetsTheNZIER’sGDPchangeestimatesshowthattheimpactonGDP,comparedtothebaselinecurrentpolicysettingscenario,willbegreaterforthe50percentreduction,thanforthefurther50percentreductiontozero.Intheenergyinnovationscenariothegrowthratefallsby0.54forthe50percenttargetandby0.73percentforthe100percenttarget.Themarginalimpactis0.19percent.Thisdoesn’tseemtomakesense.Wewouldexpectthelowercostemissionimprovementswouldoccurfirst,sotheadditionalreductionsunderthetoughertargetwouldhaveahighercost.Therelativesizeoftheeconomicimpactsshouldberoughlyinlinewiththeincreaseinthetotalcostofcarboncredits.Intheenergyinnovationsscenariotheaveragecarboncostsare$612and$845pertonrespectively,forthe50percentand100
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percenttargets.The100percenttargetistwiceasbig,sothetotalcostofthe100percenttargetis175percenthigherthanthe50percenttarget.However,theNZIER’smarginalgrowthimpactforthe100percenttargetisonly35percentofthe50percenttarget.ThemainexplanationforthisperverseresultlieswiththeNZIER’sarbitraryassumptionsaboutthecontributionsofforestplantingsfordifferenttargets,andcritically,itisassumedthatallthelandrequiredforincreasedforestryhasnoalternativeuse,sothereisnoeconomiccostintermsofforgoneagriculturalproduction.Inthemodelthe50percenttargetscenarioisassigned25milliontonsofthisfreegood.The100percentscenariogets50milliontons.Thereis,obviously,noreasontorestrictaccesstoafreegoodforthe50percentscenario.NZIERconductsasensitivityanalysiswhere40milliontonsareallocatedtoboththe50percentand100percentscenarios.Predictably,thecostofabatementforthe50percenttargetfallstozero.GDPgrowthholdssteadyat2.2percent.Thereis,however,asevereimpactforthe100percentscenario.RealGDPis12.9percentlowerby2050.Realwagesare20percentlower.Theseareoptimisticresults.Thesensitivityanalysiswasonlyconductedforthewideinnovationscenarioandresultswouldhavebeenmuchworsewiththemoreprudentenergyinnovationonlyscenario.ThemanipulationoftheforestplantingassumptionsallowstheNZIERtohidemuchofthecostsofemissionsabatementforthe100percenttarget.Costsareartificiallyshiftedintothe50percentreductionoption.Theythenarguethatweshouldignorethosecosts,becausetheyrepresentthe‘statusquo’,andfocusjustonthemarginalimpactonGDP.Theargumentisthatthepreviousgovernmenthasalready‘signedup’toa50percenttarget.So50percentisadonedealanditisonlytheadditionalchangesthatmatter.Thisisdisingenuous.Thepreviousgovernmentdidnotsignuptoastrategythatlimitedtheuseofforestrysequestrations.The0.19growthimpactfigureisanartifactofwhatcanonlybedescribedasafabrication.Abetterapproachwouldbetoallocatethe0.73totalfallintheGDPgrowthrateonthebasisoftherelativetotalcostsoftheoptions.Onthatbasisthe50percentoptionwouldhave0.19percentimpactonthegrowthrate,andthemarginalcostof100percentoptionanwouldbe0.54percent.Theotherpointtonoteisthatafallinthegrowthrateofeven0.2percentissignificant,not‘notsubstantial’astheMinistrysuggests,becausetheimpactonGDPincreasesovertime.ThepresentvalueoftheGDPlossesforthe50percenttarget(discountedat5percent)over30yearscomestoabout$150billion.Theadditional
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costofthe100percenttargetisaround$400billion,foratotalofmorethan$550billion.Therewouldbefurthercostsbeyond2050thatwehavenotcounted.PresentationoftheresultsThewaymostoftheresultsarepresentedobscuresimportantinformation.Mostofitispresentedasdifferencesfromthe‘statusquo’.Thereadergetslimitedeasilyuseableinformationontheimpactofthe50percentoption,soitishardtomakeacomparisonwiththe100percentoption.Animportantexampleistheimpactonhouseholdincome.Theonlyinformationwehaveontheenergyinnovationoptionisthataveragehouseholdincomewillfallby$46,000comparedtothe‘statusquo’.Thefallfromthebaselineshouldbemuchgreateranditispossiblethatrealhouseholdincomeswillfallinabsolutetermsfromcurrentlevels.Itishighlylikelythattheincomesofthebottom40percentwillfall.Table1:GDPgrowthresults GDPgrowth
%Avcarbonprice$
Baseline 2.2 2050%energyinnovation
1.5 612
ZNEenergyinnovation
1.7 845
50%ag.innovation 1.8 386ZNEag.innovation 1.6 60550%Wideinnovation
2.1 109
ZNEWideinnovation
1.9 272
InternationaltravelnotaddressedNoaccountismadeontheimpactofcarbontaxesoninternationaltourism.EmissionsfrominternationalflightsarenotformallywithintheParisframework,buttheyshouldbe.And,iftheworldisatallseriousaboutreducingcarbonemissionstozero,theyeventuallywillbe.Thereshouldbeashocktotouristrelatedactivities,suchasaccommodationandtransportintheNZIERmodel.Thecapacityofthesesectorsto‘mop-up’resourcesfromsectorsalreadyheavilyimpactedbycarbonpriceswouldbereducedandthenegativeoveralleconomicimpactwouldincrease.
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ImpactonexportsThereislittleinformationonwhathappenstoexports.Wearetoldthatthevolumeofexportsin2050fallsbybetween$5.2billionand$18.7billionfromthestatus
quoof$138.2billionfortheZNEtargetscenarios.
Wearenottoldwhatthebaselineexportswillbein2050.However,weknowfromtheindustryoutputimpacts(figure23)thattherearesubstantialreductionsintheoutputofthetraditionalexportindustries,comparedtothebaseline.Dairyoutputgoesfroma25percentincreasetoafallofabout60percent;horticulturefromplus55percenttominusnearly50percent;sheepandbeeffromplus40percenttominus60percent;otherprimaryplus40tominus65.
Againaseriousshockismaskedbyacomparisonwiththe‘statusquo’,notthebaseline.
Theotherissueiswhatreplacestheexportindustries,andhowplausiblearetheoutcomes.Probablythemodelwillpushservicesexportstotakeuptheslack,butasnotedabovetherehastobeaquestionmarkaboutthetourismindustry.
AresponsetotheemissionspricingshockthattheNZIERmodeldoesn’texploreisthattheeconomywillshrinkfurthercomparedtothebaseline.Theexchangerateshouldfallsubstantiallygiventheimplosionofthetraditionalexportsector,andNewZealandincomes,relativetootheradvancedcountrieswillfall.Thereshouldbeamigrationoutflow,comparedtothebaseline,asNewZealand‘climatepolicyrefugees’leaveforbetterprospectselsewhere.Thelabourforceandhencethesizeoftheeconomyshouldfall.
KeytimepathsarenotshownTheactualtimepathsofkeyeconomicvariables,GDP,familyincomeandunemploymentarenotshown.Insteadwehavetomake-dowithdifferencesfromthestatusquo,andmakesomeguessesontheimplicationsofthetimepathofcarbonprices.Giventhecarbonpricingtimepaths,whicharerapidlyincreasingtowardstheendofthemodellingperiod,itispossiblethattherecouldbearecessioninthe2040s.Thisismaskedbythefocusonaveragegrowthratesfortheperiod2017to2050.Butlittleshouldhappenintheshortterm,andtheadverseeffectswillbeconcentratedinthedecadesbeyond2030.Sotheaverageimpactonthegrowthratecouldbecloserto1percentforthatshorterlaterperiod,ratherthan0.74forthewholeperiod.Giventheshocktorealwagesgeneratedbythemodel,duetodisequilibriumconditionsinthelabourmarket,therewillbeafurthershocktohouseholdincomes.Theycouldfallinrealterms.
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CostofforestsequestrationmaybeoverstatedThediscussionsintheNZIERreport,andelsewhere,suggestthatthereisalimitonland‘suitable’forafforestation.Thisunderstatesitspotentialrole.Howmuchlandis‘suitable’willdependonthecarbonprice.Ifthepriceishighenoughthenalmostallfarmlandissuitable.Togainaninsightintotheamountoflandthatcouldswitchtoforestry,weconducteda‘backoftheenvelope’landvaluationatdifferentcarbonprices.Weassumed:
• Noemissionchargeonfarmingsothereisnoavoidedtaxbenefit.• Establishmentcostsof$1500perhectare.• Nocarbonbenefitsforthefirst5years.Ittakesawhileforgrowthtobe
materialsothisdelayroughlyaccountsforthis.• Theforestisnotharvested,andthereisnogrowthafter35years.Thisis
worsecasescenario.• Arealdiscountrateof5percent,whichisconsistentwiththe7percent
nominalrateoftenusedtoevaluateforestryinvestments.
Theresultsaresetoutintable2.
Table2:Landvalueforestry
Carbonprice$/tonne
Landvalueperhectare$
25 3650
50 8800
75 14000
100 19300
150 29500
200 39800
300 60500
800 164000
Recentfarmlandsalesindicatethatatypicalperhectarepriceforsheepandbeeffarmsisaround$6000–$8000.Theabovevaluationfiguressuggestthattherecouldbesignificantconversionsfromsheepandbeefoncethepricegetstoaround
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$75.Formoremarginalorwasteland,conversionsmaybecomeattractiveat$50orlower.
Thesecondfactortoconsideristheimpactofcarbonpricingonfarmprofitability,andhenceonlandprices.Assuminggreenhouseemissionsof8tonsahectarefordairy4,at$75pertonnethecostperhectarewouldbe$600,andthetotalcost$94000foranaverage156hectarefarm5.Emissionsof1.5tonnesperhectareforsheepandbeefwouldcost$112.5perhectare,and$74000fora600hectarefarm.Forsheepandbeefthismightbearoundhalfofaverageannualprofits.Once,after5years,whentheforestisgeneratingcarboncredits,theannualincomefromcarbonfarmingwouldbe$765,000.Whiletheincomestreamwillonlylastfor30yearsitwouldbehardtoresist.
Oncewegettohigheremissionprices,conversionsofsheepandbeeffarmsbecomecompelling.At$200asheepandbeeffarmerhasanemissionsbillof$180,000andinmostyearshastopaytowork.Ifheconvertstoforestry,in5yearsorso,hewillhaveanincomeof$2,000,000ayearandcanleadalifeofleisure.Manydairyfarmerswouldalsobetemptedtojointheleisureclass.Atthemuchhigherprices(over$2000intheenergyinnovationzeroemissionsscenario)generatedbytheNZIERmodel,farmerswhoconvertbecomefabulouslywealthy.
TheNZIERadmitsthattheyhavenotintegratedforestrysequestrationintotheirmodel,duetotimeconstraints.Butthereisalsoaproblemwithfarming.Atthehighercarbonprices,sheepandbeeffarmingshoulddefinitelybetaxedoutofexistence,andthesurvivalofmostdairyfarmswouldbeproblematic,justonthebasisofthetaxalone.Buttheyarenot,suggestinganissuewiththesensitivityofthefarmingsub-modeltocarbonprices.
Whatouranalysissuggestsisthatforestrymightsetacaponemissionprices,whichismuchlowerthantheNZIERestimatesand,alsolowerthanthehigherVividestimateof$250pertonne.Ofcoursethisconclusionisbasedonourverysimplemodel.Actualoutcomeswillalsodependonbehavioralandriskfactorsthatwouldtendtohaveadampeningeffect.Thesefactorswouldhavebeenpickedup,implicitlyintheVividanalysis,whichisbasedonempiricalanalysisofresponsestoproductmarketprices.Butitisnotclearhowapplicabletheircalibrationswillbetotheintroductionofcarbonprices,whichshouldbedrivenbylong-termstructuralfactors,ratherthanpotentiallycyclicalwoodproductpricing.Muchwilldependonthedesignofthecarbonpricingregimeandconfidenceinthearrangementsthatwilldelivercarbonsequestrationbenefitstoforesters.Ifthereisaperceivedhighrisk
4Kerretal.20145LIC2016
18
thatfuturepricescouldcollapse,astheyhaveinthepast,thentheconversionresponsewillbemuted.Ifthereisahighdegreeofconfidencethatpriceswillbehighandsustainedthentherewillbeamuchgreaterresponse.
Theotherissuewithafforestationistiming.Afforestationisnotapermanentsolutionastheforestswillmatureandthesequestrationbenefitswillend.Iftheobjectiveistomeetapointoftimetarget,thenitmakessensetoplantclosetothetargetdate.Anexoticforestplantedin2040,willbedeliveringasignificantbenefitperyearby2045.Itwillcontinuetoproducebenefits,atahighratefor,say,another25years.Atthatpointanewforesthastobeplantedtomaintainthesequestrationcontribution.Aforestplantedin2020willonlyprovidebenefitsfor5yearsbeyond2050.Fromthisperspectiveearlyactionisnotagoodidea.
WhattomakeoftheNZIERresult?PutbluntlytheNZIERanalysisisabitofamessandamuddle.
• Itdoesn’taddressthetargetoptionsthatareonthetable.• Thereisnoafforestationmodel.• Theemissionpricesareunreasonablyhigh.• Thefarmsub-modelappearstobeoverlyinsensitivetoemissionpricesand
theremaybeanissuewithothersectors.• Thereportinghasbeencontrivedtohidemuchofthecostsofthezero
emissionsoption.• Theequilibriummodelomitsimportantvariablesincludingimpactsonlabour
marketgrowthandtheexchangerate.OurClimateisprobablyrightwhenitsaysthattheNZIERresultsoverstatethecosts,thoughbyhowmuchwedon’tknow.Butifweassumethatlosseswereexaggeratedbyafactoroftwo,wearestilldealingwithsomebignumbers.The50percentreductiontargethasapresentvaluecostof$75billion,andthe100percenttargetcostis$275billion.Theadditionalcostis$200billion.Thatisourworkingnumber.Ifthelowercostisjustsomethingwewillhavetolivewithtobepartoftheinternationaleffort,thentheissuehereiswhyshouldwespendtheadditional$200billion.Whatdowegetforourinvestment?Asacomparisonofthecostsothercountriesarelikelytoincur,theestimatesofthecostspresentedinthe5thIPCCsreportareworthalook.Theyreviewedthemodellingliteratureandfoundthatthemedianpresentvalue(witha5percentdiscountrate)ofthereductioninconsumptionto2050duetomitigationeffortswas3.4percentofthebaseyearconsumption.
19
ThecostofclimatechangeforNewZealandInthediscussionofthecostofthetargetoptionsitisstated.Neithermodelincludesmanyofthebenefitssetoutaboveoftakingactiononclimate
change,suchasthewiderco-benefits,orthepotentialbenefitofavoidingdamagetothe
economycausedbyachangingclimate,iftherestoftheworldactstoo.
TheinferencehereisthatclimatechangeiscostlytoNewZealandandthatthewiderco-benefitsaresignificant.
OurClimatedoesnotpresentanassessmentofthecosts(andbenefits)ofclimatechangeforNewZealand.TheMinistryfortheEnvironmentsayssuchanassessmenthasnotbeendoneforNewZealand.Thatisnotquitetrue.TheauthorofthispaperpresentedanassessmentofthecostsandbenefitstoaSelectCommitteehearingonNewZealand’sClimatechangetargets.Butthatwasmanyyearsago,sothesubmissionwouldbehardtofind.
Thesubmissionconcludedthatglobalwarmingwouldbepositive,notnegativeforNewZealand,atleastoverthiscentury.ThereasonisthathighertemperaturesandelevatedCO2levelshaveapositiveimpactonalandbasedindustryproductivity,whichmorethanoffsetsthenegativeimpactsthatarementionedinOurClimatereport:moredroughts;arisingsealevel;morefloodsandstorms,healthimpacts,andmorewildfires.
ThequestionariseswhytheMinistryhasnotcommissionedacostsandbenefitspaper.InarecentopedintheDominionJimRose6saidthatboththeMinisterandtheMinistryhadbeenapproachedbutsaid“suchanestimatewastoohardtodo”.Wesuspectthereasonisthattheywouldn’tliketheresult.
EvidenceontheeffectsofclimatechangeinOurClimate
Despitethelackofsolidanalysis,OurClimatetriestoleavetheimpressionthatthecostsarelargeandjustifyearlyaction.Therearefourpiecesof‘evidence’.
ImpactonGlobalGDPRecentanalysisalsosuggeststhatlimitingglobalwarmingto1.5degreesCelsiusinsteadof2
degreesCelsiusbymid-centurycouldleadtoanincreaseinglobalGDPof1.5percentto2
6DominionPost26July2018
20
percentandavoidsdamagesfromclimatechangegloballyofaround$11trillionto$16
trillion.
Wehavereadthe‘recentanalysis’7.ThepaperestimatesasimplerelationshipbetweenvariationsinannualaveragetemperaturesandannualchangesinGDPinapanelof165countriesover1960-2010.ItusesthisrelationshiptocalculatethedifferenceinGDPwhenthetemperatureincreasesby1.5degreesand2degrees.
ThereareanumberofproblemsindrawinganyinferencefromthispaperforNewZealand.First,theresultswillbeheavilyinfluencedbyunderdevelopedcountriesinhotareasoftheglobe.Whileitisplausiblethattherewasahistoricalrelationshipbetweentemperatureandshortrunvariationsineconomicactivityinthesecounties,itisabigsteptoclaimthattheseresultsapplytoaslowsecularincreaseintemperatureforallcountries,60yearsfromnow.InanyeventtheresultssuggestthatforNewZealandtherewillnotbeamaterialimpact.ThepapershowsaninvertedUshapedrelationshipbetweentemperaturechangeandGDPchanges.Thereisaneconomically‘optimal’annualavergetemperatureof13.1degreeC,atwhichthereisnoeconomicimpact.NewZealandsitsclosetothisclimaticsweetspot.IftheMinistrywantedtocitethispaperthentheyshouldhavehavepresentedthewholestory.
DrawingconclusionsfromrecenteventsOurClimategoesontomakeacasefornegativeimpactsundertheheading“Impactofclimatechangesofar”
Wearealreadyfeelingtheeffectsfromachangingclimate.Inthepast100years,seashave
risenaround14to22centimetresinNewZealandports.Morerecently,wehavesuffered
costlydamageanddisruptionfromcoastalerosion,morefrequentandsevereweather
events(flooding,droughtsandwildfires)anddamagetoinfrastructureandassets.
Whileitistruethatsealevelshaverisen,itcannotbesaidthatrecentweathereventshavebeenduetoclimatechange,anymorethanitcanbesaidthatunusualcoldsnapsrefutetheglobalwarminghypothesis.NewZealand’sweatherissimplytoovariabletodrawtheconclusionthattherehasbeenanincreaseinextremeeventsastemperatureshaveincreased.ThiswasthepositioninthesectionoftheFifthReportoftheIntergovernmentalPanelonClimateChange(IPCC)relatingtoNewZealandtrends.
OurClimategoeson
Thecostswefacearecontinuingtorise.Asanexample,inthepast10years,thecostofweathereventstoourtransportnetworkhasrisenfromabout$20millionperyeartoover
7Burke2018
21
$90millionperyear.8The2013droughtintheNorthIslandcosttheeconomyaround
$1.5billion,andclimatechangewillmakedroughtslikethismorelikely.
CosttotransportinfrastructureThesourceofthe$20to$90millionincreaseinthecostwastheMinistry’s2017report9.ThatdocumentinturnreferencedaMinistryofTransportreportasthesource.Thatdocumentwaswrittenin2009,soitdidnotandcouldnotprovideevidenceonthecostsoverthelast10years.The2013droughtOnthe2013droughttheinferenceisthatclimatechangewasresponsibleforthedrought.Inthe2017reportitisstatedthatclimatechangewas‘partiallyresponsible’butthisisnotsupportedbyanyreference.Whiledroughtsareforecasttobecomemorelikely,forthemostpartthechangesareexpectedtobemoderate.Aoneintwentyyearriskbecomesaoneintenyearrisk.Andthesedroughtsareshortdurationevents,notthemultipleyeareventsweseeinAustralia.TheexceptionsarethenortheastoftheNorthIsland,CanterburyandCentralOtago.Thefirstisnoteconomicallysignificantandinthelattertwoareasirrigatedagricultureisimportantandlessvulnerabletodroughts.CostofsealevelrisesReportsfromtheParliamentaryCommissionerfortheEnvironmentindicatethatthecostof
replacingeverybuildingwithinhalfametre(abovecurrentsealevel)couldbe$3billionand
within1.5metresasmuchas$19to20billion.
Thevalueofbuildings‘atrisk’isinteresting,butnottheimportantdata.Weneedtoknowhowmuchitwouldcosttodefendthosebuildings,orwhenitisappropriatetoretreat,thevalueoftheabandonedproperties.InthatrespectthereissomeusefulinformationinareportbyBecaLtd.totheDunedinCityCouncil10(2014).
Theirbroadbrushassessmentofthecostsofdealingwitha0.8metresealevelrise(0.6metresistheprojectedriseby2100)areacapitalcostof$75millionand$3.5millionayearinrunningcosts.Thevalueofbuildingsatriskwasover$1billion.
Unfortunately,thereisnobroadbrushoverviewofthesecostsonanationalscalethatwouldcontributetotheclimatechangepolicydebate.Togetasenseofthescaleoftheproblem,letusassumethatthefuturecostis,say$10billionforcoastalprotectionandlandloss.Thesecostswillbeincurredinthefuture,andinsome
8 MinistryfortheEnvironment(2017).
10BecaLtd.2014
22
caseswellintothefuture,butsaytheaveragedelayis40years.Usinga6percentdiscountrate,whichisconventionalforthiskindofexpenditure,thepresentvalueofthe$10billionis$840million.Witha30yeardelaythecostis$1560million.Thesearenotbignumberscomparedto,say,thecostofimprovingAucklandstransportinfrastructure.
WildfiresTheonlyinformationwehaveonthecostofwildfiresisthefollowingstatementinTheWestpacreport11citedinOurClimate.
ThemostseriousriskfacedbytheForestrysectoristheincreasinglikelihoodofbushfires,asdayswith
afireindexof‘veryhigh’and‘extreme’willincreaseinsomeNewZealandlocationsupto400%by2040and700%by2090likethe2017PortHillsfireinChristchurchandthe2015and2016
Marlboroughfiresareexpectedtooccurwithincreasingfrequencyandseverity.Overthelast70
years,wildfireshavecosttheforestryindustryatleastanestimatedNZ$300millionand40,000
hectaresofplantations.
TheassessmentofthehigherincidenceoffireswastakenfromtheNewZealandchapterofthefifthIPCCreport.Theestimatedincreaseswere0-400percentand0-700percentrespectively.
Theaveragecosttotheforestryindustrywas$4.4millionayearthoughthetotalcostoffireswillbebiggerthanthisfigure.Eveniftheannualcostswerethreeorfourtimesasbigby2100,thiswouldstillnotbematerialintermsofthelargereconomy.Intermsofinsuredlosses,theonlyeventrecordedbytheNewZealandInsuranceCouncilasacatastrophiceventinthelast50years,wasthePortHillsfirewhichcost$18.3million.
TheFifthIntergovernmentalPanelonclimatereport:Chapter25onAustralasiaSomeoftheinformationandanalysisthatwouldinformanassessmentoftheextentofclimatechangeanditseffects,issetoutinchapteronAustraliaandNewZealandintheFifthIntergovernmentalPanelonClimateChangereport.Thisisthe‘goto’documentfortheMinistryandmanyothercommentators.Itwasobviouslynotwrittenbyclimatechangedeniers,soitcanbereliedonnottounderstateclimatechangeeffects.Toassistthereader,andtoavoidaccusationsofcherrypicking,wehavesetout,intheappendix,nearlyalloftheNewZealandmaterialinthereport,withtheexceptionofsometechnicaldetailthatdoesaddtothesubstance.Wehavecommentedwhereappropriate.
11Westpac2017
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Notably,theAustralasianchapter,isnotreferencedbyOurClimate,norareanyoftheassessmentsoftheclimatechangesreported.InourviewtheevidencepresentedintheIPCCreportdoesnotsupportaconclusionthattheglobalwarmingimpactswouldbestronglynegative,orevennegativeatallforNewZealand.Thereareanumberofreasonsforthis.First,theextentofthenegativeclimatechangeismuchlessthanoftenclaimed.
• ThereisnomaterialincreaseintheincidenceofseverestormsTheIPCCreportsaysIncreaseinintensityofcyclonesinthesouthinwinterbutdecreasingelsewhere.
Increaseinconditionsconducivetoconventionstormdevelopmentisprojectedtoincreaseby3-6percentby2070-2100comparedto1970-2000
• Theincreaseinextremerainfalleventsisnotlarge(upto20percentmore).• Theincreaseintheincidenceofshortsummerdroughtsismoderateover
mostofthecountry.
Second,thepresentvalueofcostsrelatingtosealevelrises,isnotlargeinrelationtotheeconomy.Third,healthcostsaretrivial(seethediscussiononco-benefits)andtheremightbepositiveeffectonhealth.Fourth,andmostimportantly,carbonfertilisationwillhaveapositiveimpactonagriculturalproduction.Thisisdiscussedinmoredetailbelow.Fifththerewillbeamenitybenefitsfromawarmerclimate.
TheMinistryofPrimaryIndustryreportonclimatechangeimpactsTheIPCCreportingontheimpactsofclimatechangeonland-basedindustryisfragmentary,andmostlyomitshardnumbers.Itdoesnotcometoanoverallconclusion,butleavestheimpressionthattheimpactisnegative.AmorecomprehensiveandbalancedassessmentisintheMinistryofPrimaryIndustry’s2012report‘Impactsofclimatechangeonland-basedsectorsandadaptationoptions:Stakeholderreport'.Themainpurposeofthereportwastolookatadaptationandresilienceissues,ratherthantomakeanoverallassessmentoftheeconomiccostsandbenefits,buttwomajorthemessuggestthattheoverallimpactwouldbepositive.ThefirstisthatC02fertilisationwillhaveapositiveimpactandthatinmanycasesthisimpactwillbematerial.ThesecondisthatNewZealandfarmersareverygoodatadapting,both
24
tacticallyandmorestrategically,toclimateevents.Thiswouldhelpmitigatesomeoftheadverseimpacts,whichare,inanyevent,lessquantitativelysignifican
OnC02fertilisationthereportsaysIncreasedcarbondioxide(CO
2)concentrationsaffectallland-basedsectors.Theymean
higherpotentialgrowthofbiomassformanykeycrops,pasturesandtreesinthefuture.This
isknownas‘CO2fertilisation’.
• HigherCO2concentrationsstimulateplantphotosynthesisandgrowth.
• Pasture,treeandcropvarietiesdonotrespondequallytochangesinCO2concentrations.
TheeffectisstrongerinC3plants(ryegrass,clover,wheat,kale)thanC4plants(maize,
kikuyu).
• PlantsclosetheirstomatatocopewiththeincreasedCO2,transpiringlesswaterinthe
process.CO2fertilisationalsostimulatesmoregrowthperunitofwater,makingplantsless
water-dependent.
Inpre-industrialtimes–beforearound1870–atmosphericCO2concentrationsaveraged
280partspermillion(ppm).Inearly2012,theymeasured390ppm.Bythe2050s,those
levelscouldclimbtobetweenabout475and565ppm;andbythe2100s,tobetween540
and955ppm.TheCO2fertilisationeffectiswelldocumentedfromgreenhouseproduction
systems,wheretheenvironmentiscontrolled.
EstimatesoftheneteffectofCO2fertilisationvarywidely.ForNewZealandpastures,
estimatesrangefrom5percentto30percentincreasesinabove-groundbiomassfora
doublingofC02.
Forpastoralfarming,managementpracticeswillhavetoevolvetomaximizethepotentialbenefitsandtomitigatethedownsides.Seasonalrainfallpatternswillchangetowardsdriersummersandtherewillbemoredroughts.Inthemostproductiveareastheincidenceofshort-termsummerdroughtsareexpectedchangefromaroundoneyearintwentytooneyearinten.
Forsomeotherproductstheimpactsareclearlypositive
Assumingadequatewaterandsoilnutrientsupply,potentialyieldsoftemperatecerealcrops
couldincreasebyasmuchas20percentunderfuturetemperatureandCO2concentrations.
Similarpotentialyieldincreasesareprojectedforforagecrops,likewintercerealsand
brassicas,whichareharvestedinavegetativestateandhavelongerperiodstogrow,thanks
totheshorteningofcyclesofadjacentannualcrops.
Forothercropsandlocations,climatechangeeffectsweremorevariable,andsomewere
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slightlynegative.Withoutadaptation,yieldsofforagecrops,suchassilagemaize,alongwith
moretemperature-sensitivecropslikepotatoesandpeas,arereducedundersomeclimate
changescenarios.
Forhorticulturetheimpactisprobablyneutral.
Themainimpactsonapple,kiwifruit,andgrapegrowerswillbeincreasesinvegetative
biomass,pest/diseaserisksandchangesinplantdevelopment.
Thesectorhasconsiderableadaptivecapacity,inthatgrowerscanrelocateandexpand
relativelyrapidly,asexemplifiedbytherecentspreadofvineyards.
Themostpositiveeffectisonforestry.
WithhigherconcentrationsofatmosphericCO2,radiatapineproductivityisexpectedto
increaseinmostplantationsbyanaverageof19percentby2040,andanaverageof37per
centby2090.SouthIslandplantationswillreceiveadditionalbenefitaswarmer
temperaturesboostphotosynthesis.Precipitationmightdecreaseinsomeareas,butthiscan,
uptoapoint,actuallyimproveproductivity,astreesusewatermoreefficiently.However,
wherewaterornutrientsareinshortsupply,productivitywillfall.
TheMinistry’sassessmentin2017AllofthepositiveeffectsofCO2fertilisationareairbrushedoutoftheMinistry’seconomicassessment.Itreadsasfollows.
primaryindustriesareparticularlyexposedtotheimpactsofclimatechange.Forexample,
theyarestronglylinkedtofreshwateravailability,andclimatechangeisexpectedtoincrease
competitionforfreshwaterresources(RSNZ,2016).Whiletheseverityofimpactswillvaryby
sectorandregion,therisksandcostsfromextremeweatherandwildfiresareexpectedto
increaseacrossalllandbasedsectorsandsupplysectorswillbeaffectedbyimpactswhich
interferewiththeabilitytogetprimaryproductsfromthefarmtoprocessingfacilitiesand
thentomarketsorports.Climatechangeimpactsmayaffecttransport(forexampledueto
stormsandslipsclosingroutes)andalsotheoperationofprocessingfacilities(forexample
interruptiontothesupplyofenergyorwaterrequiredforprocessing).
Thispresentsamisleadingpictureoftheimplicationsofawarmingclimateforagriculture.
TheamenityimpactofclimatechangeThepositiveamenityeffectofclimatechangehasnotbeenconsideredinanyoftheMinistry’sassessments(orgenerallyelsewhere).TheFifthIPCCreport,however,notedthatawarnerclimatehadbeenidentifiedasonereasonforNewZealandmigrationtoAustralia.
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NewZealandhasrelativelycoolandunreliablesummers.Whilehighersummertemperaturesanddroughtsareanissueforfarmers,theyareaboontoholidaymakers.Thesummerof2017-18wasperhapsaportentofthingstocome.Manypeopleloveditandarelookingforwardtoarepeat.Manypeopletoowillbehappyifthewinterchillisreducedbytwoorthreedegrees.
Withclimatechange,perhapsnotsomanypeoplewillgotoQueenslandandelsewhereinsearchofbetterweather.Itmayalsohaveanimpactoninternalmigration.SouthernerswillnothavetogoAucklandforabitmorewarmth.Auckland’sweatherwillcometothem.
Whyhavewesigneduptofightclimatechange?IftheoverallimpactofclimatechangeforNewZealandinthiscenturyispositive,thenwhyshouldwebe‘fighting’climatechange?Therearetworeasons.
First,unabatedgreenhouseemissionsareagrandexperimentthatmayhavemuchmoresignificantandpossiblyirreversibleimpactsoverlongertimehorizons.Itisonethingtodealwitha0.6metresealevelrisein2100,butanotherifthesealevelriseis20metresorso,albeithundredsofyearslater.
Second,wemightbecomeaninternationalpariahifweentirelystandasidefromtheprocess.BeingDonaldTrump’snewbestfriendontheissueisnotagoodlook.
Fromaself-interestedperspectivetheNationalinterestreport12ontheParisAgreementputsthecaseasfollows.
Asasmallexport-dependenteconomy,NewZealandreliesoneffectiveoperationofthe
internationalruleoflawandontheleveragecreatedthroughactiveandconstructive
engagementinternationally.IfNewZealandisseentofree-rideonclimatechange,itwould
riskdamagingNewZealand’sinternationalreputationinareassuchastradeandforeign
policyaswellasourinfluenceininternationalclimatechangeprocesses.
Beinginvolvedisanactofinternationalsolidarityforwhatisaglobalproblem.Butthisdoesnotrequireustobeagloballeader,particularlyiftheimpactsoftakingtheleadaresevere.
12NewZealandGovernment.(2016).Nationalinterestanalysis:TheParisAgreement.
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Theco-benefitsfromclimatechangepoliciesItisarguedthatco-benefitswillreducetheeconomiccostsoftheemissionspolicies,anditisimpliedthatthesebenefitsaresignificant.Alistofbenefitsisthebenefitssetoutintable3.‘Potentialbenefitsoftransitioningtoalowemissionseconomy’.
Betterhealthfromdrierwarmerhomes Every$1spentonthe‘WarmUpNewZealand:HeatSmart’programmegeneratesbenefits
ofaround$4.Retrofittinginsulationcanhelpdeliverparticularlystronghealthcostsavings
fromat-riskgroups(e.g.,childrenandtheelderly).Theemissionsreductionbenefitsare
relativelysmall.
Thissuggeststhatthereareplansafoottostrengtheninsulationstandards.Thatshouldbeassessedonitsownmerits.Dothebenefitsexceedthecosts?However,thisisnotreallyanexampleofaco-benefit.Theevidenceisthatmostpeoplerespondtoinsulationbyhavingawarmerhouse,notbyreducingtheirheating.InanyeventNewZealand’selectricitygenerationisprojectedtobealmostentirelyrenewableby2050,soelectricityconsumptionwillnotbeanemissionsissue.Climatechangewill,ofcourse,initself,makehouseswarmerinwinter.BetterhealthfrommoreexerciseandimprovedairqualityAninvestmentof$630millionininfrastructuretosupportactivetransportcouldgenerate
netbenefitsof$13billionby2050,mostlyduetothehealthbenefitsfromincreasedexercise.
Theexerciseargumentislargelyirrelevanttothechoicebetweenthezerocarbonandzeroemissionstargets.Bothwillhavethesameimpactonthemodeoftransport.Itisassumedthatcarswillbemostlyelectricby2050,sousingacar,ratherthanwalkingorbikingwillnotimpactonemissions.ThesourceoftheabovefiguresisnotgivenbuttheycamefromMacmillanet.al.2014.Thispaperreportsonanumberofbicyclelaneinvestmentscenarios.Thebiggestinvestmentistheonereportedabove.Itassumes‘internationalbestpractice’ofbuildingseparatedbicyclepathsonarterialrouteswilldeliverCopenhagenlevels(thehighestintheworld)ofbicycletrips(40percentcomparedtotwopercentnow)by2051.Ifyoubuildittheywillcome.Thislookstobemorethanoptimistic.Theyhaveacomplicatedmodel,withmanyinputs,butthecriticalvariabledrivingthebenefitsisthenumberoflives‘saved’throughthehealthbenefitsofcycling.Heretheyreliedontwostudiesonthedifferenceindeathratesofcyclistsandnon-cyclists.Thefirst13wasastudyonwomeninShanghaiaged
13Mathewset.al.2007
28
between40and70.Itshowedthatcyclistshadalowerdeathratebuttheeffectwasnotquitestatisticallysignificant.ThesecondisaDanishstudy14of20-93yearolds.Itisclaimedthatcyclingtoworkreducesmortalityratesby28percent,afteraccountingforanumberofcovariatesincludingotherexercise.Inotherwords,evenifyoudootherexercise,includingleisuretimecycling,cyclingtoworkwillreduceyourexpectedmortalityrateby28percent.Itisapublichealthsilverbullet.Wedon’tbelievethis,itappearstobeamedicalnonsense.Whatmattersforthesehealthbenefitassessmentsisthenumberofpeoplewhowouldotherwisebesedentary,andwhohaveresistedadviceandpressurestoexercisemore,andhavemanyopportunitiestodo,tochangetheirwayswhenbikepathsareconstructed.Evidenceonthispointisgenerallylackinginthesekindsofstudies.Ourmainpointhereisthatitisnotenough,justtocite,orlookattheabstract,ofanarticlethatappearstosupportafavouredoutcome.Thearticlehastoberead,understood,thesourceofcriticalinputsreadandunderstood,andanevenhandedassessmentmadeofreliability.ButrepeatedlytheMinistry,aswehavedemonstratedinthispaper,doesnotappeartohavedonethis.Themessagefordecision-makersisthatifyouarepresentedwith‘evidence’basedonthe‘literature’,thatappearstobetoogoodtobetrue,itprobablyis.ReducedairpollutionHuman-causedairpollutioncancostupto$4.3billioneachyear,whichincludescostsfrom
prematuredeaths,hospitalvisitsandrestrictedactivitydays.
Thiscosthasbeengrosslyoverstated.Thisisexplainedindetailbelow.Againthereshouldbelittledifferenceonthiscountbetweenazerocarbonandazeroemissionstarget.
ReducedroadtrafficcongestionTrafficcongestioninAucklandcosts$0.9billionto$1.3billion.
ThebenefitsfromtheexistingpassengerrailnetworkinWellingtonandAucklandare
estimatedatbetween$1.1billionand$1.2billion,almostallfromreducedcongestion.
Safetyandairqualitybenefitsmademoremodestcontributions.
Trafficcongestion,andtheroleofpublictransport,islargelyaseparableissuefromemissionsreductions.Theroadswillbejustascongestedwithelectricvehiclesaswithinternalcombustionenginevehicles.Ifthereisaneffectitcouldbenegative.Electricvehicleshaveahighercapitalcost,butalowmarginalcost,sothesevehiclescouldbedrivenmore.14Andersenet.al.2000
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However,thereisonemeaninfulargumentherethatisnotusedinOurClimate.Underthezeroemissionsoptionmanypeoplewillbemuchpoorerthantheyotherwisewouldbe.Theymaycycleorwalk,ortakepublictransport,becausetheycannotaffordacar.fbenefitand/evidence BetterhealthoutcomesfromfewerroadaccidentsBikeridingismoredangerousthantakingacar. Improvedfreshwaterquality;Reducedsoilerosion;Improvedbiodiversityandspeciesprotection Forestrycanimprovewaterquality,enhancebiodiversity,reducesoilerosion,improveland
useproductivityandstimulateregionaleconomicdevelopment.
Exoticforestsdonotincreasebiodiversity.Totheextentthatrelianceisplacedonnewindigenousforests,thenmoreafforestationwillberequiredtomeetthe2050target. Nearlyonemillionhectaresofprivatelandsubjecttomoderatetoextremeerosionare
potentiallywellsuitedtoafforestation.
Possiblytrue,butmorethanthreemillionhectaresareneededtomeetthezeroemissionstarget.
Forexample,theecosystemvalueofeachhectareofplantationforestryintheOhiwa
catchmentwas$5,600perannum,overhalfofwhichisfromimprovedwaterquality.
Wehavereviewedtheanalysisinthereport‘EcosystemServicesintheŌhiwaCatchment’.Theestimateoftheeconsystemvalueofimprovedwaterqualityis,putbluntly,nonsense.Thisrequiressomeexplanation.Thepurposeofthereportwastocalculatetheecosystemvalues(includingmarketableoutputsandpostiveandnegativeenvironmentalimpacts)foralllandbasedactivityinthecatchment.
Themostimportantpositiveforforestswasthevalueofnitrogenleaching.Heretheysetupanartificalcap-and-tradescheme.Itisassumedthatforestsleach3kg.perhectare,butareallocatedacapof10kgs.Sotheyhave7kg.tosellatapriceof$400/kg.Thisgeneratesanincomeof$2800,whichis‘waterquality’benefitthatiscitedinOurClimate.
Thesourceofthe$400estimatewasashortpowerpointconferencepresentation15Undertheheading‘Likelyincentivesbelowtheline’therewasabulletpoint.15 Barns, S. (2014). Lake Rotorua: Incentivising land use change In NZARES Conference
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$400/kg?Itisnotclearwhatpointthepresenterwasmakinghere,butitcertainlydidnotproviderobustevidenceforthe$400/kgestimatethatdrovetheOhiwacatchmentresults.
Theseriouserrorhereisthatthe$400/kgisnotremotelyneartothenitrogenleachingpricethatwouldemergeinarealmarket.At$400/kgadairyfarmerwithanoperatingincomeoflessthan$1700ahectarewouldpayaleachingchargeof$12,000ahectare.Sheepandbeeffarmerswillpay$3200onanincomeof$156.Theonlyrationalresponsewouldbeimmediatelyconverttoforestrytocollectthe$2800leachingincome.Ofcoursetherewouldbenoonelefttopayandthepricewouldcollapsetozero,orclosetoit.
Theotherkeydriveristheassumptionthatforestswouldbegenerouslyallocatedacapof10kg,whichamountstoagift.
ThereportwaswrittenbytheNewZealandForestResearchInstituteLtd.tradingasScion.
Againthispoints,atleast,tocarelessnessbytheMinistry.Iftheyaretociteastudythentheyshouldreaditandensurethattheresultsarerobust.WhatismoreworryingisthatanalysislikethismaybeinfluencingtheMinistry’sthinkingonlanduseissues.
Reducedroadmaintenancecosts;Improvedroadsafety Estimatedbenefitsofcurrentrailfreightareabout$200millionperyearfromreduced
congestion,$80millionperyearfromreducedmaintenancecostsand$60millionperyear
fromsafety.Thisimpliesthatthereshouldbealargescaleswitchtorailtransport.Thisisunlikelytobeefficientinmostcases,andifartificiallypromoted,thecostscouldbeconsiderable.Theemissionreductionsarelikelytobeverysmall,andcouldreadilybeachievedbyplantingmoreforests.Againthesourceofthefiguresisnotgiven. Improvedfreshwaterquality Reducednitrogenuse(eg,fertiliser)andimprovedpasturemanagementcouldreduce
nitrogenleachingintoriversby13percent.
Muchofthiscouldbeachievedunderexistingprogrammeswithoutazeroemissionstarget.Co-costsTheeconomicanalysisassumesthatemissionsareabatedatleastcost.However,thereisariskof‘co-costs’.Aco-costoccurswhenanemissionreductioneffectisusedtopartiallyjustifydirectinterventionsandprojectswhosecostsexceedsthe
31
benefits.Theemissionreductioneffectshouldbepickedupinacostbenefitanalysisthroughacarbonshadowpriceorwillbealreadycapturedbytheemissionpricingregime.However,whatislikelytohappeninmanycases,isthattherewon’tbearobustassessmentandthattheemissionsreductionimpact,howeversmall,willbeusedtojustifytheproject.BetterairqualityAfrequentlycitedco-benefitofemissionsreductionsistheimprovementinhealthresultingfromimprovedairqualityasinternalcombustionvehiclesarephasedout.Theprimarysourceonthehealthcostsisthe‘UpdatedhealthandairpollutioninNewZealand’(HAPINZ)study(2012).Itwasreportedthatin2006thatmorethan2300NewZealandersareestimatedtodieprematurelyeachyear,with1175duetoanthropogenicsources.
ThetotalsocialcostsassociatedwithanthropogenicairpollutioninNewZealandwasestimatedtobe$4.28billionperyearor$1,061perperson,withthefollowingcontributionsattributedtoeachsource:
• 56percentduetodomesticfires• 22percentduetomotorvehicles• 12percentduetoopenburning• 10percentduetoindustry.
Thesocialcostofmotorvehiclepollutionwas$941million.Withincreasingpopulationandpricesthatsocialcostwouldnowbeupto50percenthigher.
Therearesignificantissueswiththisstudy.
Thesocialcostsarealmostentirelydrivenbythenumberofdeathsandthecostofeachdeath.
TheestimateofthenumberofdeathsappearstobegrosslyexaggeratedandbearsnorelationshipwiththeestimatesreportedbytheWorldHealthOrganizationintheirpaper‘Ambientairpollution:Aglobalassessmentofexposuresandburdenofdisease’2016.ThestudyfoundthatNewZealandhadtheequalfirstbestairqualityintheworld,andthatthenumberofdeathsfromallsourcesin2012was20.Thedeathrateper100,000peoplewas0.5comparedtotheHAPINZestimateofabout40.IftheHAPINZestimatesarecorrectthenNewZealandhasthehighestsocialcostduetoairpollutioninthedevelopedworld,notamongstthelowest.
LookingattheanalysisunderpinningtheNewZealandstudy,weidentifiedanumberofissuesthatcouldhaveresultedinoverstatedresults.Forexample,deathsare
32
estimatedtoincreaseby7percentper10mg.persquaremetreincreaseinairparticulates,buthospitaladmissionsinclassesrelatedtopollution,increasebyonlyabout1percent.InourviewtheWHOnumberprovidesthebetterestimatesforpolicypurposes.
UsingtheHAPINZestimatesofthesourcesoftheemissions,15percentofthetotaldeathscanberelatedtosectors(transportandindustry)thatwillbeaffectedbyazerocarbonpolicy.Thatgives3deathsayearontheWHOnumbers.Mostofthesewouldbesaved,undera50percenttarget,sothemarginalnumbersavedunderthezeroemissionstargetmightbe,atmost,one.
TheHAPINZupdatestudyvaluedadeathat$3.5million,whichwasthefigureusedtovaluethecostoftrafficaccidentdeaths.ThepreviousHAPINZstudyusedafigureof$750,000.Becauseairqualityprimarilycausesdeathsinoldage,itwasassumedthatonly5yearsoflifewouldbelost.TheUpdateassumedthatalldeathsshouldbevaluedequally,regardlessofage.Thesocialcostofadeathat20yearsofage,withthelossof60futureyearsoflife,isthesameasadeathat85withthelossof,say,2yearsoflife.Thisisnotajudgmentweshare.WeprefertheinitialHAPINZestimate,whichupdatedforpricechanges,wouldbeabout$1million.Savingonelifewithvalueof$1million,givesamarginalsocialcostsavingof$1millionby2050.Thisisinconsequentialgiventhemagnitudeofthecostsoftheabatementpolicies.
Thechoicebetweenthezerocarbonandzeroemissionstargets
ThecaseforazeroemissionstargetWhileOurClimatedoesnotclearlysetoutthecostsandbenefitsoftheoptions,thereisastrongsuggestionthatfasterisbetter,andthatNewZealandshouldtargetzeroemissionsby2050.Fouradvantagesofearlyactionarecitedinthepaper.
• reducethepotentialforsudden,drasticeconomicshocks
• gainaneconomicadvantageasanearlymoverinemergingmarkets
• getthemostfromwiderbenefitslikecleanerairandwaterandbetterhealth
• meetinternationalcommitmentsandencourageothercountriestomeettheirs.
33
Reducepotentialforsudden,drasticeconomicshocksItisnotexplainedwhyatighterdeadlinewouldreducethepotentialforsudden,drasticeconomicshocks,andwhatthosedrasticeconomicshockswouldbe.LogicwouldsuggestthatinNewZealandmoretimewouldreducethoserisks.Inparticular,reducinganimalmethaneemissionsperanimalischallenging,andwilltaketime.TheNZIERreportshowsthatifwepursueazeroemissionstargetwithoutatechnicalsolutiontheimpactonthepastoralsectorwouldbedevastatingwithoutputfallingby70percent,frombaselineprojections,by2050.GainaneconomicadvantagefrombeinganearlymoverinemergingmarketsThisargumentisoverblownandreflectswishfulthinkingratherthanhardanalysis.Thereductioninemissionswillnotinvolve(much)marketabletechnologicalinnovation.Wewillmainlygrowmoretrees.Therestoftheworldalreadyknowshowtodothat.Wewillimportelectriccars,leveragingoffinnovationelsewhere.Norwayhasbeenanearlieradopterofelectriccars(careofsomelargesubsidies),butnoonehassuggestedthatNorwayhasinnovatedtoproducebetterelectriccars.Wemayclosedownsomecarbonintensiveindustriessuchasironandsteelandcementmanufacturing.Painful,butitdoesn’trequiremuchinnovationthatwecanselltotherestoftheworld.Someoftheinnovationthatmightoccurmaybearesponsetoveryhighemissionpricesthattherestoftheworldisunlikelytotolerate,andsowillnotbemarketableoverseasbecausetheinnovationwillnotbeeconomicatlowercarbonprices.WehavereviewedtheMinistry’sreportsonthesubjectofinnovation.Thefirst16isaMinistryreportthatreviewstheinternationalliteratureontheimpactsofemissionspricingoninnovationandcompetitiveness.
Thereportconcludedthatemissionspricingatcurrentlevelsreducesemissions,butdoesnotweakentheoveralleconomicperformanceofmostbusinesses.
Emissionspricingincreasesinnovationactivityinlow-emissiontechnologies,whichmaybeof
higheconomicvalue.Recentpreliminaryevidencesuggestsemissionspricingmayalso
providesmallpositiveeconomicimpacts.
Someemissions-intensiveandtrade-exposedsectorsshowpotentialforemissionsleakage
andnegativeeconomicimpactswithemissionspricing,althoughthesenegativeimpactsare
small.
16MFE2018
34
Theoverseasliteratureisnotreallyhelpful.Theemissionspriceswereverylow,comparedtothelevelswhichwillberequiredtomeettheNewZealandtargets,andtheemissionandindustrialstructureofthecountriescoveredisverydifferenttoNewZealand’s,withitshighpercentageofagriculturalemissions.Theresultsinsomeofthestudiesweremainlyshowingthattheshiftfromcoaltogasgenertedpowerhadnonegativeeffectoneconomicactivity.Thisisnotsuprisinggiventhefallingaspricesthatdrovethechange.
Thesecondpaper‘Countervailingforces:Climatetargetsandimplicationsforcompetitiveness,leakageandinnovation’byaconsultingfirmisnotsoupbeat.
Butempiricalevidenceaboutinnovation,evidencethatisapplicabletoNewZealandandto
climatepolicy,ishardtocomeby.Whatdatathereis,suchasonproductivitygrowth,casts
somedoubtoverwhetherinnovationandadaptationbyNewZealandfirmswillbesufficient
toovercomepotentiallywidecostdifferentials.Topresumethatclimatepolicycouldmakethedifferencewouldbeakindofexceptionalismandaseriousleapoffaith(Ouremphasis).
Thesearestrongwordsfromaconsultant.Consultantsaregenerallycarefulnottobitethehandthatfeedsthem.
Nothingofcourse,aboutthezerocarbontarget,precludesNewZealandfirmscompetinginemergingworldmarketsforemissionabatementtechnology.Intheagriculturalsectorwecan,andshould,undertaketheabatementresearch,withoutincludingthoseemissionsinthe2050target.GetthemostfromwiderbenefitslikecleanerairandwaterandbetterhealthAgain,overblown.Asexplainedabove,accordingtotheWHOwealreadyhavethecleanestairintheworldandthesocialcostsofairpollutionareverylowWewillprobably,mostly,maketheswitchtoelectriccarsby2050undereitheroption,whichwillhaveaminorimpactonsocialcosts.Watermightgetcleaneratthemargin,butthiswillcomeatacost.Theemissiontargetsareascattergunandinefficientwaytoaddresstheissueintheparticularlocalitiesthatmattermost.Theprimaryimpactwillbeonsheepandbeeffarmsnotdairying.Meetinternationalcommitmentsandencourageothercountriestomeettheirs.Theoptionofmeetingthe50percentreductiontargetorcarbonneutralityby2050doesmeetNewZealand’sinternationalcommitments.Nothingcompelsustobegreenhousegasneutralby2050.Therealargumenthereisthatby‘overachieving’NewZealandwillhaveenoughofanimpactontheactionsofenoughcountriestomakeadifference.WhileNewZealand’sactions,inthemselves,cannotmaketomakeadifferencetoglobalwarming,our‘moralinfluence’can.
35
Againthisismostlywishfulthinking.Doesanyoneseriouslyexpectthecountriesthatmatter:theUS,ChinaandIndia,tobeinfluencedbywhatNewZealanddoes.Eveniftheynoticedthereisareadyresponse.NewZealandintendstomeetthezeroemissionstargetmainlybyplantingtrees.Theyhaveplentyofsuitableland,wedon’t.NewZealandhaslargehydroelectricresourcesandthebestwindresourcesintheworld.Wedon’t.NewZealandwillincurveryhigheconomiccoststomeetitstargets,includingthedestructionofmuchofitstraditionexportbase.Wedon’tthinktheywillfollowthroughastheconsequencesstarttoemerge.Wearenotpreparedtoinflictsuchdamageonoureconomy.Moretothepointontheimpactoftheoptions,ifothercountriesarenotinfluencedbyNewZealand’scommitmenttozerocarbonby2050,whatdifferencewillthezeroemissionstargetmake?WillIndiabeinspiredtoimposeacarbontaxoncows,ordrasticallyreducetheirnumbers?Butperhapssomecountrieswillbeinspiredtoannouncemoreambitioustargets,afterallitisjustwords,whichdon’tnecessarilydriveactions.Therealbenefitshereare,first,somesectionsofthecommunitywillgeta‘warmglow’fromNewZealandbeingattheforefrontofthefightagainstclimatechange.Otherswillputapositivevalueonthedemiseoflivestockfarming.Ontheotherhand,thiswillbebalancedbynegativereactionsinsectionsofthecommunitywhoaremorelikelytobeartheconsequencesofthepolicies.’Second,politiciansandbureaucratswillbenefitbybeingabletopreenontheinternationalclimatemitigationstage.Theywillgetashort-termbenefitfromlookinggood.
Argumentsagainstemissionneutralityby2050Ontheotherhandthereareanumberofargumentsagainstazeroemissionstargetby2050.EconomiccostsItwillhaveahigheconomiccost.TheMinistryhastriedtohidethis.Theexactnumberisuncertain,butasdiscussedabove,themarginalcostofthezeroemissiontargetcouldbe,inpresentvalueterms,intheorderoftwohundredbilliondollars.
36
IncreasedriskofleakageGettingaheadofthepackincreasestheriskthatthepolicieswillresultinemissionsshiftingtoothercountrieswithweakerstandards,withlittleornoimpactonglobalemissions.Toourknowledgenocountryhasannouncedapolicytoapplychargestolivestockemissions.AsNewZealanddairyandmeatproductionisreducedwecanbereasonablysurethatitwillbereplacedbyproductionelsewhere.Otherenergyintensivetradedgoodsindustriessuchasironandsteelandcementwillcloseandwewillimportourrequirements.Again,therewillbenoimpactonglobalemissions.ForestrysequestrationresourceswillbedissipatedForestrysequestrationisnotapermanentsolution.Asthenetsequestrationeffectwearsoffwewillhavetoplantnewforeststomaintainournetzeroposition.Ifthisresourceisdissipatedearlythenwewillhavefeweroptionslater.Insectionthreeweexplainedwhyweshoulddelayforestryplantingsuntilaround2035.NewZealandnotanaturalcandidatetoleadtheworldItisgenerallyacceptedthattherichcountriesshouldtaketheleadinreducinggreenhouseemissions.However,NewZealandisnotreallyarichcountry,sittingonthemarginofbeinguppermiddle-income.ThisweakensthecaseforNewZealandbearingadisproportionateshareofthemitigationburden,particularlyiftheresultistopushusmorefirmlyintomiddle-incometerritory.Second,climatechangewillnotbecostlyforNewZealand,atleastinthiscentury.Itisnotclearwhyweshouldbemakingaspecialeffortinaglobalprocessthatwillactuallymakeusworseoffformanydecades.Third,reducinggrossemissionsfromanimalsisespeciallydifficult.Moretimeisvaluable.EmissionsframeworkfairnessItcanbearguedthattheemissionsmeasurementframeworkisnotfairtoNewZealand.Nearlyhalfofouremissionsrelatetoagriculture,butmostoftheoutputisexported.Iftheassessmentwasdoneonaconsumption,orcarbonfootprintbasis,ourabatementresponsibilitieswouldexcludeexportsandaccountfortheemissioncontentofimportsandwouldbelowerconsiderablylowerthanunderthecurrentsystem.Bycontrast,Norwayisalargeoilandgasproducerandexporter,butdoesnothavetakeresponsibilityfortheemissionconsequencesofitsexports.Norwayhasjust
37
announcedthatitplanstobeemissionsneutralby2030(mainlybybuyinginternationalcarboncredits)whileplanningtoincreaseitsoilexploration.NewZealand’semissionrecordisoftenpaintedaspoor.Forexample,theProductivityCommission,initsLowEmissionsEconomyreportpresentedafigureshowingNewZealandtohavethefifthhighestgrossemissionspercapita.Iftheemissionswerecalculatedonanetfootprintbasis,wewouldbewelldownintothelowemissionendofthefigure.OthercountriesarelikelytorenegeThereisahighlikelihoodthatcountrieswillnotfollowthroughontheirexplicitandimplicitcommitments,andthatNewZealand’sspecialeffortwillbeinvain.ManyothercountriesarenotdoingasmuchasNewZealandAsanexample,considerthecaseofSingapore.Asahigh-incomecountry,whichisdirectlyintheclimatechangefiringline,wemightexpectasenseofurgencyandsubstantiveactions.SowhatisSingaporedoing?First,itsigneduptoafairlysoft‘developingcountry’Parisagreementtarget,promisingthattheiremissionswillpeakin2030.Toourknowledgetheyhavemadenocommitmentsbeyondthatdate.Intermsofwhattheyareactuallydoing,wehavereliedonaJanuary2018reportfromtheSingaporeEnergyStudiesInstitute.17Themainactionistheintroductionofacarbontax,apparentlytobeatafairlylowlevel,forlargecompaniesfrom2019.Between30and40companieswillbeaffected.Inaddition:
• 2018hasbeendeclaredtheyearofclimateaction• SingaporewillhostaspecialASEANMinisterialmeetingonClimatechange• Therewillbesomefinancingsubsidies.
AssessmentInourviewtheargumentsareclearlyinfavourofthezerocarbonoption.TherewaslittleinthefourargumentsforearlyactionpresentedinOurClimate,andthereareahostofargumentsagainst.Therealargumentsforthezeroemissionsby2050isthatitwouldhaveafeelgoodeffectforsomemembersofthecommunity,andthatNewZealandwouldlookgoodinternationally.Theissueiswhetherthisisworth$200billion.
172018asSingapore’syearofclimateaction
38
AlternativeactionsAsdiscussedabove,themainbenefitstothezeroemissionstargetby2050istogetfavourableattentioninternationally,whichhopefullywilladdmomentumtotheinternationalcommunity’spathtozeroemmissionworld.
Therearemuchcheaperwaystosecuringthesebenefits.Wehavesetoutfour.Somearealittlewhimiscalandaretheretopromotedebateandthinkingonotherpossibilities.
AtaxoninternationalairtravelInternationalairtravelemissionshavebeenprettymuchignoredintheNewZealandpolicydiscussions.ButNewZealandmusthaveoneofthemostemissionsintensiveinternationaltouristindustry’sintheworld,andNewZealander’shaveahighrateoflongdistancetravel.Ifwemovedearlytoimposeasignificanttaxoninternationaltravel,thatwouldattractfavourableinternationalattentionandmayinduceothercountriestofollow.ItwouldreducetheincongruityintheargumentthatNewZealandneedstobecarbonoremissionsneutraltoenhanceourcleanandgreenimageandsobenefitthetouristindustry.Wecouldimposeadeparturetax,whichcouldbecalibratedtoroughlyreflectarealisticCO2price.Therewouldbetwoprices,say$150forlonghauland$50forthePacificandAustralia.Alternatively,ataxcouldbeleviedonjetfuel.AirlineshavealimitedabilitytoavoidthistaxbyfuellingbeforegettingtoNewZealand.Theobjectionsarethatitwouldreducetouristarrivalswhowouldwemoreinclinedtotraveltodestinationsthatdon’timposethetax,ordivertoutwardtravelthroughAustralia.Onthelastpoint,thediversionwouldbeexpensive,sotheeffectmightbelimited,butinanyevent,$50isbetterthannothing.Therewillbeanimpactontouristnumbers,butthatisthepointofthetax.Thenegativevolumeimpactwouldlikelybeoffsetbytherevenuebenefits.Fromapuretaxperspective,anexittaxisrelativelyefficientbecausemorethanhalfofthecostwouldfallonforeigners,whosewelfaredoesnotcountfromaNewZealandperspective.WithrespecttoNewZealandersthetaxwouldbelargelyprogressive,comparedtotheregressiveelementininmanyotherproposals.ItwouldalsooffsetpartofthedistortioninthetaxsystembecauseinternationaltraveldoesnotincurGST.
39
AbanongovernmentbusinessclassairtravelAbusinessclasstravellergeneratesthreetimestheemissionsofaneconomyclasstraveller.Thereshouldbeanabsolutebanonbusinessclasstravelbyallgovernmentofficials(includingpoliticians).Thishasseveraladvantages.
• Itwouldgetinternationalattention.• Itwouldbedomesticallypopular.Mostpeoplewouldsupportapolicythat
wouldrequirepoliticiansandbureaucratstoputtheirbuttswheretheirmouthsare.Thiswouldpromotesocialsolidarity.
• Itwouldsavemoney.• Itwouldreduceincentivestogoonjunkets.
AbanontraveltoclimatechangeconferencesThetechnologyexiststoattendaconferencevirtually.NewZealandwouldsendasignalthatitwasseriousaboutclimatechangebyusingthistechnologytoreduceemissionsfrominternationaltravel.Thiswouldhavetheco-benefitsmentionedabove.Itwouldalsoaddressadivergencebetweensocialandprivatebenefits.Thepolicyelitethatattendstheseconferencesgetsaprivatebenefitfrommixingwithlikemindedcolleagues,andtheneedtogainsocialacceptancemaybiastheirjudgmentstothedetrimentofNewZealandinterests.DomestictravelAllgovernmentemployees(andpoliticians)wouldberequiredtotraveltoandfromWellingtonairportbyelectricbike(ormanualiftheywish).Therecouldbeexceptionsonmedicalgrounds,buttoreducetheincidenceofabuse,therewouldbearequirementfor(named)exceptionstobepostedonline,togetherwiththereasonfortheexemption.Inadditiontothebenefitsalreadymentionedtherearethefollowingco-benefits.
• Governmentemployeesandpoliticianswouldbecomehealthier• NewZealandwouldsecureacompetitiveadvantagebyinnovatingtomake
electricbikesandbikeclothingmore‘businessfriendly’.
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Appendix
TheFifthIPCCreportonNewZealand
Observedandprojectedclimatetrends
Naturalclimaticvariabilityisveryhighintheregion
Thisvariabilityposesparticularchallengesfordetectingandprojectinganthropogenic
climatechangeanditsimpactsintheregion.Forexample,changesinENSO(ElNINO/SouthernOscillation)inresponsetoanthropogenicclimatechangeareuncertain(WGI
AR5Chapter14)but,givencurrentENSOimpacts,anychangeswouldhavethepotentialto
significantlyinfluencerainfallandtemperatureextremes,droughts,tropicalcyclones,marine
conditions,andglacialmassbalance(Mullan,1995;Chinnetal.,2005;Holbrooketal.,2009;
Diamondetal.,2012;Minetal.,2013).
Theregionhasexhibitedwarmingtothepresent(veryhighconfidence)andisvirtually
certaintocontinuetodoso(Table25-1).ObservedandCMIP5-modeledover1950–2004
increasesinannualrainfallinthesouthandwestoftheSouthIslandandwestoftheNorth
IslandofNewZealand,anddecreasesinthenortheastoftheSouthIslandandeastandnorth
oftheNorthIsland.….ForNewZealand,annualaveragerainfallisprojectedtodecreasein
thenortheasternSouthIslandandeasternandnorthernNorthIsland,andincreaseinother
partsofthecountry(mediumconfidence).
NewZealandextremeone-dayeventsdecreasedinthenorthandeastandincreasedinthe
westsince1930.
ProjectedmagnitudeoftemperatureextremesSpringandautumnfrostfreelandtoatleasttripleby2080
Upto60morehotdays+25degreesinthenorthby2090
Comment:Othercountryreportstypicallyfocusondaysexceeding40C.TheNewZealandtestismoreameasureoftheincreaseinpleasantlywarmthanextremelyhotdays.DroughtTimespentindroughtineasternNewZealandisexpectedtodoubleortrebleby2040.
Onthefrequencyofobserveddroughtsthereisnocomment.Insteaditisexplainedhowadroughtisdefined.Windmeanwesterlywindprojectedtoincrease…..decreasesof20%inSummerandAutumn
44
FireriskChangesinhighandextremefireriskdaysby0-400%usingonemodel0-700%anotherby
2040.
PrecipitationintensityIncreaseinprecipitationintensityofrareintensehighrainfallevents(lowconfidence)Increaseofdailyextremerainfallsof8%perdegreeofwarming
Comment:Iftemperatureincreasesby2degreesthenextremedailyrainfalleventsincreaseby16percent.Thisisnotreallyaworldchangingoutcome,butanincreaseinextremerainfalleventsisoftencitedasamajorclimaticrisk.Restrictingthetemperaturechangetoonedegreedoesn’tmakemuchdifference.Thereislowconfidenceintheintensityofintenserainfallevents.
TropicalcyclonesandotherseverestormsIncreaseinintensityofcyclonesinthesouthinwinterbutdecreasingelsewhere.
Increaseinconditionsconducivetoconventionstormdevelopmentisprojectedtoincreaseby
3-6percentby2070-2100comparedto1970-2000.
Comment:Anincreaseinseverestormsisoftencitedasanimportantdriverofclimatechangecosts.Theincrease,ifany,isexpectedtobeminimal.ProjectedImpacts
FreshwaterresourcesInNewZealandprecipitationchangesareprojectedtoleadtoincreasedrunoffinthewest
andsouthofthesouthislandandreducedrunoffinthenortheastofthesouthislandandthe
eastandnorthofthenorthislandAnnualflowsofeastflowingriverswithheadwatersinthe
southernalpsareprojectedtoincreaseby5to10%.Retreatoftheglaciershasonlyaminor
effect.
InNewZealandasinglestudyprojectsgroundwaterrechargeintheCanterburyPlainsto
decreaseby10percentby2040.
InNewZealandthereislittleevidenceofwaterresourceadaptationspecificallytoclimate
change.WaterinNewZealandisnotascarceresourcegenerallyandwaterpolicyreformis
generallydrivenmorebypressuretomaintainwaterqualitywhileexpandingagricultural
activities.
Impactsofclimatechangeonwatersupply,demand,andinfrastructurehavebeen
consideredbyseveralNewZealandlocalauthoritiesandconsultancyreports(Jollandsetal.,
2007;Williamsetal.,2008;Kouvelisetal.,2010),butnoexplicitmanagementchangeshave
45
yetresulted.
InlandfreshwaterandterrestrialecosystemsInNewZealand,fewifanyimpactsonecosystemshavebeendirectlyattributedtoclimate
changeratherthanvariability.AlpinetreelinesinNewZealandhaveremainedroughlystable
forseveralhundredyearsdespite0.9degreesCaveragewarmingoverthepastcentury.
ThefewstudiesofclimateimpactsonbiodiversityinNewZealandsuggestthatongoing
impactsofinvasivespeciesandhabitatlosswilldominateclimatechangesignalsintheshort
tomediumtermbutthatclimatechangehasthepotentialtoexacerbateexistingstresses.
Thereislimitedevidencebuthighagreementthattherichbiotaofthealpinezoneisatrisk
throughincreasedshrubbygrowthandlossofherbs,especiallyifcombinedwithincreased
establishmentofinvasivespecies.Somecoldwater-adaptedfreshwaterfishand
invertebratesarevulnerabletowarmingandincreasedspringfloodingmayincreaserisksfor
braidedriverbirds.Forsomerestrictednativespeciessuitablehabitatmayincreasewith
warmingalthoughlimiteddispersalabilitywilllimitrangeexpansion.Tuatarapopulations
areatriskofwarmingincreasesintheratioofmalestofemales,althoughthelineagehas
persistedduringhighertemperaturesinthegeologicalpast.
BiodiversityresearchandmanagementinNewZealandtodatehastakenlittleaccountof
climaterelatedpressuresandcontinuestofocuslargelyonmanagingpressuresfrom
invasivespeciesandpredators,freshwaterpollutionexoticdiseasesandhaltingthedeclinein
innativevegetation.
CoastalandOceanEcosystemsNoclimatechangeimpactshavebeenreportedatthisstage,althoughthismaybedueto
insufficientmonitoring.Eventhoughevidenceofclimateimpactsoncoastalhabitatsislimitedtodate,confidenceis
highthatnegativeimpactswillarisewithcontinuedclimatechange(Lovelocketal.,2009;
McGloneandWalker,2011;Trailletal.,2011;Chapter6).Somecoastalhabitatssuchas
mangrovesareprojectedtoexpandfurtherlandward,drivenbysealevelriseand
exacerbatedbysoilsubsidenceifrainfalldeclines(mediumconfidence;Trailletal.,2011),
althoughthismaybeattheexpenseofsaltmarshandconstrainedinmanyregionsbythe
builtenvironment(DCC,2009;Lovelocketal.,2009;Rogersetal.,2012).Estuarinehabitats
willbeaffectedbychangingrainfallorsedimentdischarges,aswellasconnectivitytothe
ocean(highconfidence;Gillandersetal.,2011).Lossofcoastalhabitatsanddeclinesiniconic
specieswillresultinsubstantialimpactsoncoastalsettlementsandinfrastructurefrom
directimpactssuchasstormsurge,andwillaffecttourism(mediumconfidence;Section
25.7.5).
Comment:Thesearemostlyqualitative,andsomewhatshrill,assertionswithoutanyattempttoquantifytheextentofthe‘negativeimpacts’.
46
AstrengtheningEastAucklandCurrentinnorthernNewZealandisexpectedtopromote
establishmentoftropicalorsubtropicalspeciesthatcurrentlyoccurasvagrantsinwarmLaNiñayears(Willisetal.,2007).Suchshiftssuggestpotentiallysubstantialchangesinproductionandprofitofbothwildfisheries(Norman-Lopezetal.,2011)andaquaculture
speciessuchassalmon,mussels,andoysters(mediumconfidence;Hobdayetal.,2008;
HobdayandPoloczanska,2010).Ecosystemmodelsalsoprojectchangestohabitatand
fisheriesproduction(lowconfidence;Fulton,2011;Watsonetal.,2012).
Comment:Herewehavesuggestionsof‘potentiallysubtantialchangesinproductionandprofit’butnoactualanalysistobackitup.
ProductionforestryInNewZealand,temperaturesaremostlysub-optimalforgrowthofP.radiataandwater
relationsaregenerallylesslimiting(KirschbaumandWatt,2011).Warmingisexpectedto
increasegrowthinthesouthandreduceitinthenorthbutCO2fertilizationmayoffsetthis
(mediumconfidence;
theabovestudiesprovidelimitedevidencebuthighagreementofpotentialnetincreased
productivityinmanyareas,butonlywheresoilnutrientsarenotlimiting.Adaptation
strategiesincludechangestospeciesorprovenanceselectiontowardtreesbetteradaptedto
warmerconditions,oradoptingdifferentsilviculturaloptionstoincreaseresiliencetoclimatic
orbioticstresses,suchaspestchallengeAgriculturalproductionissensitivetoclimate
(especiallydrought;Box25-5)butalsotomanynon-climatefactorssuchasmanagement,
whichthusfarhaslimitedbothdetectionandattributionofclimate-relatedchanges
AgricultureAgriculturalproductionissensitivetoclimate(especiallydrought;Box25-5)butalsotomany
non-climatefactorssuchasmanagement,whichthusfarhaslimitedbothdetectionand
attributionofclimate-relatedchange.
Projectedchangesinnationalpastureproductionfordairy,sheep,andbeefpasturesinNew
Zealandrangefromanaveragereductionof4%acrossclimatescenariosforthe2030s
(Wrattetal.,2008)toincreasesofupto4%fortwoscenariosinthe2050s(Baisdenetal.,
2010)whenthemodelsincludedCO2fertilizationandnitrogenfeedbacks.
Studiesmodelingseasonalchangesinfoddersupplyshowgreatersensitivityinanimal
productiontoclimatechangeandelevatedCO2thanmodelsusingannualaverage
production,withsomeimpactsexpectedevenundermodestwarming(highconfidence)in
bothNewZealand(Liefferingetal.,2012)andAustralia
InNewZealand,projectedchangesinseasonalpasturegrowthdrovechangesinanimal
productionatfoursitesrepresentingthemainareasofsheepproduction(Liefferingetal.,
2012).InHawke’sBay,changesinstocknumberandthetimingofgrazingwereableto
maintainfarmincomeforaperiodinthefaceofvariableforagesupplybutnotinthelongerterm.
47
InSouthlandandWaikato,projectedincreasesinearlyspringpasturegrowthposed
managementproblemsinmaintainingpasturequality,yet,iftheseweremet,animal
productioncouldbemaintainedorincreased.
TheimpactofelevatedCO2onforageproduction,quality,nutrientcycling,andwater
availabilityremainsthemajoruncertaintyinmodelingsystemresponses(McKeonetal.,
2009;Fingeretal.,2010);
NewZealandagro-ecosystemsaresubjecttoerosionprocessesstronglydrivenbyclimate;
greatercertaintyinprojectionsofrainfall,particularlystormfrequency,areneededtobetter
understandclimatechangeimpactsonerosionandconsequentchangesintheecosystem
servicesprovidedbysoils(Basheretal.,2012).
CroppingModelingsuggeststhereisthepotentialtoincreaseNewZealandwheatyieldsunderclimate
changewithappropriatechoicesofcultivarsandsowingdates(highconfidence;Teixeiraet
al.,2012).WidespreaddroughtinNewZealandduring2007–2009reduceddirectandoff-farmoutput
byaboutNZ$3.6billion(Butcher,2009).The2012–2013droughtinNewZealandisestimated
tohavereducednationalGDPby0.3to0.6%andcontributedtoasignificantriseinglobal
dairyprices,whichtemperedevengreaterdomesticeconomiclosses(Kamberetal.,2013).
Droughtfrequencyandseverityareprojectedtoincreaseinmanypartsoftheregion
EnergysupplydemandandtransmissionNewZealand’spredominantlyhydroelectricpowergenerationisvulnerabletoprecipitation
variability.Increasingwinterprecipitationandsnowmelt,andashiftfromsnowfallto
rainfallwillreducethisvulnerability(mediumconfidence)aswinter/springinflowstomain
hydrolakesareprojectedtoincreaseby5to10%overthenextfewdecades(McKercharand
Mullan,2004;Poycketal.,2011).Furtherreductionsinseasonalsnowandglacialmeltas
glaciersdiminish,however,wouldcompromisethisbenefit(Chinn,2001;Renwicketal.,
2009;Srinivasanetal.,2011).Increasingwindpowergeneration(MED,2011)wouldbenefit
fromprojectedincreasesinmeanwesterlywindsbutfaceincreasedriskofdamagesand
shutdownduringextremewinds(Renwicketal.,2009).
Climatewarmingwouldreduceannualaveragepeakelectricitydemandsby1to2%per
degreeCelsiusacrossNewZealand.
TourismSkitourismisexpectedtodeclineintheAustralianAlpsduetosnowcoverreducingmore
rapidlythaninNewZealand(Pickeringetal.,2010;Hendrikxetal.,2013)andgreater
perceivedattractivenessofNewZealand(Hopkinsetal.,2012).
HumanhealthInthesouthernstatesofAustraliaandpartsofNewZealand,this(heatrelateddeaths)may
bepartlyoffsetbyreduceddeathsfromcoldatleastformodestrisesintemperature.
48
Comment:Thisinformationcomesfromastudythatexaminedtheimpactonmortalityofheatandcold.ItwasbasedonempiricaldatafromChristchurchpriorto2000.Itwasclaimedthatalmostallofthewinterexcessmortalitywasduetoairpollutionnotcold,andthatcoldonlybecameafactorwithtemperaturebelow0C,andthatheatwasafactorabove28C.Itisnotconsistentwithmanystudiesthatfindarelationshipbetweencoldandexcessmortalityathighertemperaturethresholds.
Intra-andInter-regionalFlow-onEffectsamongImpacts,Adaptation,andMitigationForNewZealand,thereislimitedevidencebuthighagreementthathigherglobalfoodprices
drivenbyadverseclimatechangeimpactsonglobalagricultureandsomeinternational
climatepolicieswouldincreasecommoditypricesandhenceproducerreturns.Agriculture
andforestryproducerreturns,forexample,areestimatedtoincreaseby14.6%undertheA2
scenarioby2070(Saundersetal.,2010)andrealgrossnationaldisposableincomeby0.6to
2.3%underarangeofnon-mitigationscenarios(Stroombergen,2010)relativetobaseline
projectionsintheabsenceofglobalclimatechange.
Someclimatepoliciessuchasbiofueltargetsandagriculturalmitigationinotherregions
wouldalsoincreaseglobalcommoditypricesandhencereturnstoNewZealandfarmers
(Saundersetal.,2009;Reisingeretal.,2012).Dependingonglobalimplementation,these
couldmorethanoffsetprojectedaveragedomesticclimatechangeimpactsonagriculture
FewstudiesconsidermitigationbenefitsexplicitlyforNewZealand,butscenario-based
studiesgivehighconfidencethat,ifglobalemissionswerereducedfromahigh(A2)toa
medium-low(B1)emissionsscenario,thiswouldmarkedlylowertheprojectedincreasein
floodrisks(Ballingeretal.,2011;McMillanetal.,2012)andreduceriskstolivestock
productioninthemostdrought-proneregions(Taitetal.,2008a;Clarketal.,2011)
Migration within countries, and from New Zealand to Australia, is largely economically driven and sustained by transnational networks, though the perceived more attractive current climate in Australia is reportedly a factor in migration from New Zealand (Goss and Lindquist, 2000; Green, A.E. et al., 2008; Poot, 2009). (Our emphasis).