New Zealand Dairy Farming: Milking Our Environment for All Its Worth

Over the past two decades there have been major increases in dairy production in New Zealand. This increase in intensity has required increased use of external inputs, in particular fertilizer, feed, and water. Intensified dairy farming thus incurs considerable environmental externalities: impacts that are not paid for directly by the dairy farmer. These externalities are left for the wider New Zealand populace to deal with, both economically and environmentally. This is counter-intuitive given the dairy industry itself relies on a 'clean green' image to maximize returns. This is the first nationwide assessment of some of the environmental costs of the recent increase of dairy intensification in New Zealand. Significant costs arise from nitrate contamination of drinking water, nutrient pollution to lakes, soil compaction, and greenhouse gas emissions. At the higher end, the estimated cost of some environmental externalities surpasses the 2012 dairy export revenue of NZ$11.6 billion and almost reaches the combined export revenue and dairy's contribution to Gross Domestic Product in 2010 of NZ$5 billion. For the dairy industry to accurately report on its profitability and maintain its sustainable marketing label, these external costs should be reported. This assessment is in fact extremely conservative as many impacts have not been valued, thus, the total negative external impact of intensified dairying is probably grossly underestimated.