The Government must now decide how draconian it wants to be as it begins to control what is often called “dirty dairying”.
This was the challenge placed before it yesterday by the Parliamentary Commissioner for the Environment, Simon Upton.
Upton has just completed a report on a programme called “Overseer” which allows farmers to estimate nitrate use in paddocks.
He is saying the Government should say whether or not it wants to use Overseer as the tool to measure nutrient runoff and if it does to set out what further steps are needed.
The alternative would be taxes and regulations.
Upton — one of the original neo-liberals in the 1990 -1999 Bolger Government and a former head of the OECD Environmental Directorate will now find himself in familiar territory; once again arguing against extra taxes and regulations which many voices in the water-quality debate want to see imposed.
Overseer is a web-based computer model which allow farmers to input data from their farms and thus analyse the flow of nutrients through the farm and produce nutrient budgets for seven key farm nutrients and greenhouse gas footprint reports.
It was originally funded and designed by fertiliser companies to help farmers estimate how much extra fertiliser they needed to apply.
Some 10,000 farms are currently signed up to use it.
But because it is likely that by the end of next year Councils will be regulating nitrate limits on paddocks as part of the campaign by Environment Minister, David Parker to clean up waterways, Overseer could now play a crucial role in measuring nitrate runoff from farms.
Excess nitrate runoff is the prime cause of algae growth in waterways.
Upton said yesterday that Overseer was the only tool available that could use an effects-based system to measure nutrient runoff.
“The alternative is direct controls on inputs like controlling stocking rates, fertiliser application and any number of other inputs,” he said.
“That could be pretty bureaucratic and inflexible.
“If you focus regulation on limiting environmental pressures you leave the land user with the maximum flexibility in choosing how to respond, to innovate, to change land use, whatever.
“So an effects-based regime is the only incentive to innovate and change.”
But Environment Minister David Parker was guarded in his response to Upton’s report.
He said the report was “very timely and is a critically important input into the Essential Freshwater programme” but noted that the report writers said Overseer was imperfect.
The report writers did an extensive search of international models. They conclude that Overseer provides farmers with valuable information in making judgments about farm management – but it is imperfect.
The Minister agreed that if it is to be used more widely as a regulatory tool, then more investment in it would be needed, so that it better accounts for different land types and farm practices.
As Mr Upton noted: “To ensure cleaner water, farmers and regional councils need to be confident that Overseer’s outputs are reliable”.
The Government has already put $5m into Overseer in the 2018 Budget.
Parker noted that its use has evolved over time and – in reference to Upton’s recommendations – agreed that guidance for the development, evaluation, and application of environmental models in regulation would be desirable.
But the choices outlined by Upton are also alive within the Government.
The Greens favour an input based taxation system.
And in making his argument against direct controls – presumably including taxation – on inputs, Upton is up against the Tax Working Group who acknowledged in their interim report that he was working on Overseer, but nevertheless gave cautious support to input taxes.
The report said: “Tax instruments based on relatively coarse estimates (e.g. input-based approaches such as fertiliser use) may be better than the status quo for some pollutants, such as nitrogen.
“ They can provide a price signal that is sensitive to land use and intensity decisions, and incentives to abate below consent levels. “
Upton said if New Zealand didn’t use Overseer then it would need to use something else.
“And if you don’t believe you can use a model (Overseer) then you are going to be looking at input controls.
“Because at the end of the day I think we are all aware that excess nutrient from whatever activity is something that we cannot go on living with.
“We have got to do something about it.”
Upton is suggesting that Overseer effectively become the property of the Government and become open source software. He said that implies some Government money and also some user pays funding.
But the fundamental theme of his report; that taxation and regulation might be less effective than prescribed limits with farmers given freedom on how to reach them is likely to be a theme we hear a lot more on next year as the great water cleanup gathers strength.