The macroeconomic impacts of the One Plan’s intensive land use provisions

Abstract

NZIER was asked by the Horizons Regional Council to estimate the regional macroeconomic impacts on farmers and commercial vegetable growers of meeting the nitrogen loss targets in Table 14.2 of the One Plan in three local economies: horticulture in the Horowhenua district, dairy farmers in the Tararua and Rangitikei 4 districts. Horizons Regional Council wants to understand how these estimated on-farm/on-orchard costs might affect the wider territorial authority economies, the Horizons economy and the New Zealand economy. In this report, we examine the indirect or flow-on effects for supplying industries (e.g. agricultural services, fertiliser production, transport, etc.) and downstream industries (primary processing, retail, construction, etc.). Our modelling also considers how resources (especially labour and capital) shift between the primary sector and other industries (manufacturing, services, etc.) as the dairy and horticulture industries becomes less competitive and profitable in the face of higher costs to meet nitrogen loss targets. Using these direct and indirect effects, we determined the flow-on effects throughout the wider Horizons economy and the national economy on GDP, employment, wages, and household spending. This gives us the macroeconomic impacts that you are interested in for your review.