Reducing farming's environmental footprint in New Zealand is likely to hinder land values in the future, a farm consultant says.
AgFirst farm consultant Phil Journeaux has been researching the impact of environmental constraints, such as reducing nitrogen, phosphorous, sediment and microbe discharges, on land values in New Zealand.
Working on the assumption dairying was currently the highest use of pastoral farming in New Zealand, he found dairy land values would be impacted by environmental constraints that affected profitability.
These included reducing diffuse discharges to water - with the cost of improving effluent systems, fencing off streams, developing riparian margins and wetlands, putting in feedpads and wintering barns, as well as implementing a range of farm management practice changes.
"The increased cost for farmers to mitigate the discharges and also reduce the flexibility of future land use change both have the potential to impact the price of land significantly."
Mr Journeaux said it was probably also only a matter of time before the Emissions Trading Scheme covered agriculture, which meant carbon charges in the future were going to be inevitable and costly for farmers.
The impact on farm profitability could therefore be significant over time, which would feed through to reduced land values.
Mr Journeaux said, at a national level, the impact of environmental constraints on land values was that the credit risk of farming, and the credit risk of banks, would be significantly increased.