A "cash for conservation" approach incentivising farmers to off-set the impact of agriculture on the environment might be working overseas - but it's been a different story here in New Zealand, say researchers in a new paper.

An article in the major journal PLOS ONE found that offering farmers financial incentives to lessen environmental impacts, by taking measures like slashing fertiliser use and sparing land for conservation, had a positive effect on areas such as greenhouse gas reduction and increased biodiversity.

It had been a point of contention as to whether this approach could actually work.

The authors used New Zealand as a case study for measuring the benefits of mitigation and subsidy schemes - and one author was quoted in press material saying much of the country had been "transformed into a massive dairy farm for China" as a result of having little of them.

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New Zealand farmers received one of the lowest levels of Government support in the developed world for either production or conservation, essentially "abandoning the agricultural sector to market forces" the article stated.

It went on to argue that this "laissez-faire approach to the agricultural sector does little to safeguard the environment".

New Zealand researchers approached for comment have rejected that assertion.

In the journal article, the Cambridge University and Landcare Research authors aggregated investment in environmental incentives at a national level for the first time.

When they compared them to broad trends in environmental outcomes, they found that paying the agriculture industry to help the environment seemed to be working generally.

However, data showed that these incentives were being undercut by big Government subsidies to boost production.

The research team mapped the proportion of global agricultural production reinvested in environmental incentives, and compared it to the proportion gifted to the industry through government subsidies.

Pie charts created out of the data revealed big wedges of subsidy stacked, on top of barely perceptible slivers of environmental investment.

In the European Union, around 20 per cent of the value of agriculture production was subsidised by the taxpayer, but less than 1 per cent went toward mitigating the toll farming took on the natural world - despite agriculture contributing more to environmental degradation than any other economic sector.

The team described current agriculture funding models as "perverse subsidies", promoting negative actions in both the long and short term by being bad for the environment and costly to the economy.

They argued for a redressing of a huge imbalance between Government money spent on farming subsidies, and that spent on lessening the damage farming does to the environment.

Consumption of environmental services, such as water, should be taxed, they said, and any subsidies should be paid on the proviso that they are as much for protecting the land as for farming it.

"Our results show that paying farmers to do things that are good for the environment actually seems to work when averaged across national scales," lead author Dr Andrew Tanentzap said.

"In many parts of the world, governments already provide huge subsidies to the agriculture industry; if we are paying people to be farmers, part of that payment - indeed, part of the job of a farmer - needs to be protecting the countryside as well as farming it," he said.

"We need a shift in what it means to be a farmer."

But, looking to New Zealand, they found removing production subsidies alone failed to reduce environmental harm, and incentives for better farming practices were still required.

"Subsidies for production date from the post-war era, when feeding a booming population was paramount.

"Food security is, of course, still a major issue as populations continue to rise, but there are ways to deliver this without destroying the planet," Dr Tanentzap said.

"If the agriculture industry is to be subsidised, then paying farmers to protect the environment - rather than just stripping as much use from the land as possible - is something our study has shown to be effective, and something the natural world is in dire need of."

New Zealand researchers respond

Waikato University Professor of Agribusiness Jacqueline Rowarth responded to the article with some criticism.

"Dairying occupies 1.7 million ha of land in New Zealand, which is approximately 6 per cent...so to say 'much of the country has been transformed' is something of a stretch of the data and gives the tenor of the article," she said.

What the authors have termed a laissez-faire attitude to the environment, she added, had resulted in the expenditure of almost a billion dollars in the last few years fencing waterways, planting natives and upgrading effluent systems.

"Certainly other countries have been 'removed' from market forces by Government subsidies - but the New Zealand farmer has responded to domestic and international signals to the benefit of the country in economic growth and the benefit of the environment through adoption of new technologies as they have been developed."

Lincoln University environmental management senior lecturer Dr Ann Brower also rejected the "laissez-faire" assertion.

"This paper has quite a lot to recommend it. If there are to be subsidies, it is certainly better to subsidise and encourage good environmental practice than bad, as they say.

"I would not call New Zealand's environmental or agricultural policy 'laissez-faire'; as that's quite a loaded term.

"I think it is fair to call New Zealand 'lightly regulated', by international standards.

"And it's fair to say that the ill-defined and ambiguous terms in the RMA, like 'significance', lead to outcomes that might appear the result of laissez-faire.

"But I would not call the NZ environmental regulatory framework laissez-faire."

Environmental Defence Society senior policy analyst Dr Marie Brown, author of the book Vanishing Nature: facing New Zealand's biodiversity crisis, said while the article demonstrated that payments to farmers to protect the environment were a worthwhile investment, they were easily undermined by large subsidies elsewhere.

"We see this here in New Zealand, with conservation incentives usually dwarfed by subsidies for things like irrigation schemes.

"Building goodwill and empowering farmers to be good stewards of their land is confirmed as an effective approach, but benefits will dissipate with perverse subsidies for environmentally harmful activities in play.

"This demands of more holistic and strategic view of our agricultural industry than is perhaps taken now."