New research from Motu Economic and Public Policy Research looks at whether New Zealand can change the way we use land to achieve our emissions target in the lowest cost way.

"Our paper uses land-use models to simulate how changes in the way land is used can mitigate greenhouse gas emissions," says Suzi Kerr, Senior Fellow at Motu and one of the authors of the report."

Under the Paris Agreement, New Zealand must transition toward a net-zero-emissions economy.

"We focus on what landowners can do cost-effectively but we don't discuss who should bear the cost of any changes," says Dr Kerr.

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The report also looks at the potential economic and social impacts of changes in land-use.

It is part of a suite of reports from the Biological Emissions Reference Group used to inform the Ministry for the Environment and Ministry for Primary Industries about how to reduce biological emissions and the costs and opportunities of doing so.

"Achieving a 50 per cent reduction in land-sector emissions by 2050 (beyond reductions through the current Emissions Trading Scheme) would be possible even with no new horticulture and no new on-farm mitigation technology. It would, however, require planting a lot of trees" says Dr Kerr.

The modelling suggests that roughly half of the new forest area will come from land currently covered by scrub. The rest is likely to come from conversions from sheep and beef farming with a small decrease in dairying.

"It would be possible to reach a 2030 target of a 30 per cent reduction in land-sector emissions, but this will be harder to meet because of the speed of change required and the large costs this rapid change would impose."

"Our modelling also shows that if we were able to double the size of Aotearoa's current horticulture sector it would reduce greenhouse gas emissions as much as full implementation of a methane vaccine."

If the horticulture sector can grow rapidly, it would bring large increases in revenue, which are likely to offset any corresponding revenue losses in pastoral agriculture.

The modelling suggests small losses of employment in the dairy and sheep-beef sectors as they expand less or gradually contract, but these are more than offset by increases in forestry employment.

"If Aotearoa carries on as it is now, our research showed that there would be around 86,500 people employed full-time in the agricultural sector. If we are able to build up horticulture and forestry, this could increase to 136,900 full-time employees. These jobs would however sometimes be in different places and require different skills," says Dr Kerr.

The Emissions Trading Scheme remains important in encouraging land use change.

However, the report concludes that, even if biological emissions from agriculture were included in the ETS, the emissions price alone would be unlikely to be sufficient to induce efficient land-use change.

"Many farmers and Māori trusts will need some kind of help in transitioning land towards horticulture and forestry if the transition is to be a positive one for the rural sector."

"To supplement the changes encouraged by the ETS, landowners will need more information and training. There will also need to be support from government and from the horticultural sector as a whole, and probably changes in regulation, to help farmers produce new products and access international markets for these new products."

The research uses three models: Motu's Land Use in Rural New Zealand model, Manaaki Whenua – Landcare Research's New Zealand Forestry and Agriculture Regional Model, and Infometrics' Energy Substitution, Social Accounting Matrix.

The report is now available to read on the Motu website.