The River

Yesterday I saw a youtube video pollution in the Mohaka which was a real eye opener.  If you have not seen it, I strongly suggest you click on the link above.
Swimming in a clean mountain river is one of the greatest experiences one can have.

Sadly my local river, the Manawatu is far from pleasant with its greasy algae covered rocks and streams of filamentous gunge. Given the reputation of the Manawatu as the most polluted river in the western world I thought I would in the first instance try and understand what was happening in the Mohaka, and then focus closer to home.

Above the Taharua confluence the Mohaka is clean (that is no visible algal blooms/gunge) with lots of large fish, and clear water.  To my knowledge there is no dispute as to the cause of the poor state of the Taharua river. It is the change to intensive dairy farming.

In a nutshell dairying is not done the same way as it used to be done. Naru island was exported to New Zealand as phosphate rock, which was converted to super-phosphate fertiliser.  This was applied to pasture to encourage clover growth, and the clover supplied the nitrogen to the soil.  The forage was a mix of clover and ryegrass.  However it has long been known that if fast results are required give the pasture nitrogen.

From a classical economics viewpoint giving nitrogen makes sense as the value of the milk produced far outweighs the cost of the nitrogen fertilizer.  Classical economics (through the law of diminishing returns) also tells us how much fertilizer to add, that is until marginal revenue = marginal cost.  The law of diminishing returns says is the first bit of nitrogen we add gets a big response.  As more and more nitrogen is added we get less grass growth for each increment.  If nitrogen costs 50c/kg and milk is worth 1 $/litre we add more nitrogen until adding 2kg of nitrogen gets us and extra litre of milk.

The result of this situation is that New Zealand lowland waterways are in an appalling state.  This is not my opinion but scientific fact.  The question is what can, and what should be done about it? Perhaps I should send an invoice demanding payment for the direct injury to me as the loss of enjoyment of life that I have suffered by their actions.  Perhaps regulation is the answer, but watching on One Plan fiasco continue I doubt it.  Perhaps the easiest is to use economics to undo the damage economics has caused, a significant tax on nitrogen fertiliser, $1000 to $2000 per tonne should be enough.

Substituting this back into the marginal cost = marginal revenue and relying on diminishing rate of return, this should be enough to make farmers a little less heavy handed with their fertiliser.  Now if the price of nitrogen fertiliser goes up to $1.50/kg, then we add nitrogen to the point where 670g of nitrogen gets that extra litre of milk.  This will occur at a lighter fertiliser usage.

The value of environmental destruction is not measured in our current system and the farmer is not asked to pay for it. Instead the farmer is rewarded, not only by healthy profits, but also by an increase in land values.  Let us bring the true costs of nitrogen fertilizer usage back to the farmer, and we might get some better outcomes.

If you did not click on the link at the top of the article, here it is again.  Please  view the clip by clicking on this link.