Author: Professor Richard Levy, Antarctic Research Centre, Professor Tim Naish, Professor of Earth Sciences Antarctic Research Centre, and James Allen, CEO, AgFirst
After the recent Auckland floods and the effects of Cyclone Gabrielle and regular seasonal droughts, the impact of climate change is top of mind for many. Three climate and agricultural experts explain what extreme weather, rising sea levels and the challenge of reducing high levels of greenhouse gas emissions will mean for residential and rural real estate in years to come.
Sea level on the rise
Damaging flood events in Aotearoa New Zealand have increased in number since the late 20th century.
What may not be well known, is that, for many parts of our coast, only small amounts of sea level rise turn today’s rare events into frequent ones. For example, a 40cm increase in sea levels around the Auckland coast means a flood that today might occur once every century will happen every year. Knowing when these thresholds will be reached and crossed is key as we work hard to adapt to unavoidable sea-level rise.
NZ SeaRise released scientific data last year that shows that, for many regions of Aotearoa, sea level is rising faster than we thought due to the influence of land subsidence. We are all very aware that our land can rapidly rise or drop in large jumps during earthquakes but less obvious to us all, is that smaller shifts occur continuously in between those large seismic events. Tectonic forces are slowly pulling down the southern and eastern margins of the North Island and northern regions of the South Island which means land is subsiding up to eight millimetres a year in these areas.
Impact of rising sea level on residential real estate
These changes of a millimetre here or centimetres there are small but continuous and do add up. In areas where the land is subsiding then the annual rate of sea-level rise can double. In regions that are sinking, important thresholds will be reached within the next several decades. A total rise of 30cm above 2005 levels may occur in parts of Wellington within the next 20 to 30 years. Of course, sea level rise will occur more slowly along regions of our coast that are rising.
For people interested in deciding on which neighbourhood to favour when looking to buy a home, there’s an online map giving sea level rise projections out to the year 2300 for every 2km along the coast of Aotearoa. While this does not provide pinpoint accuracy for different dwellings, it is a useful risk tool for those looking to buy property on the coast. Property owners, councils, infrastructure providers and real estate professionals need to know how sea-levels will change in the coming decades so that they can consider how risks associated with flooding, erosion and rising groundwater will shift.
Sea-level rise projections for the entire coastline provide timely risk information that will help us make better decisions about how we live on the coast safely and adapt in a manageable way to the impacts of rising seas. Take a good look at the sea level projections tool on the NZ SeaRise website.
Climate change and the rural sector
CEO at AgFirst James Allen says that we’re beginning to see change from all angles when it comes to our climate. Increased variability in weather patterns, and increased frequency of damage caused by weather extremes alongside government policy to drive change; pressure from consumers and large multi-nationals who purchase products on their behalf from our processors and decisions from lending institutions and insurance companies on whom to lend to/insure in the future.
“Reductions in our greenhouse gas emissions (GHG) will be required by all sectors. The fact that the New Zealand agricultural sector is responsible for nearly half of our emissions means we will not escape scrutiny,” adds Allen.
The current targets laid down by the Government include a reduction in biogenic methane emissions by 10% by 2030 (compared to 2017), and a 24-47% reduction by 2050, as well as net zero emissions for longlived GHG by 2050.
To meet these targets, every livestock farmer was required to understand their GHG emissions by the end of last year, and all farmers need to have an emissions reductions plan in place by 2025.
What’s being done to reduce agriculture emissions?
The Government has partnered with the agriculture sector, iwi and Māori via the He Waka Eke Noa Primary Sector Climate Action Partnership to take action in reducing agricultural emissions.
The partnership was tasked with designing a farm-level pricing option as an alternative to agriculture going into the New Zealand Emissions Trading Scheme (ETS). Pricing options have been presented to the Government and the pricing scheme is being finalised with the intent of becoming legislated by the end of 2023. It is proposed that there will be separate levy prices for long-lived gases (nitrous oxide) and biogenic methane.
Adding a further element to the conversation is the issue of the ETS. The key issue here for real estate is whether there are any contingent liabilities arising from forest that has been harvested and for existing woodlots where ETS credits have been claimed.
“The reality is that most dairy farms will have received an estimate of their current level of emissions by their milk processor based on information the farmer has supplied. There will be a lower number of sheep, beef, deer, or dairy support farmers who understand their current level of emissions — although this will change rapidly in the next twelve months,” says James.
The ability to reduce emissions at the farm level will vary significantly between farms. It may be possible to achieve up to a 10% reduction in biological GHG reductions through improved farm management practices (without impacting farm profitability), but this is not a given for every farm.
Changing land use from livestock to cropping or horticulture will likely reduce emissions but must be done at scale to have a significant impact. Planting an area in forestry, particularly on sheep and bee farms can have a major impact on offsetting emissions. Promising technologies on the horizon to reduce emissions include livestock genetics, methane inhibitors (via feed additives or boluses), and urease inhibitors (to reduce nitrous oxide).
“A key point to remember is that the amount of biogenic methane emissions emitted from a farm is highly correlated to the amount of dry matter consumed by livestock. Lower dry matter consumption will lead to lower emissions. However, if you reduce livestock numbers on a farm but the remaining livestock consumes more, your total emissions may not change that much,” Allen adds.
Advising clients when buying or selling rural real estate
It’s important for real estate professionals to advise their clients on the key implications of buying and selling rural real estate. Some issues and questions to guide clients to consider include:
- Can they provide evidence of their current level of GHG emissions?
- Is there an emissions reduction plan in place?
- Does the property contain the potential to plant some areas into forestry, thus creating an ability to offset emissions?
- GST registered business owners with more than 550 stock units (deer, sheep, cattle) or 50 dairy cattle, or who apply more than 40t of synthetic nitrogen fertiliser per year, are required to register and pay levies.
- In the case of leased land, the emissions responsibility will rest with the business owner (lessee) rather than the landowner. Thus, if sequestration (planting) is used to reduce emissions, the lessee will need to obtain permission from the landowner.
- Different soil types store or release carbon at different rates. Peat soils lose carbon at a higher rate than mineral soils. In high rainfall years, soils may accumulate carbon but in a drought year, they will likely lose carbon. Currently, however, soil carbon accumulation or loss is not part of the current levy proposal.
Given that the emissions pricing is still to be finalised it is difficult to provide exact guidance on the impact on farm businesses. The price for methane will be set by a committee, whereas for nitrous oxide the price will be slowly phased in i.e., 5% of the ETS price in 2025, and increasing by 1% per annum through to 2030. Our initial modelling work suggests that the initial impact on farm businesses will be moderate, but if the full 100% of the levy was imposed, many livestock farms would become unprofitable.
Throughout 2023 the final plans and pricing for agricultural emissions in New Zealand will become apparent. Watch this space.
NZ SeaRise was a five-year research programme funded by the Ministry for Business, Innovation and Employment Endeavour Fund. It is now being expanded into Te Ao Hurihuri Te Ao Hou: Our Changing Coastline, which aims to provide more granular information, so the public can check on specific buildings and better understand what is needed for climate adaptation.
AgFirst’s mission is to provide farmer, grower and agribusiness clients with world class knowledge and experience across all sectors including sheep and beef, dairying, engineering, horticulture and Māori agribusiness. For more information on GHG costs and benefits on different land masses, head to agfirst.co.nz.