On-farm riparian zones and ecosystem services valuation

In response to the growing concerns about surface water quality, the voluntary approach to fencing riparian zones on dairy farms is now becoming a mandatory requirement from regional authorities in some dairying regions, and a condition of supply by milk companies. This has intensified the debate on the value of riparian zones, and the degree to which they are actively managed.

The introduction of a planted riparian zone has the potential to increase filtering of overland flows carrying nutrients, sediments and pathogens and improve in-stream aquatic life through the provision of shade. Reasons why riparian zone fencing has not been adopted more widely on-farm include set-up and ongoing maintenance costs, weed control, and the perceived loss of productive land.

The objectives of this study were to explore the potential environmental, economic and social benefits of riparian zones within a New Zealand dairy farm by (1) identifying, quantifying and valuing ecosystem services (ES) provided by riparian zones, (2) exploring innovative ways of integrating riparian zones to the farm system, and (3) completing a cost–benefit analysis of riparian planting and fencing including the economic value of ES.

A trans-disciplinary group composed of dairy farmers, scientists, industry and regional council representatives had the opportunity to ‘think outside the box’. Productive uses such as planting trees for shade and shelter, as well as sustainable harvests of timber, firewood, fodder, fruit or honey, were identified. Productive opportunities for waterways with improved water quality, such as harvesting watercress, koura or eels, were also identified. Cultural experiences for the farmer’s family and the wider community were also mentioned, including creating pleasant aesthetic environments, opportunities for hunting, and recognising local history.

The economic valuation of ecosystem services was realised for 1 hectare of grazed Waikato dairy pasture (Figure 1) with either: No riparian zone; 100 metres of 1-m-wide grass strip with temporary electric fence; 100 metres of 5-m-wide multi-tier system planted with poplar trees and native bushes, permanently fenced.

With the introduction of riparian zones into a dairy system, the quality and hence economic value of some ES declined (pasture quantity, recycling of wastes), some stayed stable (support to animals), and some increased (raw material, flood mitigation, filtering of nutrients). Inclusion of either a grass strip or a multi-tier system both increased the value of the ES provided, by 3–5% and 7–9% respectively, over the unfenced dairy pasture.

A traditional cost–benefit analysis (CBA) showed the net present value (NPV) over 20 years of an investment in riparian zones was negative. When the economic value of ES, especially regulating services, is included into the CBA, the NPV of the investment is always positive (Figure 2). The costs of externalities were not included in the CBA.

This shows that the change in the ES balance following fencing and planting has the potential, with only a small decline in pasture production, to put farmers in a more sustainable position.

E.J. Dominati and A.D. Mackay — AgResearch, Palmerston North
P: 06 351 8216 E: estelle.dominati@agresearch.co.nz

T.D. White And P.E. Blackett — AgResearch, Hamilton