Enhancing the tax system to halt the decline of nature in New Zealand

Abstract

New Zealand is world-renowned for its nature – its lush forests, spectacular mountain landscapes, wild and scenic rivers, beautiful coastlines and extraordinary biodiversity. This natural heritage is the foundation of New Zealand’s identity and its branding, and the premier attraction for the tourism industry. It provides habitable environments, contributes to economic production and assimilates wastes, and is an important source of great enjoyment, health and well-being (Roberts et al., 2015). Nature contributes to the success of the nation’s fishing, farming, forestry and tourism industries, which provide about 52% of national export income (Ministry of Business, Innovation and Employment, 2013). But these values and the well-being and prosperity they enable are being diminished and degraded at an alarming rate.

Managing and protecting native biodiversity on-farm – what do sheep and beef farmers think?

“…Our study shows that the financial and time investment required is a major barrier to undertaking pro-biodiversity actions on farm, which suggests that farmers are weighing financial considerations against environmental and conservation considerations. This resourcing challenge is evident in other studies (Lute et al 2018), and there would seem an obvious public policy case to enable the financial incentivisation of pro-biodiversity behaviours to manage existing biodiversity assets and enhance depleted assets in the first instance as an integral part of all these initiatives (Stephens et al 2016;Doole & Maseyk 2020;Norton et al 2020). Incentivising the maintenance and enhancement of existing biodiversity values is especially relevant given the costs of addressing environmental degradation and depletion of natural capital is escalating for both the private and public purse.…”

“…Voluntary programmes and partnerships tend to resonate most successfully with early adopters and those individuals who are open to change and new practices and can facilitate positive outcomes (Dessart et al 2019). In addition, economic levers (Stephens et al 2016;Boston 2018; Tax Working Group 2019) can help to both incentivise behaviour change and provide additional support to individuals in recognition of the public good outcomes of enhancing biodiversity on-farm. Economic policy instruments are appropriate in cases where there have been market failures, as is relevant to biodiversity management (Pannell 2004), and to provide support to protectionist policies which may increase costs of production (Stephens et al 2016).…”

“…In addition, economic levers (Stephens et al 2016;Boston 2018; Tax Working Group 2019) can help to both incentivise behaviour change and provide additional support to individuals in recognition of the public good outcomes of enhancing biodiversity on-farm. Economic policy instruments are appropriate in cases where there have been market failures, as is relevant to biodiversity management (Pannell 2004), and to provide support to protectionist policies which may increase costs of production (Stephens et al 2016). However, such incentives must occur in parallel with the necessary levels of regulatory protection as fitting for scarce natural resources, and not simply replace those policies.…”

Big issues, bigger solutions: are bottom lines enough?

“…The footprint tax is a land tax levied annually on all landowners according to property area and footprint depth estimated from the level of environmental degradation discernible from satellite imagery. This form of tax was first proposed during property tax reform discussions in Germany (Bizer andLang, 2000, cited in Brandt, 2014) and has been further developed for the New Zealand context by Stephens et al (2016). In essence, the footprint tax is an annual payment to the public purse for private benefits now gained from past consumption of public environmental goods.…”

“…• a tax on everyone's environmental footprint akin to that proposed by Stephens et al (2016): a form of land tax on every landowner's environmental footprint, with inbuilt economic incentives for best-practice land use, sustainable management of natural values, including permanent forest sinks, covenanting of significant habitat and other restoration initiatives; • cap-and-trade systems for greenhouse gases, nitrogen and water take. Regulated bottom line caps, set at a national level for greenhouse gases and at local catchment scale for nitrogen and water but subject to overarching national cap-setting rules to protect wider public interests, must underpin each system.…”