Three essays on the spatial analysis of sustainable dairy farming in New Zealand

Abstract

This Ph.D. thesis consists of three essays on the sustainable development of the New Zealand dairy industry. The first essay focuses on the relationship between dairy yields and intensive inputs. The second and third essays are concerned with farm-level management practices on nutrient pollution, the interactions between farmers, and the impact of farmer choice on the environment. Spatial spillover effects, which are considered as important issues at either the regional level or farm-level decision-making, are addressed in all three essays. As the New Zealand dairy industry faces the challenge of increasing productivity and dealing with public concerns over nutrient pollution, effective policy needs to address regional dependency and differences in productivity and fertiliser use. The first essay employs spatial panel data models to establish whether unobserved spatial effects exist and investigate how spatial effects influence the relationship between dairy yields and intensive farming inputs across regions. Results show positive spatial spillovers for most intensive inputs. The high level of effluent use and estimated negative yield response to nitrogen suggests that an opportunity exists for the greater use of effluent as a substitute for nitrogen fertiliser. Substitution has the potential to reduce dependence on fertilisers and contribute to a reduction in nutrient pollution. The second essay analyses spatial dependence in the adoption of best management practices (BMPs) to protect water quality. Bayesian spatial Durbin probit models are applied to survey data collected from dairy farmers in the Waikato Region of New Zealand. Results show that farmers located in close proximity to each other exhibit similar choice behaviour, indicating that access to industry information is an influential determinant of dairy farmers’ adoption of BMPs. In addition, these findings address the importance of farmer interactions in adoption decisions because participation in dairy-related activities is identified as an extension of information acquisition. Financial problems are one of the biggest obstacles for farmers to adopt BMPs. Overall, the second essay highlights the importance of considering spatial interaction effects in farmers’ decisions, which is important to the formulation of agri-environmental policy. The third essay investigates how dairy farmers’ social interactions influence the relationship between their environmental performance and nutrient management practices (NMPs). Spatial Durbin error models are employed to analyse farm-level sample data in the Waikato region of New Zealand. Social interactions are modelled by a spatial weights matrix and an adjacent weights matrix. Results show that dairy farmers’ environmental performance is positively influenced by geographically close farmers’ and socially close farmers’ NMPs, such as wintering off cows and increasing the frequency of soil tests. Results also indicate that encouraging the farmer-to-farmer communication improves dairy farmers’ environmental performance.