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New Zealand is a global leader in the use of emissions trading as an approach to reducing greenhouse gas emissions. Doctoral student Boon-Ling Yeo spent a summer there, examining how the interaction of two separate tradable pollution permit approaches — a local nutrient trading approach and a greenhouse gas emissions trading approach — affect the levels of greenhouse gas emissions and nutrient leaching, two different but related kinds of pollution.
Boon-Ling examined the relationships using New Zealand's Lake Rotorua catchment as a test site and NManager, a simulation tool that models nutrient trading scenarios to help control water quality in the lake. She conducted the study along with other researchers at the Motu Economic and Public Policy Research, an independent non-profit research institute.
The researchers modeled the environmental consequences and cost levels of different combinations of pollution permit approaches. Their findings suggested that greenhouse gas emissions within a catchment decline when a nutrient trading approach is introduced alongside an existing greenhouse gas emissions trading scheme.
They also showed that the permit price of nitrogen leaching is inversely related to the permit price of greenhouse gas emissions.
In other words, the study suggested that nutrient and greenhouse gas mitigation practices are complementary in the Lake Rotorua catchment. When the nutrient trading approach is already in place, the addition of the greenhouse gas emission trading lowers nitrogen permit prices and can benefit farmers who have to buy nitrogen permits. The introduction of a greenhouse gas ETS also makes it possible for farmers to receive carbon credits by switching to forestry production, which is likely to alter land-use patterns. Hence, the adoption of agricultural and forestry sectors into the greenhouse gas ETS may benefit agricultural producers.
Boon Ling, a Ph.D. candidate from UC Davis, presented the findings at the New Zealand Agricultural and Resource Economics Society annual conference, where she received the prize for best first presenter.
New Zealand is the first country in the world to implement a nationwide greenhouse gas ETS that includes forestry and will include agricultural greenhouse gas emissions. In addition, the country has an existing nutrient trading approach to control for water quality in Lake Taupo, an approach being considered for Lake Rotorua. Hence, NZ provided an ideal context for the study.
Curbing nitrogen emissions has been identified as one of the major environmental challenges of the 21st century. Nitrogen emissions have many adverse environmental impacts, including global warming from nitrous oxide emissions and eutrophication of surface water bodies due to nitrate leaching.
The agricultural sector has been identified as the largest source of nitrogen pollution, largely from intensification of meat production and increased use of synthetic nitrogen fertilizer. Efforts to control pollution through market-based mechanisms such as tradable pollution permits often treat air pollution and water pollution separately.
However, when managing a dynamic pollutant like nitrogen in agricultural production, the abatement costs of nutrient runoffs and greenhouse gas emissions can be interdependent.
Boon-Ling was one of 15 recipients of the East Asia and Pacific Summer Institutes fellowship provided by the National Science Foundation in conjunction with the Royal Society of New Zealand. The purpose of this fellowship is to foster international research collaboration between the USA and NZ and to give the fellow first-hand research experience outside the USA — an introduction to the science policy and scientific infrastructure of the respective location and an orientation to the society, culture and language.
The fellowship provided Boon-Ling with the opportunity to travel to Wellington, NZ to work with Suzi Kerr, a senior economist at Motu.
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