The New Zealand Integrated Assessment Modelling system (NZIAM) has been developed to investigate the regional impacts of climate change and climate/trade policies on major economic sectors, with a particular focus on agriculture and forestry.

Climate impacts on agriculture and forestry are simulated based on pattern-scaling simulated yields for a range of crops, using global climate simulations using MAGICC calibrated to global climate models used in the crop yield simulations. The economic model links a general equilibrium model with partial equilibrium models for land-based sectors (1). Each region includes a representative household and firms for key sectors operating in perfectly competitive markets. Regions are linked by bilateral trade flows. NZIAM has an explicit market for land and can model competing land uses that produce outputs such as crops, timber, livestock, secondary outputs, and carbon sequestered in growing stock or harvested wood products. The system is modular so that the uncertainty in projections arising from the choice of alternative climate and crop model can be compared with impact of alternative policy choices.

Our baseline simulation follows a ‘no-policy, no-impacts’ scenario that assumes no climate change. Based on the resulting emissions pathway, we then impose climate impacts onto the agriculture and forestry sectors. For each country/region, we quantify the effects of climate impacts on the trajectories of regional land-use, production, prices and trade flows. We consider the effects of direct versus trade-induced impacts on agricultural output in different regions. Finally, we assess how different regions might adapt to climate change impacts through land-use change and substitution effects.

We also simulate climate policy scenarios that follow a carbon price of $15/tCO2e that rises at 5% per annum through 2100. The first policy scenario prices GHG emissions from the typically covered sectors such as electricity, manufacturing, and transportation. The second scenario also prices GHG emissions in the forestry and agriculture sectors. Estimated impacts for all simulations are presented for several economic regions, with both New Zealand and Australia both presented as separate regions. Based on these results we discuss the relative importance of climate and policies on production in key sectors of relevance to New Zealand, and the implications for policy choices.

This work was funded by the New Zealand Ministry for Primary Industries Sustainable Land Management and Adaptation to Climate Change (SLMACC) programme.

¹