Efficient economic and environmental management of pastoral systems: Theory and application

© 2014 Elsevier Ltd. A framework for interpreting profit-environmental trade-offs in pastoral agriculture is introduced, drawing on the concepts of economic and environmental efficiency. The approach provides insights into appropriate policy mechanisms to address the environmental footprint of agricultural production. The framework is applied in the context of nitrogen leaching from pasture-based New Zealand dairy farms. This application identifies that the economic and environmental efficiency of these farms is mainly driven by imported supplement use. Grass-only farming is environmentally-efficient, with greater supplementation generating higher nutrient outflows to waterways. However, profits increase with higher supplementation within a critical range of intensification. Economic efficiency requires low use of supplement to promote herbage utilisation and reduce pasture senescence at low stocking rates, combined with high use of supplement to fill critical feed deficits at high stocking rates. Model output suggests that there exists scope for win/win solutions for private/public agents through improving the conversion of supplement to milk on New Zealand dairy farms. However, the scope to achieve such gains may be restricted in reality, given incentives for intensification, the potential cost of intensive farm planning, and personal barriers to behaviour change.