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Rural Insight: Nutrient and water plans a long run up to change

Tags: Canterbury Rural Rural Insight Waikato

Regional water plans have farmers and rural professionals warily eyeing what the implications are on farm equity and property values.

Regional water plans have farmers and rural professionals warily eyeing what the implications are on farm equity and property values. 
The latest plan to be unveiled is the Healthy Rivers plan for the Waikato and Waipa rivers, with the aim to make the two waterways and lakes within their catchment swimmable and fishable along their length within 80 years.
Like all plans around the country the Healthy Rivers plan is required under the government’s national policy statement on freshwater management, with the aim to ensure fresh water quality is either maintained or improved nationally.

Plans including the Healthy Rivers are requiring some significant shifts in how farms will operate in coming years, with tighter constraints around management of key nutrients including nitrogen and phosphate, along with tighter controls on bacteria levels and sediment losses.

Bayleys country manager Simon Anderson said recent comments by the Bank of New Zealand agribusiness head John Janssen about the risk the Healthy Rivers plan poses to land values highlights a level of nervousness about the issue.
However he said the regional plans were also working to lengthy time frames to achieve improved water quality, giving communities and farmers time to adjust to the changes they may bring.

“If you were to look at the Waikato plan, we are talking an 80 year time frame to bring that goal into a reality. It is not as if these changes will be coming over night, and the changes that will be coming are being clearly signalled.”
He also welcomed the extensive consultation periods that have accompanied such plans. 

The Waikato plan for example was going to allow 80 working days for affected parties to place a submission, pushing the close off date well beyond the standard 20 days and into next autumn.

 “With about a million hectares of land in the catchment, the Waikato is one of the country’s most intensively farmed, productive regions with 4,000 dairy farms and a similar number of dry stock farms, along with significant horticultural areas now. Communities deserve that sort of time to consider how to respond to such a far reaching plan.” 
A report released earlier this year by 2015 dairy consultant of the year Phil Journeaux showed reducing farming’s environmental footprint could have some downward effect on land values over coming years.

He had estimated the national impact of environmental constraints on farm production as being worth a $16.8 million loss on farm land value. His work had shown that a farm’s location to good communities, recreational assets and schools can be stronger in affecting its value than its profitability.

But the emerging caveat was that same proximity to natural assets like rivers and lakes could in coming years impact in a negative way on the property’s value. 

Waikato registered valuer Byron Gray of Curnow Tizard said it was too early in the Healthy Rivers plan life to determine if it was having any real impact upon property values. 

However he anticipated that based on the proposed rules, some properties may strengthen in value, including arable properties where there are limitations on the ability to convert suitable properties to arable land use.

“For example, the growth in Pukekohe is leading to growers looking for lower value land elsewhere, with this particularly evident in Matamata and Pukekawa. A restriction on land use changes may lead to increased competition for the arable land in the medium term.”

He said properties with good mitigation measures in place, for example planting of waterways, and those already compliant with the proposed rules are likely to receive a premium over those where work is required to comply.

Simon Anderson agreed the same plans that required mitigation expenditure also had the potential to add value.

“We are seeing more farmers planting riparian strips to absorb phosphate losses, native trees and wetlands for nitrogen loss minimisation, and fencing around waterways. It is all investment in the property that adds aesthetic and economic value to it.”

Bayleys North Canterbury rural specialist Dean Pugh said buyers of rural real estate in Canterbury are very aware of the nutrient regimes governing different areas of the province, and the need to take specific catchment regulations into account when making land use and value decisions on properties.

“Some vendors are very organised, depending often on farm type and location and already have nutrient information prepared and available at the time of sale for prospective purchasers to review. Others are taking the opportunity that the sales process presents to have this work done so that buyers can undertake their due diligence with confidence, and early in the process,” he said.

There is plenty of opportunity to seek out technical expertise and advice that is available from professionals working in the field to help everyone make informed decisions and buyers are certainly taking these steps.  
“Consequently most of the transactions we are seeing are based on a high degree of certainty. As a result the market appears to be taking the nutrient environment in its stride and operating with a high degree of confidence.”


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