Policymakers in New Zealand are attempting to achieve improved environmental outcomes by implementing an output-based approach to non-point-source pollution from intensive agricultural production. Initial emphasis has focused on the nitrogen leached, with the assumption that this can be calculated accurately on an individual-property basis. While catchment-wide nitrogen-loss levels are specified, farmers in some regions are able to apply for discretionary consent with conditions that allow for greater nitrogen loss, based on calculations for historical land use. In an intensive farming operation, it is difficult for regulators to constrain production in the short term as this will threaten financial viability. However, farmers who have a less intensive historical land use may see a decrease in their farm value of up to 40 per cent relative to those with a historically intensive operation. Over time, it is likely that councils will move to enforce specified limits equally across a region and move away from the inequitable distribution of nitrogen caps. In the short term, those involved in the market, as rural professionals or market players, must give consideration to the highest and best use of the land and reflect the restrictions of a land use consent in their assessment of current market value. Policymakers need to be aware of the implications of restrictions on land use on the value of a capital asset and the inequities that result when a grandfathered system of allocation is adopted.
You can access the article here: https://online.liverpooluniversitypress.co.uk/doi/abs/10.3828/tpr.2017.37