Budget 2021

Budget Policy Statement

Natural Capital: Our Environment

Natural capital covers all aspects of the natural environment supporting life and human activity, such as land, soil, water, plants and animals, minerals and energy resources. While in the short run COVID-19 has had much less impact on natural capital than on the other capitals, the Labour Government is committed to ensuring that New Zealand's recovery from COVID-19 protects and enhances our natural capital over the long term.

The short-run positive environmental impacts on several natural capital measures during COVID‑19 serve as a reminder of the pressure that our everyday lives place on the natural and physical world around us as a result of existing technologies and patterns of production and consumption. For example, road traffic pollution in our main centres reduced to between one‑quarter and one-third of normal levels during Alert Level 4, though traffic volumes rebounded quickly when alert levels reduced. Greenhouse gas emissions from electricity generation fell from March to June 2020, primarily owing to lower coal emissions - though, again, this was a temporary reduction. Overall, at their peak, New Zealand's lockdowns reduced daily carbon dioxide emissions by an estimated 17% from 2019 levels.

Set against these environmental gains, some Department of Conservation predator control programmes scheduled for 2020 were delayed, or in one case cancelled owing to COVID-19 restrictions, increasing predation risks to native species.

The long-term impacts on New Zealand's natural capital from economic and behavioural changes as a result of the COVID-19 virus are uncertain. For example, a more sustainable approach to tourism could deliver longer-lasting reductions in emissions, if there is a shift in tourism patterns and the climate footprint as the sector recovers. Tourist activity generates approximately 7% of New Zealand's greenhouse gas emissions, primarily via air and land-based travel. However, the biggest generators of emissions in New Zealand are the agricultural and transport sectors where the impacts of COVID-19 have, so far, been relatively small or short-lived. Permanent reductions to the emissions profile of these sectors will come from concerted and coordinated efforts by the Government and industry working together.

He Pou a Rangi - the Climate Change Commission - has released draft advice to the Government including the first three emissions budgets required to meet New Zealand's target of net zero emissions of long-lived gases, and for reducing methane emissions by between 24-47% by 2050. The advice shows that while current policy settings will reduce emissions and move us toward the targets, significant further action is required.

The Government's immediate response to COVID-19 included significant investments to protect our natural capital. Among these were investments in improved waste infrastructure ($123.3 million), in Three Waters infrastructure ($710 million), and in a range of Jobs for Nature initiatives ($1.3 billion over four years, plus some ongoing funding). In addition, investment in rail infrastructure, described on page 13, will contribute to lowering the long-term emissions profile of the transport sector.

The new Government recently announced new clean car import standards and $50 million to support councils to fully decarbonise the transport bus fleet by 2035, and has agreed in principle to mandate a lower-emitting biofuel blend across the transport sector.

New Zealand also has long-standing environmental challenges that are no less pressing in the wake of COVID-19. Many of New Zealand's waterways are under pressure from changes to the way we use land. For example, between 2013 and 2017, 71% of river length in pastoral farming areas had modelled nitrogen levels that could affect the growth of sensitive aquatic species. In addition, models show that over 80% of the total river length in urban areas exceeds the guidelines for quantity of pollutants such as nitrogen, E. coli and phosphorus. New Zealand has lost more than 90% of its original historical inland wetlands which has resulted in the loss of unique biodiversity and ecosystem services. In 2020, the Government took action to restore and protect New Zealand’s waterways through the Essential Freshwater package. New rules and regulations aim to prevent further degradation and bring our water to a healthy state within a generation. However, there is further work to be done on implementing these regulations in a fair and efficient manner - it is this that will lead to an upward trend in the health of New Zealand’s water.

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