Can NZ Cut Agriculture Emissions Without Hurting Its Economy?

New Zealand’s economy relies heavily on agriculture and services, particularly tourism and retail. Agriculture contributes 5.8% of the country’s GDP and employs 5.6% of the workforce, with pastoral farming and horticulture being key sectors.

The country is the seventh-largest milk producer globally, and its major agricultural products include dairy, meat, wood, fruits (such as peaches and kiwifruit), vegetables, seafood, wheat, and barley.

However, agriculture is also responsible for about half of New Zealand’s gross greenhouse gas emissions, with 91% of biogenic methane emissions coming from this sector.

Methane reduction target sparks mixed reactions

On 13 October, the New Zealand government announced revised plans to reduce methane emissions by 14 to 24% by 2050, compared to 2017 levels — a significant reduction from the previous target of 24 to 47%.

Dairy farmers welcomed the move, while climate advocates and opposition parties criticised it as a weak response to the climate crisis.

The New Zealand Herald reports that the decision was influenced by coalition partners ACT and New Zealand First, both of which are right-leaning parties. They have raised concerns about New Zealand’s strong commitment to the Paris Agreement, particularly given that major trading partners are not fulfilling similar obligations.

Agriculture Minister Todd McClay stated that the adjustment was informed by the Methane Science Review (2024):

“We’ve accepted a range of advice and worked closely with industry to agree a practical target that protects food production whilst substantially reducing New Zealand’s farm emissions.”

He also reiterated that agriculture would not be included in the Emissions Trading Scheme, arguing that doing so would “close down farms and send jobs and production overseas.”

Recession deepens economic strain

The announcement coincided with troubling economic data showing that New Zealand remains in recession. Reports from RNZ and News.com.au revealed that the economy shrank by 0.9% in the last quarter of 2025, following two consecutive quarters of contraction in 2024. Unemployment has risen to 5%, compared to Australia’s 4%, while a “brain drain” of workers to Australia between March and June 2025 has further weakened growth prospects.

In this context, the government’s softer methane target was welcomed by farmers. The Federated Farmers of New Zealand called the change “long overdue,” with President Wayne Langford stating that previous targets had been “absolute madness” and that “farming families have been under huge pressure for a long time now – but it looks like that’s finally coming to an end.”

Climate risks and opportunities for farmers

A report by Kōmanawa Solutions explored how climate change could impact farmers’ profitability. The study ran 295 million weather simulations using historical data from a catchment in North Canterbury. It found that dairy farms dependent on irrigation were especially vulnerable due to declining water reliability.

To adapt, the report recommended building water storage facilities, such as ponds and reducing cattle numbers. Research author Zeb Etheridge said:

“Dropping your stock numbers is probably going to make you more resilient and improve your financial performance long term.”

Meanwhile, the Canterbury Regional Council is proposing a new water storage facility to bolster regional water supplies.

Despite the challenges, the National Institute of Water and Atmospheric Research (NIWA) sees emerging opportunities from climate change. Warmer conditions could allow the cultivation of high-value crops such as avocados, while melting glaciers may open new landscapes for tourism, such as glacial lake tours near the Tasman Glacier.

A strong foundation for climate resilience

New Zealand’s resilience to climate impacts remains among the strongest globally. The “New Zealand Productivity Commission” (2021) noted that while extreme weather poses risks to primary industries, the country’s adaptive capacity is high.

The World Risk Report (2021) found New Zealand has high exposure but low vulnerability to natural hazards, earning a low World Risk Index score of 4.96. Similarly, the Notre Dame Global Adaptation Initiative (ND-GAIN) ranked New Zealand the second most climate-resilient nation in 2019 and seventh in 2023.

Strong governance, effective institutions, and social stability underpin New Zealand’s ability to adapt to and mitigate climate change impacts.