Will Fonterra be blamed for farming on drained peatlands?

*Correction: This article has been updated to correct Fonterra’s percentage of peat emissions

Government officials have been quietly exploring how much carbon dioxide could be saved if the country reflooded its peat soils.

The answer is more than four million tonnes of carbon dioxide per year – more than the coal-fired power station at Huntly emits.

Draining peat for dairy farming, mainly in the Waikato region, allows microbes to enter the soil, releasing carbon that has accumulated over thousands of years and producing up to 10% of New Zealand’s net greenhouse gas emissions.

Officials concluded that reflooding peat bogs could reduce the country’s emissions at a cost of $40 per tonne – cheaper than the current market price for buying a tonne of carbon.

But that was in public conservation areas. Most of the emissions came from private farms, which are considered more sensitive due to the loss of income from dairy cows.

The researchers say there is a risk of re-flooding of less productive farmland, some of which is costly and unprofitable to drain.

Fonterra is aware of the problem – and government officials have been poring over the data.

Fonterra reports that carbon dioxide emissions from peat account for 4% of the company’s emissions in New Zealand.

Fonterra would not be interviewed about its peat practices and did not directly respond to questions about whether international consumers were concerned about its peat emissions.

The company released a statement written by Andrew Kempson, general manager of global climate policy, saying Fonterra was supporting research into how to manage peat on farms and supporting farmers around the three peat lakes in the Waikato – Areare, Rotomānuka and Ruatuna – to improve land management.

The dairy giant said it was the only primary industry company to model and disclose its peat emissions.

Only 1% of New Zealand’s soil is peat, compared with 20% in Scotland and 25% in Ireland, but the impact of that 1% is huge.

The current “best guess” of more than four million tonnes a year is likely an underestimate, according to the July 2024 Manaaki Whenua report, obtained by RNZ under the Official Information Act.

Shallow peat soils at the edges of full peat bogs may release carbon dioxide at a similar rate to full peat soils, but are not counted as a source of carbon emissions in New Zealand’s official inventory, the report said.

The report said these parts of peat soil may also produce an additional 1 to 2.4 tonnes of carbon dioxide per year, on top of previously reported emissions of more than 4 million tonnes.

If the land is flooded again, these emissions will stop.

Reflooding the peat would produce methane, but the study found that stopping carbon dioxide emissions would be enough to offset its impact on the climate.

But the proposal to re-wet 167,000 hectares of arable peat is sensitive.

Much of the land was drained by the predecessors of today’s landowners, who inherited climate-warming emissions along with their farmland.

An official briefing paper obtained by Radio New Zealand recently suggested research was needed into the economics of growing biofuel crops or raising buffalo in wet conditions.

Professor Louis Schipper from the University of Waikato said it might be possible to restore less productive farmland to peat wetlands, which would eventually sequester carbon as they had for centuries.

But work so far has been “somewhat patchy” and scientists still don’t know how to replant peatland plants on land used for farming. “The experiments haven’t been done yet.”

Farmers also need more data on the specific benefits of shallow drainage systems that keep the surface dry enough to raise cattle, Speer said. If the data bear it out, it could be a way to maintain agricultural production while lowering emissions.

He is launching a project with Irish scientists to study the question.

“There’s a lot of interest from the international community because this is not just a New Zealand issue.”

“A very hot topic”

As European countries spend millions restoring and rewetting their own vast peat bogs, New Zealand exporters may find their peat emissions under scrutiny.

Nestle, a major buyer of New Zealand dairy products, sees draining peatlands as equivalent to deforestation. By 2025, no deforestation is involved in raw material supply chains Includes converted peatlands.

However, Nestlé said in its 2020 progress update that it was concerned about land conversion after 2015, but that did not apply to peat in New Zealand.

Farmer and agribusiness expert Jenna Smith, who has just returned from an overseas trip researching peat, says peat is becoming increasingly difficult to ignore.

“Especially in Europe, peat is a very, very hot topic,” she said.

“In some parts of Europe, talking about draining peatlands causes almost the same tension as talking about cutting down rainforests.”

“It’s seen as a big problem and a difficult issue,” she said.

“This is an important factor in meeting (European) carbon targets, with more than 100,000 hectares of land identified as needing re-watering in Denmark, for example, and more than 80,000 hectares in Ireland,” Smith said.

One reason peat has not attracted much attention in New Zealand may be that it is not included in agricultural emissions statistics, at least not by the government.

Statistics show agriculture accounts for “nearly half” of New Zealand’s greenhouse gas emissions, which include methane and nitrous oxide from livestock but exclude carbon emissions from peat, even though most peat is extracted for dairy farming.

Emissions from peat soils are accounted for in the inventory under the category “land use” rather than agriculture.

Since the land use category is dominated by carbon-absorbing forestry, the land use has important climate positive effects for the country as a whole.

If peat is added to the agricultural total, agriculture’s contribution would easily exceed 50%.

‘No single solution’

Smith said her research into the issue so far shows there is no single solution.

The farms she has visited overseas are trying everything from raising the water table 20 to 30 centimetres below the surface (to raise livestock on top) to wet-farming to grow niche crops like medicinal sphagnum moss. Other landowners are undertaking full-scale peat wetland restoration.

Like Schipper, Smith said peat soils, which are grown extensively in New Zealand, were poorly profitable because they were not suitable for farming.

The land might be suitable for re-irrigation, she said, allowing farmers to focus on productive paddocks rather than “trying to force the land to do something it’s not supposed to do”.

She said while European farmers received subsidies that helped support climate-friendly projects, New Zealand also had its own advantages.

“New Zealand is really immature in this area so we have a real advantage,” she said.

“In the UK, Europe and parts of Asia, people have been doing this for centuries, and we’re only at the beginning of a century, so we’re in a better position to reverse the damage.”

Peat cheating?

Rewetting peat is listed as a possible climate action in the government’s latest emissions reduction plan, but whether it will make it into the final version at the end of this year remains to be seen.

Unlike planting forests, New Zealand does not recognize rewetting peat as a way to earn carbon credits.

Professor Schipper said reflooding peat was not like planting trees – in terms of its impact on the climate, “it’s more like stopping cutting down trees” because it stopped emissions.

Restoring the health of living peatlands and inducing them to absorb carbon dioxide is more like planting trees, albeit at a slower rate, he said.

Both the current and previous New Zealand governments have sought proposals to rewet peat to help New Zealand meet international climate goals, but no progress has been made on the plans.

But the chairman of the Committee on Climate Change said governments needed to be careful.

“You need to think about how to reflect your budget and goals, rather than suddenly adding new content (to meet your goals),” Rodkar said.

“If you’re going to give subsidies for restoring wetlands, then are you going to penalize people for farming on high-emission wetlands for profit?” Carr asked.

Suzy Cole, an economist at the Environmental Defense Fund (EDF), a US nonprofit, is also cautious. EDF has studied the global potential of different types of natural carbon sinks, including peat bogs and other wetlands.

If the goal is simply to meet climate targets, she said, it might not be worth investing too much energy into alternative carbon sinks such as peatlands.

Kerr said forestry contributes most to climate, but restoring wetlands still has value for flood control, biodiversity and water quality.

“The benefits from wetlands, blue carbon and peat bogs are modest and will not make a significant global contribution in the short term… They should be considered in terms of co-benefits,” she said.

“Reforestation offers far greater opportunities than the other options, and the evidence is stronger.”

“I don’t think we should be distracted by the latest fads.”

From the numbers

Preliminary estimates from officials, obtained under the Official Information Act, suggest the cost of re-irrigating peat pastures on private land would start at $158 a hectare once yield losses are taken into account, even on farmland with slim margins.

They concluded that re-irrigating high-yield farmland would cost more.

But the benefits to the climate are huge.

The brief estimates that re-irrigating 167,000 hectares of private peatlands currently drained for agriculture could “immediately and permanently” stop 4 million tonnes of carbon dioxide emissions per year.

The same brief also states that the national impact of farming and draining peat accounts for between 7.6% and 9.8% of the country’s net greenhouse gas emissions.

Senior officials were told more economic studies were needed on options such as “growing biofuels or raising buffaloes”.

That was in November.

New figures provided by the Ministry of Environment show New Zealand’s carbon budget could be met by reflooding peat on protected area lands alone.

The brief estimates the cost of carbon savings at $40 per tonne (the figures for private land are per hectare, so are not directly comparable).

The carbon reduction potential is relatively small: by 2050, it totals about 6 million tons, while before 2030 it is only 0.2 million tons.