Myth: Dairy is the backbone of the economy. 

Our economic saviour

Reality: Dairy only seems to contribute so much because they don’t have to pay for their pollution.

Dairy contributes to around 25 per cent of New Zealand’s export revenue [1] and contributed to 2.8 per cent of Gross Domestic Product (GDP) in 2010 [2].  Thus, it is the most significant export industry. However, like other industries, it only seems like it is worth so much because they don’t have to pay for the pollution and environmental degradation they cause. These things are externalised and the costs fall on society. As in the previous myth, these are termed externalities. Many of us are losing, while a few benefit.

Some of the ways we pay are by:

  • having degraded rivers that we cannot swim or fish in;
  • having to fund expensive clean-up projects;
  • subsidising the payment of greenhouse gas emissions; and
  • the loss of biodiversity and ecosystem services offered by the environment.

Polluted rivers

Already, many of our lowland rivers are too polluted to swim in at certain times during the year and the biggest culprit is the dairy industry.

Future generations will lose as pollution gets more expensive to clean up, and our rivers become more degraded. This will be a huge burden to future generations. Cleaning up will be far more costly than not polluting in the first place (find out more). Impacts also damage New Zealand’s ‘clean green’ image, threaten future food production, and lead to biodiversity loss and degradation of recreational areas [3].

Some of the environmental externalities of dairy farming have been economically valued at up to $15 billion – this was more than the 2012 export revenue for dairy of $11.6 billion [3]. This total only included a few of the impacts from dairying, which were: the cost to treat water that would be contaminated with nitrate from dairy land; the cost to remedy soil compaction; the potential annual cost of greenhouse gas emissions produced by dairy farming; and the annual loss of dairy products if New Zealand’s ‘clean green’ image was degraded. This assessment was extremely conservative as many impacts had not been valued, thus the total negative external impact of intensified dairying is probably grossly underestimated. The authors of this study call for a “more holistic conversation in New Zealand of whether the dairy industry is actually beneficial for the country: economically, environmentally, and socially”.

We should not be putting all our economic reliance on one land use that is increasingly resource intensive and not very resilient to changes in milk prices, regulation, weather and international markets.

We should be investing in sustainable land uses that are beneficial for the environment and the economy.


[1] Statistics New Zealand (2012). Infoshare.

[2] Schilling, C.; Zuccollo, J. and Nxon,, C. (2010). Dairy’s role in sustaining New Zealand – The sector’s contribution to the economy. New Zealand Institute of Economic Research.

[3] Foote, K; Joy, M and Death, R (2015). New Zealand Dairy Farming: Milking our environment for all its worth. Environmental Management. Click here for article.

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