Bioeconomic Modelling to Assess the Impacts of Using Native Shrubs on the Marginal Portions of the Sheep and Beef Hill Country Farms in New Zealand

New Zealand hill country sheep and beef farms contain land of various slope classes. The steepest slopes have the lowest pasture productivity and livestock carrying capacity and are the most vulnerable to soil mass movements. A potential management option for these areas of a farm is the planting of native shrubs which are browsable and provide erosion control, biodiversity, and a source of carbon credits. A bioeconomic whole farm model was developed by adding a native shrub sub-model to an existing hill country sheep and beef enterprise model to assess the impacts on feed supply, flock dynamics, and farm economics of converting 10% (56.4 hectares) of the entire farm, focusing on the steep slope areas, to native shrubs over a 50-year period. Two native shrub planting rates of 10% and 20% per year of the allocated area were compared to the status quo of no (0%) native shrub plantings. Mean annual feed supply dropped by 6.6% and 7.1% causing a reduction in flock size by 10.9% and 11.6% for the 10% and 20% planting rates, respectively, relative to 0% native shrub over the 50 years. Native shrub expenses exceeded carbon income for both planting rates and, together with reduced income from sheep flock, resulted in lower mean annual discounted total sheep enterprise cash operating surplus for the 10% (New Zealand Dollar (NZD) 20,522) and 20% (NZD 19,532) planting scenarios compared to 0% native shrubs (NZD 22,270). All planting scenarios had positive Net Present Value (NPV) and was highest for the 0% native shrubs compared to planting rates. Break-even carbon price was higher than the modelled carbon price (NZD 32/ New Zealand Emission Unit (NZU)) for both planting rates. Combined, this data indicates planting native shrubs on 10% of the farm at the modelled planting rates and carbon price would result in a reduction in farm sheep enterprise income. It can be concluded from the study that a higher carbon price above the break-even can make native shrubs attractive in the farming system