Climate change implications facing the NZ economy.
Inaction on climate change puts tens of billions of dollars at stake.
Taking faster action on climate change could save New Zealand $30 billion by 2050, according to new research commissioned by Westpac.
The research, carried out by EY and Vivid Economics, shows New Zealand’s economy could be tens of billions of dollars better off if early action is taken to meet our Paris commitment to help keep global warming to less than two degrees Celsius.
Two scenarios were mapped out: the central scenario modelled an early and smooth transition by NZ businesses to meet climate obligations. The shock scenario anticipated more than a decade of inaction on emissions reduction, followed by more aggressive action from 2030.
The modelling shows that NZ can decarbonise towards a two-degree target while achieving economic growth.
A key difference between the scenarios was the timing of the inclusion of agriculture within the NZ Emissions Trading Scheme (ETS). Other factors included improvements in technology, the purchasing of carbon credits, and the rate of afforestation.
The modelling indicated the central scenario would create $30 billion more GDP through to 2050 than the shock scenario.
Agriculture faces challenges in a two-degree aligned economy, but the industry is projected to be better off from an early, phased, introduction to the NZ ETS, rather than a more rapid entry later on.
Growth is not projected to be evenly distributed. Renewable electricity sources such as wind, hydro and solar will be among those industries to prosper, alongside fishing and non-ferrous metals, while fossil fuel industries will contract.
A sector’s capacity to decarbonise is positively correlated with projected growth.
The report also looked at the physical threat posed by climate change to key NZ industry sectors.
Electricity generation and transport will likely experience physical disruption from climate change but will become a focus for decarbonisation and may see increases in demand.
Forestry will likely face significant fire risk but be an important sector in the transition to a two-degree economy.
Drought, wildfires and glacial retreat will likely increase in frequency and cause economic loss and operational disruption for agriculture and tourism, as evidenced by past climate events.