16 May 2025 Dispelling the myth that freshwater regulation negatively impacts farm values

Research from Te Whare Wānaka o Aoraki Lincoln University helps dispel the myth that freshwater regulation in New Zealand negatively affects farm values, an outcome that will bring greater confidence to farmers and policymakers, as new environmental regulations are introduced around New Zealand. 

Lincoln University researchers Edward Percy, Professor Alison Bailey, Professor Anita Wreford, and Gary Owen Garner wrote the article The effect of freshwater regulation on farmland values in New Zealand—dairy farming in Selwyn Waihora, Canterbury, published in the journal Land Use Policy. 

Lecturer in Valuation and PhD student Edward Percy identified in 2015 that freshwater regulations implemented in New Zealand, while good for the environment, were often perceived to affect farm productivity, profitability and land values negatively. As a registered valuer and farmer himself, Edward wanted to test this perception in Canterbury’s Selwyn district at a time when newly imposed regulations were introduced.

To undertake the research, Edward interviewed dairy farmers involved in farmland transactions and dairy farm management from the Selwyn Waihora region in 2015, and again in 2020 to understand if their perceptions had changed after the regulations had been in place for some time. 

Most study participants' farms ranged from 200 to 350 ha, milking from 500 to 1,300 dairy cows. All those interviewed farmed on land that was in the highly threatened ‘red zone’, where there is unacceptable water quality due to nutrient concentrations. 

Collecting the research data through interviews, Edward says, was the most accurate way of understanding farmers’ perceptions of how freshwater regulation would impact their operation.  

“I was quite surprised by the feedback I got from the majority of the farmers who were accepting of the need to implement changes to their farm operations in order to remain compliant. They were generally positive about how these changes introduced efficiencies to their farm systems and reduced nitrogen leaching while not adversely affecting their profitability. Ultimately, farmers did not believe the freshwater regulations impacted their land values.”  

The research found that the majority of farmers believed their land values had stayed the same or improved slightly with the introduction of the freshwater rules – 62.15% in 2015 and 64% in 2020. 

“We didn’t find any conclusive evidence that land values were significantly impacted by freshwater regulation. Rather, remaining compliant is a strong driver of value,” says Edward. 

These research outcomes are positive for policymakers who can be confident that future freshwater regulations will be more positively received than in the past. Farmers now have a greater understanding of the benefits of implementing these changes as they offer an opportunity to improve efficiencies and environmental aspects of their farm management. 

“As a registered valuer, I’m seeing that the attitudes of those in the farming community are continuously evolving. If I interviewed the study participants now in 2025, I believe they would say they were even more motivated to mitigate any adverse effects of farming on their land at the same time as looking to increase productivity,” says Edward. 

This shift in farmers’ thinking to now look beyond doing just what is required by freshwater regulations is encouraging and will help enhance farm values, as Edward explains. 

“Ensuring your farm is compliant with the current environmental rules is now essential. When I’m appraising a farm, freshwater regulation compliance is just one part of a big mix of factors I’m assessing on farm, but any efficiencies or mitigations to the environmental impacts of farming certainly help to maintain or add value.” 

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