Everyone is well aware of the significant impact that greenhouse gas emissions have on the environment and how climate change will continue to affect the way that we live. Nationally, New Zealand has a target for net zero greenhouse gas emissions by 2050 (other than for biogenic methane) which is enshrined in law and international obligations. But besides knowing that emissions need to reduce, it hasn’t always been clear how exactly how local communities and economies are contributing to greenhouse gas emissions.

Infometrics has recently added a number of environmental indicators to the Regional Economic Profile and Quarterly Economic Monitor, including estimates of carbon emissions. These indicators can be used alongside our indicators of economic activity and population to explore and compare the environmental impact of different industries or areas. This article explores how we have constructed our estimates, and what insights can be gained from our analysis.

Our regional emissions model combines several sources from Stats NZ on greenhouse gas emissions, including their estimates of emissions by region. We then model these emissions down to a territorial authority level, using our estimates of regional economic activity at detailed industry level. In effect, Stats NZ has estimated the size of New Zealand’s emissions pie, and how big the slices of the pie are for each region. We’ve then taken that one step further, and estimated each city or district’s share of that regional slice of the pie.

We use production-based estimates of carbon dioxide equivalent emissions from Stats NZ, which reflect CO2 and other greenhouse gases such as methane, adjusted for their global warming potential. A production-based approach means that we are estimating where emissions are produced, but it’s important to note that this is different to where products are consumed – more on this later.

At a broad sector level, most greenhouse gas emissions are generated by industry, with households generating a minority. Chart 1 shows that industry has consistently accounted for most emissions. Industry emissions totalled 68,354 kilotonnes (kt) in 2023, 89% of total emissions, and households produced 8,454 kt or 11%. These shares have been fairly consistent over time – industry produced 90% of emissions in 2007.

New Zealand’s gross emissions have eased slightly between 2007 and 2023, decreasing 8.6% in total. Decreases in industry emissions have driven the fall in overall emissions, with industry emissions down 9.8% and household emissions up 3.2% over the period.

Because we use production-based emissions estimates, emissions are apportioned to the sector and industry which produces those emissions, not necessarily where they are consumed. Just because household emissions are a small proportion of overall national emissions doesn’t mean that households don’t make a substantial contribution to New Zealand’s overall emissions – it just means that the emission contribution of households is indirect through the products they consume. For example, if a household orders a taxi, the emissions are counted in the transport industry, not household sector. But if a household drives their own car for a journey, the emissions are counted to households.

Electricity is an important case to bear in mind, as emissions associated with generation are allocated to the area of the power station, not the area that is consuming the electricity. Food is another case to bear in mind – New Zealand’s rural areas produce far more food than they need, which is consumed in urban areas and overseas – but the emissions associated with food production are allocated to rural areas.

We can use emissions per capita to compare emissions across areas of different sizes. Chart 2 shows that New Zealand’s emissions per capita have eased over the past 15 years, from 20 tonnes per person per year in 2007, to 15 in 2023.

Emissions per capita vary hugely within New Zealand, with the highest emissions per capita in rural areas – reflecting low population bases and high emissions from agriculture, especially livestock farming. Emissions per capita for rural areas averaged 55 tonnes per person in 2023, ranging up to 122 for Southland District. However, it’s not all bad news for rural areas, as emissions per capita have come down over time and there are significant opportunities to reduce emissions by changing practices or land uses within agriculture.

Metro areas have the lowest emissions per capita, at an average of 7 tonnes per capita in 2023, down from 9 in 2007. Metro areas tend to have more high value service-based industries, which inherently have very low emissions, and large population bases to spread the emissions across. The lowest emitting metro area in 2023 was Porirua City, with average emissions of 3 tonnes per capita.

Provincial area emissions per capita sit somewhere in the middle between metro and rural areas, with an average of 24 tonnes per capita in 2023. This middle ground reflects that provincial areas often have a larger population base and a mix of primary sector industries alongside lower emission goods and services industries.

Emissions per capita is one way to compare emissions across areas of varying sizes, but isn’t necessarily the best way to compare industries across areas. Emissions intensity – industry emissions per $1m of GDP – tells us more about the relationship between economic activity and emissions. Chart 3 shows that New Zealand’s total industry emissions decreased 10% between 2007 and 2023, at the same time as real GDP rose 41%, meaning that total emissions intensity fell 28%. The emissions intensity of the economy decreased as lower emission industries have grown, and as existing industries have reduced emissions.

Construction and wholesale are the only industries which have grown their emission intensity in the past 15 years, with emissions rising faster than GDP. Emissions intensity has reduced in every other industry, meaning that GDP has grown faster than emissions. Eleven industries have managed to grow their output at the same time as reducing emissions – including agriculture, forestry and fishing.

Improving emissions intensity alone won’t reduce our total emissions, but looking at industries that have reduced their emissions intensity can illustrate how to reduce emissions while maintaining local economic activity and employment.

At the national level, agriculture, forestry and fishing has the highest emissions intensity, with 2,317 tonnes per $1m GDP, well above the economy-wide average of 181t/$1m GDP. However, even within agriculture, forestry and fishing, there is a wide range of emissions intensities throughout the country. Growth in lower emission sub-industries has helped to reduce emissions in agriculture, forestry and fishing, as well as improving the value that we add to products we are already producing.

The lowest agriculture, forestry and fishing emissions intensities can be found in Tauranga (401t/$1m GDP), Napier (523), Western Bay of Plenty (636), and Nelson (734). In these four areas, the agriculture, forestry and fishing industry are concentrated in the high-value horticulture and fishing sub-industries.

The highest agriculture, forestry emissions can be found in areas focused on sheep farming such as Wairoa (6,474t/$1m GDP) and Central Hawke’s Bay (5,206). However, areas with a focus on dairy farming still have relatively high agriculture, forestry and fishing emissions too, such as Waimate (2,956) and Matamata-Piako (2,567). Where feasible, some transition to horticulture could be a valuable pathway for reduction in emissions intensity and outright emissions, while maintaining the local economy.

Of course, agriculture, forestry and fishing produces products that are consumed across the country and exported to the world, so any changes to land use to reduce emissions will mean changes in the types of foods we eat in towns and cities, and the products that we export.

Conversion from sheep and beef farming to forestry has been a challenge for rural areas and is one of the land use changes behind the reduction in agriculture, forestry and fishing emissions intensity. One of the key challenges is that forestry, particularly permanent carbon forestry, offers fewer employment opportunities than farming.

We’ve added an indicator on land use and land use change to the Regional Economic Profile, including change in exotic forest land cover and grassland (pasture). Land use data appears to be produced roughly in line with Census periods, so every five years or so. This new indicator currently covers up to 2018, so doesn’t yet include more recent shifts around carbon forestry, but we’re keeping an eye out for an update over the next year or two.

Our land cover indicator shows that the area of land covered by exotic forest increased 10% between 1996 and 2001, but held fairly steady up to 2018. The Ministry of Primary Industries’ National Exotic Forest Description shows a 5% increase in exotic forestry between 2018 and 2023.

We’ve also started reporting on greenhouse gas emissions in our Quarterly Economic Monitor, providing a more current perspective on emissions trends. Given the time taken to produce quarterly emissions data, Stats NZ has only released data to June, so this indicator will be lagged one quarter behind many of the Quarterly Economic Monitor indicators.

Our quarterly estimates suggest that New Zealand’s greenhouse gas emissions rose 1.8% in the year to June 2024, driven by an increase in the use of coal and gas for electricity generation amidst electricity shortages. The recovery of tourism activity after our international borders reopened has also contributed to the growth in emissions.

Greater detail on emissions is important to identify and contextualise how different parts of the economy contribute to carbon emissions, and can then influence how different businesses, industry, regions, and agencies address climate change. It is encouraging to see areas that have recorded substantial emissions reductions, and various groups can use these cases as inspiration for even greater emissions reduction in future across the country.

Ultimately, no one indicator – whether it be GDP or emissions – should be the sole determinant for decision making, but hopefully the addition of carbon emissions estimates and other environmental indicators in Infometrics products will help provide a broader perspective for ongoing decision making.

You can find the new indicators in the Regional Economic Profile and Quarterly Economic Monitor, and get in touch if you have any questions.