Story: Economy and the environment

Page 1 – An economy based on the environment

New Zealand’s economic activity is largely based on its natural environment. For example, agriculture, tourism and power generation all depend upon the environment. Despite this interdependence, in the past the environment has been viewed as a passive resource for exploitation by a boundless economy.

Early economy

New Zealand first entered the European world as a distant source of resources, including whale oil, sealskins, kauri timber and flax. Agricultural and pastoral possibilities were identified early on, as were the scenic attractions. By the late 1800s wool and meat were important export commodities, and the colony was already on an emerging international tourist circuit. The main attraction was the landscape.

Land of milk and honey

The Empire Marketing Board was set up in London in the mid-1920s to promote trade in the British Empire. It published a series of posters representing New Zealand as an idyllic pastoral land for the production of sheep, cattle, apples and honey. During the 1940s the cover of the New Zealand Journal of Agriculture sometimes represented the country as Britain’s overseas farm.

A pastoral economy

From the 1880s New Zealand’s economy was largely dependent on products derived from introduced grass. Forests and tussock were cut down and burned, and pasture was sown in the ashes.

Wool, the first significant pastoral export earner, was very important until the 1960s. In the 1880s the advent of refrigerated shipping opened up access to the British market for meat, butter and cheese, considerably extending the economy’s reliance on grass. It also encouraged the burning of forests in the North Island to sow new pasture.

By 1921, 93% of New Zealand’s export income was from grass-related products. However, converting forests into pasture caused environmental problems such as soil erosion. Institutions were set up and laws passed to deal with the issues.

A resource-based economy

The New Zealand economy diversified from the 1970s. By the 2000s the economy was no longer solely reliant on grass-related products, but much of it was still based on natural resources. In 2005 about 25% of exports (by value) were from the dairy industry (butter, cheese, milk powder and casein) and 24% were meat. Wool, which had historically been very important, only accounted for 4% of export value. Timber and wood products made up 10% of exports, and aluminium, processed using South Island hydroelectricity, accounted for 5%. Another 20% of overseas revenue earnings came from international tourism – the main attraction for visitors being New Zealand’s natural environment.

The myth of clean and green

In the 2000s New Zealand branded itself for tourism and food exports as clean and green, yet there was little evidence to suggest that New Zealanders lead particularly environmentally friendly lifestyles – in fact the opposite was true.

By the 2000s there was a growing acceptance that the environmental costs of the world economy were a global problem. The climate was warming due to the release of carbon dioxide and other gases. The interdependence between the economy and the environment had never been clearer, yet New Zealanders were living less sustainable lifestyles than ever before.

How to cite this page:

Eric Pawson. 'Economy and the environment - An economy based on the environment', Te Ara - the Encyclopedia of New Zealand, updated 13-Jul-12
URL: http://www.TeAra.govt.nz/en/economy-and-the-environment/page-1