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Implementation of a New Zealand Emission Trading Scheme (NZ ETS) will begin in 2008, beginning withforestry, subsequently including energy and industrial emissions, and finally, agricultural GHGs from2013. Reducing agricultural emissions is a major challenge for New Zealand as they account for over halfits total GHG emissions. On the other hand, agriculture is critical to the economy, with its basic andprocessed products accounting for a third of exports. We use an environmental input-output model toanalyse direct and indirect cost impacts of emissions pricing on food and fibre sectors. At NZ $25/tCO₂-eq, costs of energy-related emissions on the food and fibre sectors are very small; however, costs ofagricultural emissions post 2013 would substantially impact on sheep, beef and dairy farming. Costeffectivemitigation measures and land use changes should help reduce micro- and macroeconomicimpacts, but the latter may also risk 'emissions leakage'.
