. the continuing fall in sheep numbers in the eu, and residual anxieties about bse and cjd in britain, have pushed lamb prices to new highs. at the same time, the bse outbreak in the us, which was traced back to a canadian herd, has resulted in north american beef being virtually shut out of the world market. with demand for beef from north asia continuing to be strong, world beef prices have risen sharply. while the outlook for agriculture remains positive, it is too early to say that prices for the commodities that we produce have shifted up a level and will stay there. it can be argued, for example, that increasing demand for dairy products from china means that our dairy prices will move to a higher level. even if this was the case, it would be unwise to think that commodity price cycles would disappear altogether - prices will continue to cycle, even if they cycle around a higher level. the national bank, in its rural report of march 2004, suggested that even now rural land might be too expensive. the national bank notes that the value of an asset in economic terms is the present value of future expected income discounted at the required rate of return. the national bank estimates that for the future income stream to equal the current price of rural land a discount rate of around 4 per cent is required, which is very low. provided that the future income stream is being estimated correctly, this suggests that rural land is currently overvalued. analysis that we have undertaken at the reserve bank indicates that the ratio of rural land prices to agricultural operating surplus is now above its long run average value. however, the ratio is not yet out of line with the values that it reached in the mid 1990s. whether there will be a downward adjustment in prices presumably depends on whether market participants also reach the conclusion that rural land is overvalued. rural dwellers often remind us that non - economic factors - lifestyle considerations in particular - are also important reasons for wanting to hold rural land. industrial and commercial property the prices of industrial and commercial buildings rose sharply in the mid 1980s during the growth surge that followed the first moves to deregulate the economy. by industrial buildings i mean factories, cool - stores, warehouses and the like. by commercial buildings, i mean offices, retail buildings, hotels, and other similar places of business. looking back, we can see that we had a price bubble. ( bubbles are often difficult to identify when they are occurring, but are clearly

of enhanced financial stability. we will keep going harder on climate. as a member of the network for greening the financial system we are working with 66 central banks, supervisory agencies and international financial institutions to develop a coordinated response to climate. as part of this, we are looking at options for better managing our own balance sheet to mitigate climate change risk and promote climate change adaptation more broadly in new zealand. the impact of covid - 19 like climate change, covid - 19 highlights interdependencies between economic prosperity, environmental sustainability, and social inclusion. covid - 19 has done something climate 4 https : / / www. rbnz. govt. nz / financial - stability / financial - stability - report / fsr - may - 2019 / industry - survey - on - the - potential - impacts - of - climate - change change has struggled to do : engage everyone on earth. we have all been disrupted. as the economist newspaper noted last week : “ following the pandemic is like watching the climate crisis with your finger jammed on the fast - forward button. ” our current response to covid - 19 in new zealand shows that when the risk is acute, we can act together in a powerful, effective response. this is motivating : with climate change the risk is also acute. the current economic regeneration challenge requires bringing forth opportunities to reduce carbon emissions and adapt. we need to ensure that whatever we rebuild, reshape or invest in now is sustainable, long term in its horizon, helps us build climate resilience, and benefits generations to come. the task is significant but, as has been said, ‘ the best time to plant a tree is 20 years ago. the second best time is now ’. conclusion i ’ ll return to tane mahuta and his efforts to let the sunshine in so life could flourish. disclosure is a tool to let in the sunshine. better information to make better decisions. the degree to which climate change remains a ‘ tragedy of the horizons ’ depends on our ability to make better decisions today. thank you.