Meaningful carbon price is vital to future of forestry

Meaningful carbon price is vital to future of forestry

New Zealand’s third largest export industry, forestry, is steadily shrinking. Ministry for Primary Industries figures reveal that only 3000 hectares of new forest were planted in 2015 and that the total area of planted forest fell by 16,000 ha.

Forest Owners Association technical manager Glen Mackie describes the figures as predictable and says the area of forest is likely to continue to fall, until the cost of land can be justified by the income it generates.

From 1955 to 2000, the area of New Zealand’s plantation forests grew from 344,000 to 1,769,000 hectares, an increase of 31,667 ha a year. Since then the planted area has declined to 1,720,000 ha, a decline of 3267 ha a year. In addition, in 2015 there were 9300 ha of harvested forest lying fallow, awaiting a decision from the land owner whether or not to replant.

“The irony is that forestry in the long-run is more profitable than sheep and cattle on a lot of second class hill country. It is particularly profitable for established growers with good infrastructure, as well as for new forest owners on land that has good road access and is near to a port or processor,” Mr Mackie says.

“The key hurdles for those contemplating planting new forests are the cost of land and a lack of income from the forest until it reaches harvest. The cost of land is largely determined by farmers who are willing to accept extremely low financial returns in return for the lifestyle benefits of owning a farm and the promise of future capital gains.”

He says reliable income from carbon credits – $15 a tonne or better – plus averaging of credit income through the life of the forest could help overcome these hurdles and be a game changer for forestry.

“The government is currently reviewing the emission trading scheme (ETS) with the aim of making it more effective. If, as mooted, the 50% subsidy on existing emitters is removed this will increase demand and underpin prices for carbon credits – an important step in giving emitters an incentive to reduce emissions and land owners an incentive to plant trees. ”

Mr Mackie says government policy will always have a big influence on forest planting rates.

“Unlike most other land uses, forestry offers major environmental and recreational benefits to society for which forest owners usually don’t get paid.

“A meaningful price for carbon will not only tell land owners and the rest of the world that New Zealand takes climate change and reducing carbon emissions seriously, it will ensure that future generations get the environmental and other benefits of a vibrant forest industry.”

ENDS

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