Incentives needed to grow Kyoto forests
Increases in forestry to offset greenhouse gas emissions in New Zealand are dependent on more than just high carbon prices.
New Zealand Forest Owners Association president Peter Berg said there are too many unknowns to encourage people to invest in growing trees right now.
A new report published by Infometrics suggested that for New Zealand to reach a target of 25-40% below 1990 emission levels by 2020, a carbon price of $200 per tonne would be required.
The government has yet to confirm its target to the International Panel on Climate Change.
“Even at $100 a tonne, a typical radiata forest would generate an average of $2000 or more in carbon credit income per year for 30 years,” Mr Berg said.
“That compares with a gross annual income of $530 a hectare on a typical hill country sheep and beef operation.”
But his comments come with a caution.
He said there are major barriers to forestry investment, regardless of the carbon price.
“Everyone is scared of making long-term investments in the current economic climate, especially in something as speculative as the carbon price at harvest. It’s a lottery,” Mr Berg said.
Trees also take time to get started from planting and carbon credits would accrue slowly in the first decade of a forest’s life, which is also the main period of expenditure.
“For a farmer converting part of a farm, it means forgoing livestock income during this period.”
Mr Berg suggested the government needed to offer land owners a scheme to smooth the flow of credits through the life of a forest and remove the obligation for repaying the credits, so long as the forest is replanted.
Forest owners would essentially get paid to suck carbon out of the atmosphere, but have to refund the money when the trees are harvested and sold.
“If it gets the polity right, New Zealand will get trees and hill country erosion control at no cost to the taxpayer.”
Erosion control can be costly. Just this week, the Ministry of Agriculture and Forestry has fronted up with $1.1 million for the Taranaki Regional Council to help with erosion control. The money comes from the Hill Country Erosion fund, which local authorities can apply to for erosion control.
Mr Berg said planting on erosion prone hill country would reduce flooding and the loss of carbon-rich soils.