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4.1.5 Forestry and land-use change

RELEASED UNDER THE OFFICIAL INFORMATION ACT

Introduction

New Zealand has 6.256 million ha of indigenous forest and 1.82 million ha of planted production forest. Indigenous forests are managed primarily for conservation and recreation purposes. While the primary objective for most planted production forests is timber production, they also have significant environmental and recreation benefits.

It is currently assumed that New Zealand’s indigenous forests are a relatively stable carbon reservoir. A national carbon-monitoring programme is being established to demonstrate this.

New Zealand’s planted production forests, mainly comprising Pinus radiata, have removed and stored substantially more CO2 over the period 1990 to 2003 than has been emitted through harvesting of both planted and indigenous forests.

The land-use, land-use change and forestry (LULUCF) sector represented the removal of approximately 30.3% (23Mt CO2e) of all New Zealand’s greenhouse gas emissions in 2003.

Production forestry planting rates

Production forestry planting rates have fluctuated significantly since afforestation programmes began in New Zealand in the 1920s. The average afforestation rate over the past 30 years has been 44,900ha per year. In the period 1992 to 1998, planting rates were high (averaging 69,000ha per year). Since 1998, the rate of new planting has declined and, in 2003, 19,900ha of new forest was established.

Figure 36 - Afforestation from Planted Production Forest

This graph is summarised in the text above.

Source: MAF (2005)

New investment in commercial forestry is currently at a low level. It is provisionally estimated that just 10,600ha of new forest was established in 2004.

New Zealand had approximately 660,000ha of Kyoto forest (ie, forests planted after 1 January 1990 on land that was non-forest prior to that date) in 2004.  In the short term, forest sink credits will offset harvesting and deforestation liabilities.  New Zealand’s projection for sinks over CP1 is a surplus of 67.8Mt CO2e. This is the most likely scenario in the “Projected balance of units during the first commitment period of the Kyoto Protocol” (New Zealand Ministry for the Environment, 1995I) and is based on the inventory methodology and the best information available at the time of the projection.

The decline in new forestry planting has been driven by a combination of factors. These include:

  • a relatively strong New Zealand dollar
  • substantial increases in shipping costs
  • tough international market conditions
  • competition for land from alternative uses (which have pushed up land prices).

The first three factors have combined to give a very significant decline in stumpage (net return) to foresters and downward pressure on forestry valuations. Work undertaken by MAF shows that over the period 1994 to 2004, export prune log prices have fallen from a peak of $350 per tonne to around $190 per tonne. With a decline of this magnitude in prices received, there is no indication that the level of new planting will increase under current market conditions. These factors have created a decline in investor interest in the New Zealand production forest industry, but projections forward to 2020 are very uncertain.

However, forests are valued for more than their ability to sequester and store carbon.

They have co-benefits, such as:

  • avoided agricultural emissions
  • soil conservation, catchment control and water quality, and biodiversity
  • substitute materials for more emissions-intensive products
  • a source of bioenergy.

A number of policies and programmes undertaken for reasons such as those outlined above also provide climate change benefits. These include the East Coast Forestry Project and sustainable-development frameworks and programmes (such as the RMA and soil conservation/land management work undertaken by regional councils).

Land-use change from forest to non-forest

A very recent phenomenon that is becoming more prevalent is the conversion of plantation forest land to other land uses (deforestation).  Historically, very little conversion of plantation forest land has occurred in New Zealand.  Implementation of the New Zealand Carbon Accounting System will provide more accurate data on deforestation.

Under current policy, the Government’s deforestation liabilities during CP1 are capped at 21Mt CO2e (this is based on 10% of the forest area due for harvest over CP1 being deforested). Officials’ “best guess” of historic deforestation rates is that 2% to 4% of the area harvested each year is not replanted.

The downturn in the forestry sector since 2002 and strong agricultural commodity prices have increased interest in converting forest land to other land uses such as dairying, which is now a competing land use on flat, well-drained sites formerly considered marginal for agriculture due to soil fertility reasons.

As a consequence, the forest industry is concerned that there is a significant risk that the deforestation cap of 21Mt CO2e will be breached and that deforestation liabilities will be passed on to foresters who deforest.

There is uncertainty surrounding the rules, targets and interpretation for deforestation beyond 2012 to 2020 (and further out). This means that the issues surrounding mitigation for deforestation become problematic, when the definition of “forest” for future commitment periods has not yet been determined.

Reliably predicting or even making reasonable estimates of future rates of deforestation is very difficult. This is because deforestation is driven by a large number of factors, which, in themselves, cannot be accurately forecast.

Conclusions

Uncertainty about the Kyoto Protocol’s future rules, targets and interpretation beyond 2012 and out to 2020 means that assessing the forestry sector’s mitigation prospects is difficult. At best it would be necessary to assume the same rules for contiguous commitment periods.

Furthermore, uncertainty about the rates of afforestation, reforestation and deforestation in New Zealand is a major impediment to determining the prospects for mitigation out to 2020 for forestry.  Better information is required to discern the new planting (afforestation and reforestation) and deforestation intentions of foresters.  An improved understanding of the decision-making process of land-use managers in New Zealand is also needed.

In the short term, forest sink credits will offset harvesting and deforestation liabilities.  New Zealand’s projection for sinks over CP1 is a surplus of 67.8Mt CO2e. In the medium term, out to 2020, (assuming similar rules over contiguous commitment periods) this surplus will be eroded as Kyoto forests are harvested. 

Forests are valued for more than their ability to sequester and store carbon.  Options that send positive afforestation and reforestation signals could be used to maximise their co-benefits.

Section 4.6 outlines some alternative policy options for the forestry sector to address the issues of afforestation, reforestation and deforestation.  These options range from policies where the Government retains all benefits and liabilities to those where the Government devolves all benefits and liabilities. These options are assessed and further work proposed.  Any further work should also include assessing the mitigation potential of those options.