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2. The Problem and the Objective

2.1 What is the problem?

The current management framework for plantation forestry, as outlined in section 1.6, creates a number of issues for the forestry sector.

The overarching issue is inconsistency in regional and district plan rules under the RMA. Inconsistency is resource draining for many in the forestry sector and creates uncertainty for the sector as a whole. In particular it results in:

  • re-litigation of the same issues across the country
  • inconsistent treatment of forestry operations
  • operational inefficiency
  • investment uncertainty.

Although some variability between plans is inevitable and justified, due to the varied soils, water bodies, biodiversity and climatic conditions across New Zealand, there are opportunities for reducing inconsistency where effects from particular activities are similar and well understood. An example is where there is inconsistency between plans where the receiving environment is similar (eg, one forest extending over two or more councils areas, but with each council having different rules).

The New Zealand Forest Owners Association (NZFOA), which represents many owners of New Zealand’s commercial forests, is seeking a nationally consistent management framework. The NZFOA hope that this will better facilitate the establishment of new plantation forests and ability to undertake forestry activities due to improved certainty about the management framework.

There are particular concerns around the impacts that inconsistency is having on the ability of forestry activities to be undertaken in a timely and cost-effective manner such as to attract investment. As noted in MAF’s A Forestry Sector Study April 2009, factors that influence investment decisions in forest growing are operational costs, capital costs, the size of margins and the return on capital, and environmental performance requirements and legislation (MAF, 2009a.). The unpredictability of obtaining resource consents under the RMA, and generally higher environmental performance requirements and legislation than in some competing countries, are considered threats to forestry investment (MAF, 2009a).

Overall, there is concern that the current regulatory framework is creating a barrier to forestry development and impeding investment in a sector that creates many economic and environmental benefits for the country, including the following.

2.1.1 An important contributor to New Zealand’s GDP

Forestry is a significant employer and revenue generator. Timber harvested from plantation forests amounts to around 20 million cubic metres per year (MAF, 2009d). A significant proportion of this is exported as logs and chips (6.6 million cubic metres in 2007/08), but the majority is used in the production of sawn timber, panel products, pulp, paper and paperboard (MAF, 2009d).

Around 6000 people are directly employed in the sector, with a further 14,000 employed in related forestry activities (Statistics NZ, 2009). Forestry contributes approximately $5.1 billion (in 2007/08) to New Zealand’s gross domestic product, or 3.8 per cent of the New Zealand total GDP (MAF, 2009d). The contribution of the industry is projected to increase steadily over the next 15 years, with the annual harvest increasing to over 35 million cubic metres in 2025, as illustrated in figure 3 (MAF, 2010c).

Figure 3: Historical harvesting and forecast wood availability (radiata pine only)

Figure 3 shows the historical harvesting and forecast wood availability for radiata pine. The x axis shows the data from years 1995 to 2008 with projections until 2025. There are two projections shown: one a forecast for all owners and one a forecast for large scale owners. The y axis shows the recoverable volume in cubic metres. Data shows the volume increasing from about 12,000 to 17,500 m³ with a peak of about 21,000 m³ in 2003. Projections then show both scenarios increasing with large scale owners projected to increase at a much slower rate than the all farmers scenario. The year 2025 shows more than 35,000 m³ for all owners and just over 20,000 for large scale owners.

In total, plantation forests represent 7 per cent of land cover in New Zealand, covering a total of 1.75 million hectares (MAF, 2009a). Large-scale exotic plantations make up the majority of the area of forestry plantations in New Zealand, although trees in farm wood lots, syndicates and investment blocks also contribute to the total area of plantation forests.

2.1.2 An important player in climate change mitigation

New Zealand has commitments to international climate change agreements, including being a signatory to the Kyoto Protocol. The Protocol is a legally binding agreement, which entered into force on 16 February 2005 and has been ratified by 184 parties (UNFCCC, nd). Under the Protocol, developed countries are committed to reducing greenhouse gas emissions (MAF, 2010a).

New Zealand’s target is to reduce its greenhouse gas emissions to the level they were in 1990, or take responsibility for excess emissions. The forest estate included in the New Zealand Emissions Trading Scheme (NZ ETS) will create a carbon reservoir, helping New Zealand to meet its obligations under the Kyoto Protocol. This will be supported by new planting initiatives and harvesting strategies. New Zealand’s forests therefore play an important role in meeting this target (MAF, 2010a).

The international Kyoto Protocol rules provide credits for the growth of forests planted after 31 December 1989. New Zealand is likely to meet its obligations in part because of the approximately 600,000 hectares of forests planted in the 1990s (MAF, 2010a). However, emissions resulting from the subsequent harvest of these forests may mean that meeting the agreed targets could be problematic in the future (Ministry for the Environment, 2009).

Post-1989 forest owners who have chosen to be participants in the NZ ETS are entitled to credits for the carbon stored in their trees as they grow, but are also liable for any decrease in the carbon stored in the forests as a result of fire or harvesting. Owners of pre-1990 forest land will incur liabilities if the land is deforested.

The amount of carbon stored in a forest varies depending on the age, the species and the site. An average radiata pine forest absorbs approximately 800 tonnes of carbon dioxide equivalent per hectare over 30 years, equivalent to approximately 2.5 tonnes per tree (MAF, 2010b).

Refer to Appendix 2 for further information on the NZ ETS.

2.1.3 Delivering environmental benefits

Plantation forestry can deliver environmental benefits such as the stabilisation of slopes susceptible to erosion. The key benefits are described in section 1.7.

2.2 Analysis of the problem: inconsistency

2.2.1 Re-litigation of the same issues across the country

Consultation and participation in the RMA process are critical, but are viewed as costly and time consuming by the forestry sector (MAF, 2009a). Forestry companies spend considerable amounts of staff and consultant time, and incur substantial legal costs, submitting on plan development processes, including plan changes or variations. This is particularly onerous for forestry companies that have forestry operations spanning different regions or districts. In these cases they need to get involved in multiple plan processes and any subsequent litigation.

Assuming a typical submission process costs $10,000, submissions on five plan changes a year over a 20-year period (which is less than the typical life of a crop) generates costs in the order of $500,000 (Covec, 2010). Forestry companies report that the same topics are re-litigated over and over again in different parts of the country. The costs of a typical dispute are around $10,000–$20,000, although some costs can be substantially higher (Covec, 2010). Some in the forestry sector consider this to be a poor use of resources (both for forestry companies and for councils).

The 2009 amendments to the RMA simplified many processes under the RMA, in particular plan-making and resource consent processes. These changes focused on improving the speed and reducing the costs of these processes. The amendments are likely to reduce some of the costs and the time involved in these processes, but are unlikely to specifically align the content of plans as they relate to plantation forestry.

Example: Re-litigation

According to the forestry sector, issues that have been re-litigated in almost every district plan include afforestation and replanting setbacks, noise provisions, the zoning of existing forests in outstanding landscapes and subsequent regulatory effects, quarrying rules, and (in some districts) the status of plantation forestry and the impacts of rules governing indigenous vegetation disturbance.

With regional plans, the key issues litigated typically involve provisions controlling earthworks, harvesting, riparian zones and river crossings.

Definitions of plantation forestry and associated activities, and duplication of historic heritage functions, have also been repeatedly addressed at both the regional and district plan level. This is accentuated by the fact that some companies span different districts and regions, as follows:

Forest manager Regions Unitary authorities Local authorities
Timberlands 3 0 5
Hancock Forest Management New Zealand Ltd 6 2 16
Matariki (Rayonier) 9 1 15
PF Olsen’s Ltd 12 3 41

Source: Hancock Forest Management (NZ) Ltd

2.2.2 Inconsistent treatment of forestry operations

There are three components here.

Cross-boundary issues

The forestry sector has experienced cases where similar (or the same) proposals are treated inconsistently by different councils in terms of the activity status they are afforded (ie, whether consent is needed). This is particularly an issue where forests are located across district or regional boundaries (eg, the same forestry operation can be ‘permitted’ under one district plan and ‘restricted discretionary’ overall in an adjacent district). Presently, local authorities are required to manage cross-boundary issues themselves, through applying techniques such as having similar provisions in plans or having joint administration arrangements.

Example: Cross-boundary issues

Kinleith forest is one of New Zealand’s largest and oldest production forests, with the first stands planted in the early 1920s, and now covers 92,000 hectares. Forest harvesting is in either second or third rotation areas, with some fourth rotation currently being planted. Kinleith forest is managed as one management unit and has relatively contiguous soil types, climatic conditions and social environments, but it covers two regions (Waikato and Bay of Plenty) and three districts (South Waikato, Taupo and Rotorua). As a result, the forest manager must understand and comply with five different sets of rules governing the same forest management practices.

The following are some examples supplied by the forestry sector of the difference in rule approaches for the different parts of the forest.

  • Harvesting is a permitted activity in both Waikato and Bay of Plenty regions on the topography encountered, but is subject to different permitted activity conditions.
  • Earthworks are permitted activities in the Waikato region, with the exception of “high risk erosion areas” (riparian zones and slopes over 25 degrees). In the Bay of Plenty region the status of earthworks varies from permitted to discretionary based on a slope, area and volume criteria. Again, where permitted, the permitted activity conditions vary.
  • Environment Bay of Plenty provides the opportunity to become an “Accredited Operator”, in which case harvesting and earthworks operations are permitted. Environment Waikato does not offer this option.
  • Smaller stream crossings are permitted in both the Waikato and Bay of Plenty regions, but the criteria are different – based on catchment size in the Waikato region (up to 100 ha) and on design culvert size in the Bay of Plenty region (up to 1200 mm diameter when designed to pass a 1-in-20-year return period storm event). Both have permitted activity conditions, and again these are different.
  • Quarrying requires a consent in the South Waikato and Rotorua districts regardless of the volume of material extracted, the effects or location. The Taupo District Plan has no specific rules relating to quarrying, but the activity is required to meet other general effects rules relating to noise, dust, etc.
  • The approach to the management of activities such as impacts on indigenous vegetation and significant natural landscapes is different in each district and region.

To add to this complexity, the district and regional boundaries do not correlate, and some of the district boundaries cut across catchments and do not follow any topographical or road boundary. This makes it difficult to know the location of the district boundary on the ground without a GPS unit.

Source: Hancock Forest Management (NZ) Ltd.

Duplication of function

In the development of district and regional plans there has been some blurring of territorial authority and regional council functions (under section 9 of the RMA), which has led to the duplication of functions. While there are mechanisms in place to address duplication, such as the use of regional policy statements to clearly set out roles, such arrangements can still lead to delays and confusion.

Example: Duplication of function

Where district plans seek to place controls on activities that are also covered under regional plans, the inevitable result is a duplication of effort concerning the same activities and effects. Typically this occurs where district councils seek to control earthworks or harvesting activities, which are almost always covered under regional plans.

As an example, the Matamata Piako District Plan contains rules that control harvesting in some rural zones. The Regional Council, Environment Waikato, also has rules covering harvesting activity. As a result, the harvesting of the Te Aroha forests located on the foothills of the Kaimai Range, requires three separate resource consents:

  • an earthworks consent from Environment Waikato
  • a harvesting consent from Environment Waikato
  • a harvesting consent from Matamata Piako District Council.

Source: Hancock Forest Management (NZ) Ltd

Inconsistent regulation of land uses

The forestry sector has concerns about resource consents being required for forestry activities and not for other production land uses (such as agriculture), when the effects from forestry are similar or less than those from other lands uses (see the comparative land-use study in the box below). Higher regulatory hurdles and higher monitoring costs imposed on forestry activities affect the forestry sector’s ability to bid for hill country pastoral land.

Case study: Pakuratahi Land Use Study

A comparative land-use study (the Pakuratahi Land Use Study, by Eyles and Fahey, 2006) collected information for 12 years from two adjacent catchments: one in radiata pine plantation forest and the other in pasture (MAF, 2009d).

Following are some of the key findings from the study.

  • In the pre-harvest period, annual water yields from the plantation forest catchment were 6 per cent lower than the pastoral catchment.
  • Over two years post-harvesting, annual water yields were on average 22 per cent greater in the forested catchment than the pastoral catchment.
  • Seven years after harvesting, the difference in the annual water yields had declined to 5 per cent.
  • The pasture catchment yielded three to four times more suspended sediment than the mature plantation forest catchment over the 12-year period.
  • During tree harvesting, sediment yields increased two to three times above those from the pasture catchment.
  • With oversowing and rapid replanting, sediment yields returned to pre-harvest levels within two to three years.
  • Streams draining pasture and mature forest had similar levels of turbidity, nitrate-nitrogen, total phosphorus and dissolved phosphorus.
  • Tree harvesting did not cause any statistically significant increase in the concentration of any of the parameters mentioned above.
  • Immediately after harvesting, stream invertebrate communities changed to being dominated by more impact-tolerant taxa.

(MAF, 2009d).

Although there is inconsistency in the forestry sector rules between districts and regions, the industry has observed that many of the conditions attached to resource consents are generic, and that similar conditions are repeatedly being applied to forestry operations throughout a region. This indicates that resource consent conditions are not necessarily being tailored on a case-by-case basis. This raises the question of how much additional value is being gained by companies going through a separate consenting process when the final conditions are often similar.

The typical cost of internal staff time and other expenses incurred in preparing a resource consent application is around $5,000, but may range up to $20,000 per application. Also, a typical application fee levied by councils may be in the vicinity of $1,500 for simple applications, but can be significantly higher for more complex applications (eg, $10,000) (Covec, 2010). In light of this, there is an argument for some of the requirements set out in resource consents to be reflected in appropriate rules (and terms and conditions) within plans instead. Such a move would need to take into account logistics such as the ability of councils to monitor forestry operations.

Example: Repetition of consent conditions

Hancock Forest Management currently holds 15 separate resource consents for earthworks and winter ground-based harvesting in one region. Despite each being individually considered through a separate consenting process, there is no material difference in the conditions of these consents beyond minor variations to the wording of individual conditions.

All 15 consents have identical, or very similarly worded, conditions that cover:

  • providing the council with an annual plan
  • providing notification of earthworks commencement
  • complying with consent application and Northland Regional Council Soil and Water Section 32 standards
  • protecting archaeological sites
  • refuelling
  • harvest tracking in winter
  • minimising sediment generation from earthworks
  • revegetation of earthworks
  • protection of indigenous vegetation and wetland.

Additional conditions covered in some, but not all, consents cover:

  • temporary crossings
  • slash management
  • monitoring requirements
  • notification of neighbouring property.

All other conditions were generally worded and not specific to the particular forest.

Source: Hancock Forest Management (NZ) Ltd.

2.2.3 Operational inefficiency

At an operational level, inconsistency generates confusion for on-the-ground crew, who have different rule requirements for the same operation in the different blocks they operate in – or even in different parts of the same forest – when they cross regional or district boundaries. This leads to inefficiencies. Ensuring contractors know the different rules for the same activity involves extra supervision and training. Based on estimates made by the forestry industry, briefing and training regarding applicable rules requires the equivalent of up to three full-time equivalents (FTE), plus overheads across the sector. This is estimated to cost approximately $250,000 per year.

2.2.4 Investment uncertainty

Investment in plantation forestry is capital intensive and occurs over a long period of time. This inherent longevity has implications for investor confidence, and hence forestry investment. On average it takes 25–50 years from planting to harvesting for radiata pine. In some cases, infrastructure installed to facilitate the first rotation (roads, landings and river crossings) are only economically justified based on a second harvest 25–50 years out.

The nature of the current management regime creates uncertainty for the forestry sector. Because district and regional plans are being reviewed on a continual basis throughout forestry rotation periods, there is the potential for inconsistency to cause restrictions or time delays on future harvesting well after the initial investment has been made.

This is relevant to the forestry sector as the timing of harvesting can have a significant impact on returns to forest owners. For instance, it is not uncommon for the price of logs to change by $5 per tonne over the course of a year (ie, 5 per cent or 10 per cent fluctuation). This can alter the return on a 100-hectare forest block, which could generate approximately 50,000 tonnes, by around $250,000 (Covec, 2010). With forestry contributing 3.8 per cent of New Zealand’s total GDP, changes in investor attitudes can have substantial implications for the country.

2.3 The importance of retaining local and regional decision-making

Although the problem of inconsistency has been raised by the forestry sector, this issue is not unique to the forestry industry. The nature of the RMA means that decision-making is made closest to the community of interest. That is, if effects generated by an activity are felt only locally, then decisions are most appropriately made locally. This devolved decision-making inevitably generates different rules in different localities.

Given this, some inconsistency is clearly warranted because it reflects specific local or regional differences and, in particular, different receiving environments. This is especially relevant at a regional level, as water-related issues are particularly variable across the country.

The scoping process has highlighted the fact that some local authorities do have concerns about local decision-making being reduced or the management framework becoming too permissive in their area. The dynamic and unique nature of receiving environments means that appropriate levels of controls cannot always be appropriately determined at a national level because effects are variable depending on the location. A failure to retain local and regional council influence in such cases risks not addressing environmental issues properly and removing community input where it is needed.

For this reason, a decision was taken early in the NES scoping process to apply a principle of ‘appropriate scope’ to any alternatives being considered to address the problem. This recognises that intervention is best suited where effects are well known and can be managed in more than one location. The aim of this principle is to retain local and regional decision-making (in terms of both rule setting and consenting), where effects cannot be appropriately assessed at a national level. As a result, absolute consistency is not appropriate as a policy objective, and it is likely that the best option will only partially address consistency issues.

It is also a priority that any alterations to the existing planning framework fit with the way plans currently function, do not significantly change the overall approach to plantation forestry, and make the most effective use of tried and tested ‘best practice’. A principle of promoting sustainable management under the RMA is also vital so that an appropriate amount of control over plantation forestry is retained.

2.4 Problem summary

The problem to be addressed is best summed up as follows.

The New Zealand forestry sector currently operates under a planning framework within which different territorial authority and regional councils apply different rules. This has consequences for the forestry sector in terms of investment certainty and operational efficiency, and is a potential barrier for the environmental and economic benefits that plantation forestry generates at a national level.

Questions:

  1. Do you agree with the problem statement? Have the main problems been defined accurately?
  2. Are there any other issues that have not been considered?
  3. What is the scale of the problem? Does inconsistency between plans or lack of long-term certainty have more impact?

2.5 The policy objective

The policy objective of the proposal is to address the problems identified in the preceding section by:

Bringing about a more consistent and appropriate plantation forestry management framework, while facilitating the sustainable management of natural and physical resources.

Note that, for the purposes of this objective:

  • consistent means having a management framework that brings about certainty to the forestry sector for when a resource consent is needed, facilitates efficient forestry operations, and is free from unnecessary variation or contradiction.
  • appropriate means an approach that:
    • does not significantly tighten or loosen the management of forestry overall (fits with the way plans currently function)
    • recognises and accommodates different receiving environments and local values
    • promotes best practice.

The intention of the policy objective is to retain the overall level of control that district and regional council plans have. In other words, the intention is not to make the framework more permissive or more restrictive, but to bring about consistency where possible. An underlying principle is that effects that occur locally will still be dealt with at a local level. Some effects that have regional, national or international implications may also still be best dealt with by local authorities.

Question:

4. Do you agree with this objective?

This objective was used to generate assessment criteria that alternative options (outlined in section 3) were assessed against. Figure 4 outlines this process.

Figure 4: Process for assessing alternatives against the objective

Figure 4 is a flow chart which depicts the process for assessing alternatives against the objective.

The objective is in three parts:

  • Promotes sustainable management -  a management framework that recognises natural and physical resources
  • Consistent – a management framework free from unnecessary variation or contradiction
  • Appropriate – an approach that:
    • does not significantly tighten or loosen the regulation for forestry overall
    • recognises and accommodates different receiving environments and local values where warranted
    • promotes best practice
    • fits with the way plans currently function.

Each of these three points is informed by a different principle or problem

  • ‘Promotes sustainable management’s’ underlying principle in the Resource Management Act 1991.
  • ‘Appropriates’ underlying principle is that of appropriate scope.
  • ‘Consistent’, however, is informed by the problem: inconsistency.  This problem means, for the forestry sector, that there will be re-litigation of the same issues across the country, operational inefficiency, inconsistent treatment of forestry activities and investment uncertainty.

Assessment criteria are provided from which the alternatives are assessed to find the preferred option. These are linked to each of the objectives points.  They are:

  • promotes sustainable management
    • promotes sustainable management of natural and physical resources
  • consistent
    • provides long term certainty
    • provides national consistency
  • appropriate
    • Is able to be implemented in appropriate timeframe
    • allows for local input for different receiving environments
    • Is able to promote best practice
    • does not significantly tighten or loosen overall controls