Forestry Investment – A prominent forestry expert has called upon New Zealand’s government to make the changes that are necessary to encourage more forestry investment.
New Zealand Forest Owners Association president, Peter Berg, said there are too many unknowns to be able to communicate clear incentives for people to invest in growing trees at the current time.
New Zealand’s government is keen to attract forestry investors so that it can offset greenhouse gas emissions under the Kyoto agreement. With this in mind, a report was commissioned from Infometrics. It found 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.
Mr. Berg confirmed that “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,” but warned that “everyone is scared of making long-term investments in the current economic climate, especially in something as speculative as the carbon price at harvest.” He added: “It’s a lottery.”
The solution, according to Mr. Berg, is for New Zealand’s government 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: “If it gets the polity right, New Zealand will get trees and hill country erosion control at no cost to the taxpayer,” he said.