The concept of ‘carbon farming’ has been around for a long time. I recall carbon farming discussions with my colleagues at University of Queensland back in the early 1990s, but the industry has taken a long time to finally arrive. Well, it is now here. And it has the potential to overwhelm not only the sheep and beef industries, but also have big impacts on the timber industry.
It is only six weeks since I wrote an article setting out that carbon farming is now considerably more attractive than sheep and beef on the hard North Island hill country. Then two weeks later I extended that analysis to the easier hill country. In a more recent article focusing on the Emission Trading Scheme (ETS), I mentioned that the same conclusion could be drawn for considerable parts of the South Island. All of those can be found archived here.
I undertook those analyses using a carbon price of $48 which was then the market price. As I now write this article on 8 September, the price is $62 and has been moving up each day.
Futures contracts for 2026 are now available above $71. That means that anyone who knows they will have carbon NZUs available to sell at that time can right now lock in a price above $71.
There is talk that, given current settings within the ETS, the price could soon rise to more than $100. The Government’s current advice is that a price as high as $110.15 would be acceptable in 2026, with the Government’s cost-containment reserve only being activated at that point.
Given that this year’s cost-containment reserve is already exhausted, there is considerable speculation as to what will happen as soon as the next auction on 1 December. The Government will need to find some more firepower if it wants to put a lid on current prices. At last week’s auction, they were totally outgunned by the commercial investors, who sucked up all of the 2021 reserve and still the Government could not hold the supposed maximum price to $50.
I have just rerun some forestry calculations using $60 as the carbon price. At that price, and if financial returns are to be the key criteria, I can confirm that carbon farming is clearly the highest and best use across most of the existing sheep and beef land. However, note the caveat about financial returns being the criteria for that finding.
There is also no doubt that if financial returns are the criteria, then it has to be exotic forests. Natives grow much more slowly and are more challenging to establish.
In contrast, if amenity values and perhaps biological diversity are the criteria, then native forests can indeed be the solution in some specific situations. But if the criterion is either dollars or carbon sequestration, then it has to be exotics.
Those exotics don’t necessarily have to be the Pinus radiata that we refer to as ‘pine trees’. It might be eucalypts, or it might be redwood, or in some cases Douglas Fir. But let there be no doubt, it won’t be native forests if dollar returns and carbon sequestration are what counts.
Until recently, the timber industry has been rather keen on carbon farming as an adjunct to production forests. Once the carbon averaging system is introduced next year, the risk associated with claiming carbon credits for first-rotation forests will have been greatly reduced.
As long as carbon credits were valued at $20, $30 or even $40, then for first-rotation forests it looked like a nice little income earner alongside the main business of timber production. However, foresters are now realising that carbon farming has the potential to totally outrun production forests in relation to these first-rotation forests.
From a land-owner perspective, in many situations it is now looking better to collect credits for the carbon, not just for the first 16 or so years under the new averaging system for production forests, but to let those credits run on, initially to 50 years, but then beyond for another 30 or so years to full maturity at perhaps 80 years. Forget about the harvest!
Note that this situation pertains to new forests on land that has most recently been in pasture. Carbon credits are not available for any land that was in forest immediately preceding 1990. There are also major limits in regard to those first-rotation forests planted after 1989 that are now reaching maturity. In general, but with exceptions, those forests will remain as production forests.
One of the major exceptions will be post-1989 forests where the owners registered their forests in the ETS and collected the associated carbon credits. The key issue is whether or not these credits were cashed-in or are still held as NZUs. If the NZUs were cashed in, then at least some of those NZUs will need to be repaid at the now much higher carbon price.
Hence, there are some nasty situations coming up for some landowners, with the only escape being to now convert these forests to permanent-forest status. But the details are too complex to get into right now. It must wait for another article.
James Shaw in his role as Minister of Climate Change has been explicit that the ETS is operating much along the lines he had hoped, and he is not at all upset that the carbon price is now rising rapidly. His perspective has been that the carbon price needed to be at least $50 per tonne before emitters would start significantly changing their behaviours. Similarly, he has indicated that he can see the price of carbon rising considerably higher and he is comfortable with that occurring.
So, let’s look at what would happen if the price of carbon, with ‘carbon’ being the shorthand for ‘carbon dioxide’, reached $100. It would mean that the carbon tax on petrol would be about 24 cents per litre, given that a litre of petrol releases approximately 2.4 kg of carbon dioxide. This change would undoubtedly be an issue of annoyance to many motorists, but it would not greatly change petrol-buying behaviours.
In contrast, a carbon price of $100 per tonne would mean that carbon farming would blow away all significant agricultural land-uses apart from dairy and horticulture.
One of the problems with carbon farming becoming dominant is that carbon returns are received in New Zealand dollars. As currently structured within the ETS, they are transfer payments within the New Zealand economy. In contrast, the agricultural industries earn export dollars, and it is export dollars that underpin the New Zealand economy.
According to Ministry of Primary Industries in their most recent ‘State of the Primary Industries’ document, New Zealand’s primary industries earned 83% of New Zealand’s export income in the most recent year. They also state that this percentage has been increasing for the last ten years. Sheep and beef currently earn about $10 billion of foreign exchange each year.
Another issue is that land converted to carbon forestry is locked up permanently. Give the associated carbon liabilities attached to the land, there is unlikely to ever be a pathway for future generations back to agriculture.
I have been writing regularly about forestry for more than two years. There are now fifteen articles focusing on forestry archived at my own website amongst the more than 60 articles on many topics that I have written during that period.
Back in June 2019, I wrote that the “equilibrium price of carbon needed to ensure that emitters change their behaviour is much bigger than the price required to make carbon forestry profitable”. That insight remains the reason that carbon farming now has the potential to blow away the sheep and beef industries.
When I first made that statement, it was heard in Wellington. Someone with considerable influence rang me and we talked about it for well over an hour. But we were not on the same wavelength. I was politely told that New Zealand’s focus had to be on planting a lot more trees given our international obligations. The implication was that collateral damage to sheep and beef was just the way things were.
As for solutions, that gets real tricky. Unscrambling the egg is not easy and I will have more to say on that. But the first step is to get acceptance that we have already headed into dangerous territory.
*Keith Woodford was Professor of Farm Management and Agribusiness at Lincoln University for 15 years through to 2015. He is now Principal Consultant at AgriFood Systems Ltd. You can contact him directly here.
103 Comments
Lanthanide,
Yes, that may happen once we have grown enough trees to cancel out our emissions from elsewhere in the NZ economy. There would need to be agreement from other countries that their companies could cancel their liabilities by buying our credits. That was sort of how the Kyoto Protocol worked. But under Kyoto we in NZ ended up buying bogus units at a low price, largely from Ukraine, to offset our own emissions. So any new international system would need to have much greater integrity. In NZ our Government continued buying the fraudulent units for quite some time when it was obvious to anyone who scratched beneath the surface that they were fraudulent. Then in 2015 we brought down the shutters and moved to an internal system. But what would we be leaving behind for our 'children's children's children' (with due acknowledgement to the Moody Blues) in terms of food and income earning capacity?
KeithW
There you step into a bigger picture, Keith.
Earning capacity expects spending capacity, which in turn expects production capacity, work capacity, energy-availability. That will NOT be available in the future, not at the levels we have become accustomed to. That train is about to leave the station, due to these two graphs:
https://www.researchgate.net/figure/World-Oil-Discovery-Trend_fig1_2671…
https://www.bbc.com/future/article/20120618-global-resources-stock-check
Essentially, we were using underground acres to power our consumption. Those are coming to an end, and the attempt to mitigate is competing with our existing above-ground acreage-use. Which was already using inputs and processes we can call 'unsustainable' - so that practice was going to decline anyway.
All that tells us the global debt-increasing system is a goner - lack of faith will collapse it, probably, if rampant inflation/deflation/stagflation don't. So forget 'export income'. That leaves feeding the local populace, full (or as near as dammit) regenerative/recycling food-production, and an obligation to restore the biodiversity which farming has already commandeered. That's BEFORE carbon-sinking (although the biodiversity will help, collaterally).
Ultimately, natives make more sense than exotics (my forest is the latter, eucs/macro, for which we purposely do NOT claim credits, just sayin') and will be our next planting.
Ans we can NEVER have planted enough trees to catch up to our fossil energy-use - that's an oxymoron. We'd be hard put to find enough land to retroactively address our emissions from the past, let alone the future. So many narratives don't address reality......., so many dodge the inconvenient....
for which we purposely do NOT claim credits, just sayin
Is that because you want to keep the land available for deforestation in future, or just a moral/ethical standpoint? Would not claiming credits give you more funding to allow you to plant more natives, sooner?
There's not much cost as long as the body is willing - if you had to pay someone to do all the planting, weeding and pest control it would cost a fortune. It keeps me awake at night worrying about the fate of my 30 ha of natives that I've spent thousands of hours tending, once I'm dead or too elderly to look after it.
Seems to me that allowing the exporting of Carbon units would mean eventually it could be cost effective to have all of NZ covered in Pine trees. Whereas if carbon units cannot be exported I would have thought some sort of price equilibrium will eventually be reached before the above could happen.
Is that any different to having it wall-to-wall dairying and exporting that?
Having imported a downed rainforest (PKE) and a finite resource (phosphate) using another (oil) in the process.......
And we cannot have global physical 'equilibrium', not enough surface area left for that...... as for 'price'......
Of course there is a difference, you can't eat (or drink) a carbon unit... you can't make buildings out of carbon units. Carbon units don't support gainful employment. It would be bad enough if we were talking about pines for use in construction but we are talking about pines for sinking carbon and thats it.
Thanks so much Keith. Great article. Very worrying times and sadly won't make the blindest difference to global warming. Advocates of a grain based diet better take a look at this Twitter thread https://twitter.com/JimBair62221006/status/1433829191405826052?s=20 - climate change is worsening food insecurity globally and we're planting our farmland into pines. Madness.
Who exactly was supposed to arrest this population growth? It’s essentially just the result of a global reduction in extreme poverty. The only proven way to reverse population growth rates, other than famine, is economic growth.
There is no carrying capacity for humans. You lot have been wrong about this since 1798. Sustainable population is a function of both resources and technology. In this case you’ve arbitrarily chosen fossil fuel, but the sustainable population level was much lower before agriculture also. Also before Haber Bosch, before Bourlag. So what? This is progress.
Incorrect. Faulty premise from the start.
Population growth was a result of applying fossil energy to food energy. Nothing to do with (money) poverty, all to do with energy poverty - try not eating.
Economic growth is not proven to anything - it's a use-rate of energy and resources, i physics terms. Do that less, you'll last longer.
There is ALWAYS a carrying capacity for humans - and we are currently overshot because of the finite nature of the fossil energy (and other resources; topsoil, aquifers, phosphate, other draw-downs).
Sustainable population is actually reliant on non resource draw-down. Technology can only facilitate, not create. Read that last sentence again. And again.
Agriculture is not a switch-off switch on thing. We hunted large protein-on-the-hoof to extinction, and took to winnowing grasses. It wasn't as good, but we got better at it. However, everywhere we have practices it, we deplete. Thus Empires falling, thus irruptions declining.
Haber Bosch takes energy - a classic case of levering fossil energy to produce food energy.
You seem to see unlimited progress...... I prefer to go with the statement of a thinker:
“No man can say that he has seen the largest ear of wheat or the largest oak that could ever grow; but he might easily, and with perfect certainty, name a point of magnitude at which they would not arrive.
In all these cases therefore, a careful distinction should be made between an unlimited progress, and a progress where the limit is merely undefined”
Any idea who the thinker might have been? He'd have smiled quietly and turned away from you, I suspect. No point in engaging with believers....
Although technology does potentially allow a way out of the trap - if we could get something like fusion working in a cheap way. Yes there's still actual limitations in the raw materials, however seawater has a lot of minerals suspended in it that can't be economically extracted. But if there was very very cheap and plentiful energy from fusion, then mining the oceans for a lot of minerals would be possible. Re-processing / cleaning up a lot of wastes will be more feasible with very cheap energy, too, similarly with sequestering carbon directly, there are methods available they're just extremely energy inefficient.
Next step from there is to use technology to harvest asteroids and get off world.
You are confusing descriptions. Cheap in terms of keystroke-issued debt? Who cares? Keystroke some more - it wasn't going to be paid back anyway....
Cheap in terms of the energy it takes to get the energy? That's the real count. And on that count, we going backwards at speed.
https://surplusenergyeconomics.wordpress.com/2021/08/10/208-a-path-of-r…
Read it without your money ideas - just think of energy. Fig2 is a doozy.....
Your avoiding the point. Where does your ideology lead you in a world with Q10+ fusion reactors. We’re only limited by seawater. Present debt becomes irrelevant at that point, due to the economic growth resulting from such an energy abundance.
Hell, even fission would’ve done the job, had it not been kneecapped by luddite boomers.
I think fusion could solve two problems (energy and co2 production) but just create new ones.
Imagine we had essentially free unlimited energy (in money and energy terms), what would happen?
We'd burn through other resources even faster, a sort of Jevons paradox effect.
The thing about unsustainabilty is that by definition it can't continue, and we are living unsustainably on many levels, not just co2 and energy.
Pretty much.
Gaya Herrington - and KPMG should have some kudos in growth-forever circles - did the latest in 50 years of longitudinal study; it's the best-fit over the longest-time the planet has ever seen, prognostication-wise.
And the person who had to plagiarise my pen-name, doesn't get EROEI - or energy, really. Entropy, all that. Probably fear, underneath it all. And no doubt a life-story attached to the departing narrative.
Free energy would utterly transform the economy, to the point that most material constraints would be irrelevant. One immediate obvious example being fresh water.
Tautologies around the word unsustainable aren’t relevant to the physical world. Sustainability shifts with technology
Population growth is just a natural response of any species that can adapt to exploit the resources in front of it.
Suggesting that humans are a smarter species than all others and could have planned a way forwards otherwise is obviously wrong going by the evidence.
Economic growth =/= money. It’s doing work to achieve more favourable physical arrangements. It’s information (in the technical use of the word).
“Do less and you’ll last longer in a closed system”, perhaps, but it is an open system, with a flux of energy from the sun, giving rise to complexity, or a local reversal of entropy. Even as a closed system, there is no shortage of energy on earth. We’ll eventually graduate to nuclear energy, just as we did across the spectrum of fossil fuels (lignite in a steam engine -> natural gas in a combined cycle plant).
Technology not only reduces draw down, but allows resource substitutions. Name a single resource we’ve ever run out of.
Agriculture was driven by necessity, as you say, but it allowed for a higher population without any fossil fuel input. One again, you’ve arbitrarily picked exploitation of fossil fuels as the only relevant resource/technology.
Haber Bosch uses fossil fuels, as do most 20th century industrial technologies. That’s not the point. It will be replaced by information/biological technology in this century.
He suspect he would’ve repented long ago, had he lived a couple hundred years longer.
Name a single resource we’ve ever run out of.
Having just read "scarcity" by clugston... coal, copper, tin in the UK. And many other resources regionally. The trouble is weve run out of new regions to plunder.
https://commons.wikimedia.org/wiki/File:UK_Coal_Production.png
Learn what? The fringe literature you lob at any objection to your bizarre ideology. I’m familiar with the collapse cannon. I grew out of that stuff long ago.
And mantras? You’re the one quoting your prophet. It was a reasonable idea 200 years ago; not now. How many predictions of famine and societal collapse do we have to blow past before you people cheer up. At least Erlich had skin in the game.
The UK hasn’t even run out of those resources, let alone the world. And you’ve picked a small island which led the industrial revolution. And if you care to look at a graph which isn’t 10 years old, you’ll see coal is virtually gone from their energy mix.
But you missed the point. Industry moves on to more abundant resources and efficient technologies long before we run out of anything.
Sorry, yes, i did kinda misread your comment.
But I still think you're being a little optimistic (and maybe I'm too pessimistic..). Efficiencies always run up against the law of diminishing returns (see light bulbs) and eventually there'll be no more "abundant resources"
You have to be a special kind of stupid to allow the exchange of some clown money today for locking land FOREVER as trees.
Robbing future generations is the kiwi tradition.
Growing trees is the kind of solution that would come from braindead hippies. If you want to capture industrially emitted carbon and industrial solution like direct air capture is required. Trees aren't going to do jack.
Perhaps you'd be able to provide a link to a direct air capture method that is as efficient, cost effective and attractive as a tree? The USA mooted such a method , (and it would be great if it existed), but has been deadly quiet about it ever since. They have since released plans to plant a trillion trees.
Yeah apart from soil carbon sequestration - but we don't pay farmers for that - and where is the virtue signal in something you can't see.
The other thing better than trees is tropical tree plantations for a fraction of the price. For example Brazil has a million ha of eucalyptus planted for charcoal, to replace coking coal, for negative carbon pig iron. If one is fixated/deluded on saving the planet with carbon sequestration invest in those much cheaper projects and the money saved could be spent on hospitals here - but where is the feel good in that.
Eucalypt forests, typically short rotation, are very common across South America. Those investments have been going on for a long time and if used for biofuel or similar then it can be argued that the overall project is carbon neutral. But that is different from actually sequestering significant quantities of carbon. And eucalypt forests have the same categories of cost such as planting cost and the opportunity cost of land as do pine forests in NZ. Eucalypts actually grow very rapidly in NZ also and deserve a closer look as to what their role could be here in NZ.
KeithW
Eucalypts can also be coppiced , and the tops used for fuel . Oringi freezing works had a plantation , that treated theiir waste , and fed the boilers. This probably doesnt fit the current scheme , but i expect it will be refined to allow for calculating the actual carbon net effect. I.e 1/2 credits for a coppiced tree , given 1/2 of it is probably still ni the ground and growing.
Eucalyptus forest have the same categories of costs as NZ - apart from much cheaper land and labour costs which are quite significant. The other kicker is that tropical hardwoods have significantly higher growth rates than NZ softwoods. So if even if you argue the cost is the same - which they are not - the output is much higher. More bang for your buck. All we seem to be interested in here is more buck. Brazil is streets ahead of us on genetic improvement and NZ is very prone to Oz eucalyptus fungi etc blowing across the Tasman so a risky proposition. If you are going to grow trees to save the world why on earth would you do it in NZ.
Substituting coking coal for plantation charcoal is different to sequestration how - the coal stays in the ground and you end up with negative carbon pig iron. As a handy bonus you can generate electricity from the charcoal blast furnace. What's not to like.
No, you cannot get credit for leaving the coal in the ground. But you do get a carbon debit for taking the coal out.
Biofuels (excluding fossil fuels) can count as carbon neutral but not as sequestration. NZ is itself moving in a significant way to biofuels.
If NZ companies were to grow trees in say Brazil, then those companies could earn the credits and convert to cash. But at a national level the credits would still go to Brazil. One problem with growing trees in Brazil to save the world is that you are asking someone else to do that saving. National, Labour and the Greens (and possibly other parties) have all decided that we too need to do our share of saving.
KeithW
Keith you can do carbon offsets under the Paris Agreement. Switzerland and Peru have already done so. So no the credits wouldn't remain in Brazil as you suggest - the framework is there to do things much more efficiently.
If we want to be all high horse and keep it in NZ then why are we importing electric cars? Under your Nat/Lab/Green logic should we not be building them here?
It is really stretching things to suggest keeping a barrel of oil in the ground in Saudi by using an imported electric car in NZ is saving the planet but keeping a tonne of coal in the ground in Indonesia by using plantation charcoal as a pig iron reductant isn't saving the planet.
And I might add you can't really conflate biofuels with a charcoal based reductant.
Who has ever claimed that carbon credits could be claimed in both countries - surely you can see that the country that can most efficiently sequester carbon should be doing so. Why are people so hell bent on putting pastoral farming on the pyre in NZ - when there are better solutions out there that save us money and keep our export industries intact.
The Chicken Littles are not acting like it is an emergency - just talking like it is one and making bucket loads of other peoples money in the process.
Keith, I'm interested in your thoughts on the long term value of permanent carbon forest land, once it has reached a steady state where carbon losses through decomposition balance forest growth. Seem likely this land will have zero value, once it is no longer sequestering carbon. What follows from this; gutted rural communities, increased pressure on urban centres as a result of a rural population moving to larger cities , loss of sheep, beef and forestry exports, a collapse the rating base for rural local government areas as carbon forest landowners abandon their now non returning assets. Is this potentially the biggest social and economic upheaval for NZ since European settlement ?
Yes, if you bury a tree deep enough it will take a very long time to decay. A couple of years ago I visited a property in the Southern Waikato where there were trees that were killed and buried by ash from the Taupo eruption close on 2000 years ago. It would require a great deal of bulldozing to do as good a job as what nature did.
KeithW.
Redtussock,
Yes, the long-term value of that land under pines relates only to its value as an ongoing storage for carbon. The pines should grow for at least 80 years with carbon credits continuing to accumulate until then - unless hit by fire or some pest that sneaks in from the Northern Hemisphere. Accordingly, those who think beyond 80 years might argue that planting the land in pines is actually a short term solution that leaves nothing for our 'children's children's children' (with due acknowledge to the Moody Blues). Something to think about.
KeithW
Our generation(s) are doing that to them, orders-of-magnitude worse, daily. Every litre of Fossil energy you burn, they can't.
Ever.
And all you're talking of, is a bit of land you covered to cover your ass, which you stole from them? It's true, but it hardly rates.
Surely there's a limit to this, but I do wonder where it is. If enough land is converted to forests for the carbon credits, the price will stabilise or even fall. Then you might have the double whammy of speculators from the last auction realising they're not on a sure thing and dumping some of their credits onto the market.
The other side of the equation is that we reduce our carbon output to the point where we meet our Paris obligations. Or it is more economic to reduce emissions than plant trees. At the moment , it seems that even $ 100 per unit may not be enough to make that happen. But who knows . At the moment everyone is obsessed with Huntly and Fonterra burning coal ( which is far from ideal ), but the elephant in the room is our transport systems carbon emissions. The huge changes required there are not politically achievable at the moment. And then we can expect the international community to grow the balls to tackle international air travel and shipping. That has huge implications for NZ's tourisim and citizens expectations to be able to pop over to Europe for a wedding. Not to mention our trade.
Anyone who thinks our current efforts are an over reaction are dreaming . This is the future , like it or not.
The problem then becomes that some companies are also purchasing the credits as genuine risk management strategies in regard to future liabilities. And many foresters are holding their credits they have received as a risk management strategy that they might need at harvest time. So yes, limitations could be imposed but that would have implications. There would probably be a flood on the market and the price would crash, just as happened back in around 2012 with the Ukrainian bogus credits. It has taken close to ten years thereafter to get even the semblance of a functioning ETS. Nothing is simple.
KeithW
They could restrict sales to companies that have some need for the credits. I.e forestry , manufactering and energy companies. Other companies would be restricted to the number of units there business would need.
A simple requirement would be for them to be gst registered , which would eliminate investment companies and oversea buyers .
Broken record here
Permeant radiata forests will be controlled - Ill put a bet on that
We don't know who bought the carbon in the last auction. What we do know is it will motivate coal users to stop very quickly.
Talking to financal market players, some very experienced, they see no problem in the price movement.
Yes the economics are over whelming - but we are completely limited by seedlings and labour - 25 - 30,000 ha a year will be maxed out.
Farmers own the land - they will decide who they sell it to or start to participate themselves. This is the first time they can practice good land use planning on harder areas i.e. they can make money of them. Look at those poor ones in Southern Hawkes Bay and comments in the Herald last week - the warming climate makes it not feasible to farm there now.
I can also see controls put on exotic forest being allowed to go into the ETS once we get the CCC 380,000 ha - a small fraction of the farming estate.
If farmers are worried - take control - step up and say we will plant 200,000 ha in 15 years leaving 180,000 ha to be done on larger scale so we can get scale for timber, biomass, biofuel etc. Be proactive for once - its profitable!!!.
Personally as the price goes up so fast I would be very wary of permenant forests - 50 years is a long time. The best cure for high prices is high prices.
The bigger threat may come from biomass requirements - with no coal and electricity too expensive they need something - you need to a lot of trees and we either plant a lot more (not for carbon so the ETS doesn't matter) or stop supplying logs to China. As the largest exporter of logs to China they will react (Price) so you will need large new areas. Theres a RFP out in Waikato on biomass (Guess who!!) now which makes the pulp mill in Tokoroa look like a childs tea party.
The times they are a changing.
Jack,
I am sure you are correct in saying that some financial market players see no problems with the high prices. They love the opportunities it creates for them.
There may well be limits put on permanent forests. Those regulations will probably be both complex and brutal. They are likely to create some big winners and losers. In fact some huge winners.
If regulations are to be put in place, then the sooner the debate occurs the better. In essence it will be a situation of removing some existing property rights.
Your bet in regard to regulations is an acknowledgement that the current system is highly problematic.
I agree that lack of seedlings will be a big issue in the short to medium term. But supply can in time be ramped up.
I doubt whether we will be exporting logs to China in 20 years time. I expect that they will be self sufficient by then. However, I do expect they will still be buying meat and dairy.
I agree that biofuel could become a very big industry.
Please note that I am not arguing against forestry. However, I do believe, like you, that times are a changing. And I do believe that we all need to better understand the changes that are afoot.
As it stands, some of the changes that are occurring are very good for pastoral landowners. They are and will be, under current settings, the beneficiaries of increasing land prices as the pine trees march across and the country. But a major reduction of the sheep and beef industry is not necessarily the best national outcome. And if it is to occur then it is best that it it a consequence of well informed and carefully considered decisions.
KeithW
If regulations are to be put in place, then the sooner the debate occurs the better. In essence it will be a situation of removing some existing property rights.
Yes. But is there really the time to debate? Sometimes regulations just need to be enacted by executive fiat. But, of course they have to be the right regulations for our collective future as a relatively isolated island nation with a small population and a growing set of problems between the haves and the have nots.
In my observation, property rights often get in the way of best outcomes for social/intergenerational equity.
Thanks Keith
Im certainly not saying you are anti forestry - I think its a good discussion.
I do differ on some things.
1. I don't see China ever being self sustaining in wood - demand and mix will change but from being in the game their is no way they will be self sustaining - just like milk and meat.
2. We are assuming that sheep and beef farming is all profitable. What I see in the flesh out there is that its not. 60% plus of Farmers are struggling to make any true profit - its a lifestyle - Drawings are not profit. This is backed up by what accountants, bankers (I cant repeat what they say!!), farm consultants and the farmers all tell me. The decrease in animal numbers over the last 30 years clearly shows this - we need to be honest its not working for a large proportion of farmers and in many regions the climate is now making it worse.
3. I agree there will be winners and losers in whatever controls come in - but whats new in that - NZ has a fine history of creating those situations and its almost unavoidable. We have that now in some regions where water controls to keep irrigators going mean hill country farmers aren't allowed to plant any trees. Grandparenting nutrients - Ive been at some very tense meetings between irrigating farmers and hill country farmers - the list goes on.
As a result its not that problematic - its requires a bit of thought. Its not to hard to see some of the changes coming - first in first served, existing rights, Permenant on Class 7 and only 25% of a property etc etc.
Farmers are the biggest beneficiaries from the ETS so far - land values and a pool of willing buyers. We can debate whatever we like about exports, national outcomes but for the poor farmer on the ground making no money its a relief to be able to actually get the tax free capital gain and escape. The kids aren't interested and if some are they don't have the money to do it plus pay out the other kids because theirs no profit. I have seen the relief on so many faces when they sell and can leave to move on. Others have started planting and are now making true profit and still farming - the choice is the landowners and now they have a choice to become truely profitable.
I don't see pine trees marching across the country - we still arent back to the area we had 10 years ago. The only things thats marched across the country is intensification of landuse in farming. 400,000ha of new tree planting - which will take 10 - 15 years - is not large.
Finally we are all working under the assumption that BAU carries on ie we keep farming animals and trees - what if we find its more imperative to lock up carbon? For Humanity this may become a bigger requirement - Im sure some commentators here would agree with that hypothesis and if you look at the IPCC report and other research it maybe the case.
Jack
I agree with you that hill-country farmers - or at least those who choose to sell their farms - are currently the big beneficiaries of the ETS.
Linked to this, not all hill-country farmers are going to agree with the perspective taken by Beef+Lamb. The majority might disagree if they had the full information.
If by BAU you are referring to the current ETS, then there are some big windfall profits to be made. And by 'windfall' I do not mean trees that fall over!
My understanding (subject to updating) is that China is about 83% self sufficient for timber. I would welcome new and more precise data on that. My current assessment is that in the next 15 or so years they will achieve self sufficiency apart from some specialty timbers.
KeithW
BAU I mean in a different context - simply that we are all carrying on exporting, making money (well trying!!), ETS etc etc. What if the climate becomes an even bigger issue and the need to store carbon overrides current economic uses? All our discussion if this was to occur becomes rather moot.
ETS - yes some people will/are/have made a lot of money but since people have lived greed has achieved many things - good and bad. It seems often to be the only thing to change behaviour. Up to date all we have had is conferences, papers, discussions to let everyone avoid them or their group having to do anything as "its not our fault" - still ongoing really. The ETS is now causing change as it is intended to do - there will be winners and losers but no one should be surprised as its been forecast for so long - no one believed anyone would have the gall to actually do anything.
China - based upon what I see from visits there, our customers, demand, reports and multiple projections from people I believe have a handle on it. Of course I could be totally wrong just as animal meat and milk may be produced from other means in 20 years.
We all live in hope someone will want what we produce tomorrow in NZ.
JL - well put. In my circles we call it a human predicament, not a human problem; the latter have solutions. This only has best-of-a-bad-lot-of-cards-to-play. All things will now impact all things, exponentially. It's impossible to see the minutae, but globalism has peaked, the efforts to continue Growth are more and more artificial (and debt-increasing) and we're misdiagnosing much - house prices, material availability, for instance - en route. I'm picking global wars over what's left (no nation is self-sufficient in resource terms) and financial collapse. Which comes first is an interesting question.
We can't do much about either, but we should be asking how we can support ourselves in those situations? And we should be looking to long-term NZ self-sufficiency (physical) while managing whatever quality of life we can (consumption won't be such a factor). Rehabilitating the landscape we raped in less than two centuries, should be a part of that - which is kind of why I prefer to plant natives.
Thanks again, Keith - all great reading/insights.
I like the photo choice: One way, dead end.
This carbon conundrum is a bit like the accommodation supplement - how to unwind a broken market approach that only serves to fuel the fire?
James Shaw seems to be in denial in terms of his media statements on it
The other Interesting issues about permanent radiata forests revolve around fire and needle blight. The former quickly wipes the 'permanence', the latter presumably ditto but more slowly. Monocultures are very susceptible to diseases as they by definition make a massive target.......think dothistroma
Edit, oh, and wind. The '75 windstorm wiped out a couple of large Canterbury forests....
Permanent, much?
Yes, the Canterbury Plains are definitely not the place to grow pine trees. Every 20 years or so a big wind storm comes along and tips them all over. Most Canterbury soils are very shallow. And yes, there have been some very big fires over the years. Probably the biggest one was in the Amuri in 1955. Here is a link to a detailed report on it. http://nzjf.org.nz/free_issues/NZJF07_5_1958/66DA88BE-E7B0-40F2-91C7-73…
Insightful as ever Keith. I think the farmers will soon wake up to the fact they don't have to sell their farm to participate in this . At that point unfortunately resistance will fade away. And the complaining will be about the shortage of baby trees and planting gangs.
I do not understand why we are so tied to plantation forestry to deal with these issues . The rest of the world seems to be more concerned with energy and biomass crops . The NZ arable industry seems to be hamstrung by not having any levy funded lobbiests in Wellington .
Stanhay,
Farmers are rapidly becoming aware. Most do not have the ready cash to buy and plant the seedlings except for small areas.
Most of NZ is not suited to arable farming on account of the mix we have of soils, topography and climate. For most of NZ the options are either pastoral farming or forestry.
KeithW
In an article published in Rural News 7 Sept, Jacqueline Rowarth quotes journalist Mark Schapiro from his piece entitled " Conning the Climate" in Harpers magazine in 2010. He wrote " the carbon market is based on the lack of delivery of an invisible substance to no one " .He made the point that commodity markets required the delivery of something in physical form, whereas carbon trading does not. The whole carbon market is a political construct which exists at the whim of its authors. A change in the political mindset of those authors could see a change in the workings of the market. "The ( Lord) giveth, the ( Lord) taketh away, blessed be the name of the (Lord)".
Excellent article Keith. We don't want to lock up land in perpetuity, but instead encourage harvest into long-lived wood products with residue used as energy. The incentives are all a bit wrong. Ideally wood should be replacing steel and concrete, but as you say the price of carbon is insufficient to change consumer behaviour but high enough to change land use. Much will depend upon how our trading partners price carbon.
One of the barriers to farmers participating in this financial saviour/bonanza is the banks treatment of carbon income.
My bank will not lend money based on future carbon income and actually reduce future farm income for debt servicing as land shifts from grassland to trees.
So the game is only for the corporates or multi generational farm owners with no debt requirements.
Farmers such as myself only have the option of selling into this market.or continue as beef farmers as forestry surrounds us. .
No idea how viable something like this is in NZ.
https://www.youtube.com/watch?v=nXophqU-rp4
Manuka can be planted by laying branches down over large areas, helped DOC with this once. Maybe spreading 1000 of seeds is viable , if you get 10 % strike , that is a start .
It may surprise you but some farmers prefer sheep and beef systems to dairy farming. The artificial construct of carbon credits is wiping out tangibles through artificially inflated land prices and subsidies. Did we not learn our lesson with SMP's. Though at least with SMP's rural communities were kept intact.
I'm sure there are many that would prefer sheep or beef . My point is they Cannot borrow money now , because of the low profit/ capital ratio , that Keith has calculated for us in these articles.
If Carbon returns were accepted by the banks it gives them a chance, I would think . But banks are very risk averse with any productive enterprise . Property , risk is no problem at all. The more likely to hassle you for not been ambitious enough.
It's called market forces profile, regardless of how they come about. More land was converted to forest in the 90s with only the prospect of harvest, carbon was not on the radar. It also gave many hard pressed farmers an oppertunity to exit uneconomic circumstances. There are many different land uses and not all of them may suit your perception.
The Government interferes in all markets just by imposition of legislation. We all want a fair playing field, where all sectors are sustainable and none are polluting without mitigation or penalty. We aren't going back to the Little Ice Age, we are already at +1⁰C above the 20th Century mean and temperatures will continue to increase until net greenhouse gas emissions are reduced to zero.
Too right we aren't - and if you were honest with yourself planting all of NZ in pine trees won't make a blind bit of difference to global climate.
If the government interference was achieving something worthwhile I could support it. All this is doing is making the landed gentry, and hangers on, wealthy at the expense of exporters.
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