KEY POINTS:
The Government has detailed how its preferred option for dealing with the climate change consequences of deforestation might work.
But the document, Design Options for a Tradeable Deforestation Permits Regime doesn't give forest owners an indication of what costs they would likely face.
The forest owners say any cost is unfair if it only applies to one side of the equation when land use is changed - for example, the decision to get out of forestry but not the decision to get into dairying.
And they argue it is inefficient if it locks land into a use that made sense when trees were planted, perhaps 25 years ago, but might no longer be the best use of the resource.
"The general sentiment of 'polluter pays' is one we strongly support," Forest Owners Association chief executive David Rhodes said.
"It's unfortunate that at the moment we are looking at this as penalties that would be applied to forestry, when what we are talking about is land use conversion. Land use change per se is not something we should be trying to stop, but we do want to make sure that all land users face the true cost of what they are doing. At the moment, there is a massive pull from forestry into dairying in some areas, with land prices for dairying not reflecting their cost on the environment."
The Government's problem is that it has promised the farming sector there will be no price-based measures to curb emissions applied to agriculture before 2013.
It has been surprised at the extent of deforestation in recent years and the indications from surveys that these historically high rates are likely to continue.
Deforestation creates a national liability under the rules of the Kyoto Protocol, currently estimated at $650 million.
Since 2002, the Government has indicated there is an upper limit, which it has put at 21 million tonnes of carbon dioxide, on the deforestation liability it is willing for the taxpayer to bear. Current estimates are that actual emissions arising from deforestation will be about twice that.
Forestry Minister Jim Anderton said 75 per cent of the deforestation expected during Kyoto's first commitment period (2008 to 2012) was expected to be in the central North Island.
"It will be carried out by a small number of corporate investors, while the overwhelming majority of forest owners still intend to replant their forests - more than 80 per cent on the latest information," he said.
The forestry industry was united its opposition to the policy, Rhodes said, as, regardless of the level at which it was set, a deforestation tax forced forest owners into a three-way dilemma: they could cut down their trees prematurely and change land use before 2007 to avoid it; they could change land use after 2007 and pay for doing so; or they could continue to grow trees on possibly unsuitable land.
Kyoto Forestry Association spokesman Roger Dickie said more than 700 people had attended the ministry's consultation meetings held so far.
"In more than 30 years in the industry I have never known such turnouts to industry events and I've never seen such anger against Government policy from the grass roots."
Anderton said deforestation had an environmental impact over and above the greenhouse gas emissions involved, such as increased risk of flooding and nutrient run-off into rivers.
"Private property rights have never given people the right to pollute the commons," he said.
PUTTING A CARBON COST ON TREES
What is the object of the exercise?
Under the rules of the Kyoto climate change treaty when a forest is felled and the land use is changed to pasture the country has to pay for the carbon in those trees, which is deemed to be emitted to the atmosphere. That deforestation liability will be about $650 million by 2012 on current estimates. The Government is ready for the taxpayer to bear some of it, but it wants the relevant landowners to bear the rest. The forest owners say it is a retrospective tax that could lock some land into forestry that would be better used for something else.
Would it apply to all forests?
No, only those planted before 1990. And then only if after harvest the land is not replanted in trees or left to revert to native bush. Small plots - there is no indication yet of how small - are likely to be exempt.
How would it work?
Owners of forested land to which the scheme applies would be allocated permits either free or at a subsidised rate. If they want to deforest they will need to buy more, from those who are willing to replant and don't need theirs. There is carrot here as well as stick.
What are permits likely to cost?
It depends on how "short" the market is, i.e. the balance between the demand for permits and the supply. That will depend on how much land is deforested - the current estimate for 2008-12 is about 44,000 hectares - and on how much the Government is prepared to pay for. In the past it has indicated it would be just over half that. And it depends on the world price of "carbon" or tradeable permits to emit greenhouse gases, since deforesters can use them to meet their liability, which puts a ceiling on the price of local deforestation-specific permits. Those are all unknown at this stage.
