KEY POINTS:
One of the ruder shocks to the public coffers this year sprang from the trend of switching land from forests to pastoral farming when trees are felled. Officials warned deforestation could double the extent to which New Zealand fell short of its target under the Kyoto Protocol, creating a potential liability of hundreds of millions of dollars. The forestry statistics made grim reading. It was estimated that 7000ha of forest felled last year would not be replanted - 18 per cent of the area harvested - while only 6000ha of new forest was planted.
"It is clear," Forestry Minister Jim Anderton observed, "that the current policy does not send strong signals to encourage landowners to keep their land in forests and establish new forests."
His response, in tandem with Climate Change Minister David Parker, has all the subtlety of a tumbling monster pine. Their draft land use strategy, released yesterday as the final plank of the Government's global warming response, is said to mix incentives with penalties. The sticks, however, are extremely weighty, whatever criteria are associated with the need to increase the number of trees planted in order to offset carbon emissions.
One of the proposals would see forest owners fined if they cut down trees and did not replant the land. Government officials have suggested $13,000 a hectare would be enough to stop conversion to pasture. And just as forest owners would be penalised for not planting trees that suck carbon dioxide out of the atmosphere, farmers would be penalised for replacing them with methane-belching cow.
A flat charge would be proposed on any agricultural emissions created when land was converted from forestry to agriculture. Another proposed Government mechanism is a national deforestation limit.
Such measures have a surface allure because of their simplistic approach to a complex issue. But they disregard the fact that deforestation reflects, in part, the strong prices being realised over the past few years for dairy products and meat, and the weak market for forest products. In other words, landowners have been making rational economic decisions. The Government's heavy hand could send a wayward signal to the agricultural sector, the ongoing mainstay of the national economy.
Unsurprisingly, the draft strategy's proposals have drawn a stinging response from forestry owners, in particular. They have been in dispute with the Government since being denied the value of the credits created under the Kyoto Protocol when new plantations were established on land not previously forested. There is surely little point in encouraging further antipathy by imposing penalties that would devalue much forestry land, and encourage the bulldozing of forests before they took effect.
The Government's emphasis should, therefore, be on fine-tuning its proposed incentives. These include the owners of new forests getting some recognition of the value their trees create through a tradeable permit regime. There is also a proposed afforestation grant scheme, and financial incentives to encourage the use of nitrification inhibitors. The latter would be offset by a charge on nitrogen fertilisers.
The Government must recognise that encouraging investment in permanent afforestation will entail a cost. The proposed penalties suggest it has yet to accept that. It may be too late to have a drastic impact on New Zealand's fiscal liability for 2008 to 2012, the Kyoto Protocol's first commitment term. Before any progress can be made, relations must be repaired. That will be achieved by carrots, not the straitjacket of market-distorting dictates.
