6 Future directions: emissions and sequestration from land use and other greenhouse gases
In New Zealand, agriculture produces the highest total greenhouse emissions of any sector, producing around half of New Zealand’s total GHG emissions (New Zealand Climate Change Office, 2003). Most of these emissions are land-use related, primarily through animal emissions of methane and nitrous oxide. In contrast, the forestry sector is a net ‘sink’ of carbon dioxide; growing forests absorb carbon dioxide. The main opportunities for reduction in GHG emissions related to land use are from potential carbon sequestration through increasing forestry and reduction of emissions related to ruminant animals and nitrogen fertiliser use.
6.1 Carbon sequestration in plantation forests
Plantation forest currently covers around 7% (1.8 Mha) of New Zealand’s total land area (Ministry of Agriculture and Forestry, 2004). Pinus radiata makes up 89% of planted area, and has an average rotation length of 27 years (New Zealand Forest Owners Association et al., 2003). In 2000, the average carbon stored in the New Zealand plantation forest estate was approximately 100 tonnes per hectare (New Zealand Climate Change Office, 2003). MAF estimates that around 640,000 hectares of forested land are Kyoto forests, but who owns Kyoto forests is not clear (Ministry of Agriculture and Forestry, 2004).
PA Consulting Group (2001) estimated that over 9.4 million hectares of land is suitable for forestry (although this is not a prediction of likely conversion). The Forest Industry Council envisions 4 million hectares will have converted to forestry by 2025 (New Zealand Forest Owners Association et al., 2003). However, new planting rates have been falling since the mid 1990s. Without an incentive to increase plantation area, New Zealand may become a net source rather than a net sink (Te Morenga and Wakelin, 2003).
No comprehensive instruments have been introduced to encourage the planting of harvestable forest. Current government policy is focussed on the development of a “Forestry Industry Framework Agreement” which includes assistance for regional and industry development, including marketing and skill development (Ministry for the Environment, 2004). The government has agreed to accept full liability for deforesting or harvesting Kyoto forests (forests planted on previously unforested land after 1 January 1990), and liability up to a specified (10%) cap for non-Kyoto forests for the first Commitment period (Hodgson, 2004a).
The gains to any instrument could be large relative to the costs. Forestry sequestration is a relatively simple process for limiting the increase in atmospheric levels of carbon dioxide (IEA Greenhouse Gas R&D Programme, 2004). The most feasible option for landowners would be to simply convert marginal pastoral land to forest.[13] Reforestation on marginal land would also have secondary environmental benefits through reduction in erosion and flood risk.
The ‘point of assessment’, who has the right to earn credits and bears liability for loss of credits, also needs to be decided upon. In New Zealand, ownership of forest and the land underneath the forest can be separated. The land owner and forest owner are separate entities for at least a third of New Zealand’s forests. Information on who owns the land and who owns the forest is needed before deciding who should gain credit and where liability should be placed. Grand-parenting of credits to either forest-owners or the owners of the land the forest stands on would involve huge one-off transfers of wealth so if the point of assessment is linked to the way credits are grand-parented, as is likely, this is a critical distributional issue. Kerr and Brunton (2004) discuss this in detail.
Plantation forest area is relatively easy to monitor and can be achieved reasonably cheaply with the combined use of satellite data and ground truthing (Kerr et al., 2004). Alternatively, forest information could be self reported by landowners (or forestry companies). Because the rotation length of plantation forests is long, on average 27 years, and incentives to harvest early are weak, costs could be reduced by monitoring at longer time intervals without much reduction in environmental integrity. Abstracting carbon sequestration information from area measurements is possible using models being developed as part of the national inventory process.
However, some data gaps would need to be addressed. The carbon models rely on age-class information and this is lacking. This is a one-off problem, as once the initial age-class structure is known, ages will be able to be inferred from future satellite pictures.
Optimally, marginal pastoral land would be converted to forestry. These forest blocks would likely be small. Currently, small blocks of less than 1000 hectares, comprise around a third of the total planted area (Ministry of Agriculture and Forestry, 2003). The scattered nature of these kinds of blocks would create costs in terms of government having to deal with many farmers. Monitoring/measurement issues would also arise because of limits in satellite identification of small blocks. Satellite measurements would not create any environmental integrity issues as any error should not be biased nationally, but there are possible equity issues at the local level especially with errors exacerbated when measuring changes (New Zealand Climate Change Office, 2003). Local, on-the-ground measurement would increase administration costs and may induce bias, but may be worthwhile when carbon dioxide prices are high and hence equity concerns are important.
Environmental integrity may be lost if plantation forestry is rewarded but scrub reversion is not. Around 6,000 hectares of scrub was cleared for new forest planting in 2001 (New Zealand Climate Change Office, 2003). Marginal land that might have reverted to scrub without a reward may be converted to plantation forestry in response to a reward, with no environmental gain or possibly even environmental losses.
6.2 Carbon sequestration in reverting indigenous forests
Around 2.6 million hectares of land in New Zealand is estimated to be reverting to indigenous forest (Ministry for the Environment, 2000). Potentially, if all marginal pastoral land currently containing scattered manuka/kanuka (or “scrub’) were converted to fullcover shrubland, about 4 million tonnes per year (Mt/yr) additional total carbon could be sequestered (Whitehead et al., 2002). Kerr (2003b) estimates a potential yield of up to $117 million annually from forest reversion. Additional environmental benefits include erosion control, flood risk reduction, biodiversity benefits and cultural benefits.
Land-owners’ options range from abandoning land in response to a policy and allowing it to revert naturally (as a result of its own seed bank), to actively managing it, including fencing it off and removing pests to optimise carbon storage.
Current government policy for rewarding reversion is covered by the proposed permanent forest sink mechanism where landowners would be rewarded for increases in carbon over Commitment Period 1 (CP1), 2008 – 1012, subject to the landowner covenanting the forest for permanent protection (Hodgson, 2004b).[14] Other forestry protection mechanisms exist, such as the QEII National Trust and Nga Whenua Rahui under which land is covenanted for 25 years then there is a renewed kawenata (agreement) with landowners (Kerr, 2003b).
Carbon returns from indigenous forest are unlikely to be sufficient so that indigenous forest will displace plantations or agriculture on land where these are good options, but will be relevant for encouraging reversion on unused or bare marginal land. Most marginal land is found in poorer rural areas such as East Cape, Northland and Taranaki (Kerr, 2003b). Allowing reversion to indigenous forest could become profitable on this land, particularly if carbon returns are combined with other scrub related industries, such as manuka honey and pharmaceuticals (Harmsworth, 2003).
Some commentators have suggested that farmers may be reluctant to let land revert because they may lose the option-value on that piece of land, fearing that the government may not allow them to clear it in the future if changes in prices or costs mean it becomes more productive (Kerr et al., 2004). This suggests that there needs to be an opt-out option in any policy that is implemented.
It would be difficult to reward only land that would not otherwise be protected (Kerr, 2003b). In the absence of carbon dioxide credits, indigenous forests are not protected for profit. The complexity of the issue suggests that it may be best to be overly generous and reward all land newly protected after a certain date.
The scattered nature of marginal farmland may mean that monitoring, measurement and administration costs will be high. Government would have to deal with many owners/farmers over a large area. Small scattered plots are harder to measure by satellite, and error would exacerbated when rewarding changes in areas.
The gains from a policy for reverting forest may be large, but the costs of full integration into a permit system may be significant. Therefore, in the short term, temporary measures such as subsidies or tax breaks for newly protected reverting scrub may be preferable to a comprehensive instrument.
