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Some of the country’s largest exporting companies have joined forces to seek changes to the proposed Emissions Trading Scheme (ETS) that they say will encourage the planting of more than 800,000 hectares of seriously eroding hill country land.
The Flexible Land Use Alliance, launched in Wellington today, consists of Blakely Pacific Ltd, Carter Holt Harvey Ltd, Fonterra Co-operate Group Ltd, Forest Enterprises Ltd, Landcorp Farming Ltd, the New Zealand Forest Owners Association Inc., PF Olsen Ltd and Wairakei Pastoral Ltd.
It says proposals to impose massive retrospective liabilities on owners of land planted with trees prior to 1 January 1990, who want to convert their land, have devalued forestry land throughout New Zealand and had a chilling effect on confidence to plant new trees.
The liabilities, which were previously thought to be around $13,000 per hectare, are now feared to be as much as $65,000 per hectare, depending on factors including future prices of carbon and the value of the New Zealand dollar. A conservative long-term average is likely to be around $20,000 per hectare.
The Alliance says that with such massive liabilities proposed for landowners converting their land, no one will be able to do so, freezing up to 1.2 million of land in forestry forever, regardless of whether or not that is the highest and best use of that land for New Zealand, economically or environmentally.
At the same time, fears of the retrospective liabilities are deterring the forestry industry and other land owners from planting the more than 800,000 hectares of seriously eroding hill country land which is not currently in forestry but for which forestry is likely to be the highest and best use.
The Alliance’s spokesman, Ross Green of Wairakei Pastoral Ltd, said it believed the best solution was for the Government and Parliament to make clear that forests planted before 1 January 1990 would be excluded from the ETS.
He said that would avoid Parliament establishing the chilling precedent that it would impose massive retrospective liabilities for economic activity carried out more than 18 years ago and, in some cases, more than 90 years ago, when today’s trees were planted.
It would also maintain the important principle of land use flexibility that has been the backbone of the New Zealand economy for more than 100 years, and prevent climate change policy from becoming embroiled in costly and protracted disputes in the Waitangi Tribunal.
He said that if New Zealand had not been flexible in its use of land over the last 100 years it would still be over-producing frozen lamb carcasses for the British market and the volumes of coarse wool demanded during the Korean War.
“Land use constantly evolves as market demands change and it’s essential we maintain the principle that our land should be used for the highest and best return, taking all factors into account including environmental factors,” Mr Green said. “Whether we are talking the rise of successful, innovative niche industries like wine, deer or kiwifruit, or growth in global powerhouses like contemporary dairying, New Zealand has always responded by changing the proportion of our land devoted to different industries. That must be able to continue if we are to maintain and improve our standard of living.”
Mr Green said it was also essential the highest and best returns were achieved from land use in order to ensure primary industries were profitable enough to be able to constantly reinvest in environmental maintenance and development.
The Alliance accepts that, despite its opposition to pre-1990 forests being included in the ETS, it may eventually be determined that they will be. In that case, the Alliance says it is crucial that all land owners are fully compensated for the loss of value associated with inclusion in the scheme.
It says a key part of the overall compensation package would be a Forestry Offset Scheme, under which land owners could meet their liabilities for harvesting their land either by replanting that exact same land, as is allowed under current proposals, or by planting the same area of land that is not currently in forestry. The latter is currently not allowed, which the Alliance says makes no sense.
“The atmosphere benefits in exactly the same way whether the trees are planted on one side of the road or the other,” Mr Green said. “It is simply a matter of common sense that we should allow people to meet their liabilities either through reforestation or through afforestation. The atmosphere does not know the difference. The same amount of carbon is stored either way and carbon storage should be what drives our policy. Some of our currently forested land would move into other uses, while there would be a huge financial incentive for forest owners to plant the more than 800,000 hectares of seriously eroding land that should be in forestry but which is not – and that would have very wide environmental gains for New Zealand.”
Mr Green said the Government had made clear, even in the Explanatory Note to its climate change legislation, that it has not decided its final policy for pre-1990 forests. He said the Flexible Land Use Alliance appreciated that the Government had an open mind on the issue and was pleased to have the opportunity to be part of its ongoing policy development process. He said the Alliance was confident its proposals for a Forestry Offset Scheme would be well received by parties across the political spectrum, even though he stressed it would not offer a complete solution to the destruction of land value associated with inclusion of pre-1990 forests in the ETS.