Drylandcarbon buys 1,600-hectare Te Puna station

Drylandcarbon was formed with the intention to develop forests to sequester carbon. Photo / 123RF

A specialist carbon forestry fund established by some of the country's biggest emitters has bought its first property.

Drylandcarbon has agreed to buy the 1,600-hectare Te Puna station near Wairoa. About two-thirds of the property – much of it steep and erosion-prone - will be planted in exotics as a permanent carbon sink. About 114 ha will remain as pastoral lease with the balance allowed to regenerate as native forest.

Executive director Ant Beverley said marginal land is ideal for forestry planting, but care is needed to ensure that viable land isn't also taken out of production. Nor does it make sense to plant trees for harvesting where the land is too steep for harvesting or too remote to get logs to processors or ports.

In the case of Te Puna, leasing the pastoral block to the current manager avoided the risk of him and his family being displaced.

"This is a positive outcome which sees land used appropriately, jobs protected within the rural community and the more productive land retained for farming," Beverley said.

Drylandcarbon, a limited partnership, was formed in March by Air New Zealand, Contact Energy, Genesis Energy and Z Energy. It was intended to develop forests to sequester carbon and provide the partners with an ongoing supply of New Zealand emission units to help meet their obligations under the emissions trading scheme.

Boosting forestry planting through the 10-year "billion trees" programme is an important part of the government's climate change response.

But the potential land that may ultimately be required – estimated at up to 2.8 million hectares by the Productivity Commission – has alarmed farming groups and been dismissed as un-doable by some foresters.

Easier rules for foreign owners to buy farms to convert them to forest have also skewed land prices and has some rural councils worried that further depopulation may make already struggling communities unviable.

Drylandcarbon's model is to buy land or enter into joint ventures with landowners looking for an income stream from marginal land. In the latter, proceeds from carbon or harvested forest would be shared with the landowner.

Te Puna, about 37 kilometres north-east of Wairoa, was put on the market in February. Drylandcarbon hasn't disclosed what it paid.

Beverley said the firm has two other properties under contract, which will be developed for rotation forestry. Discussions are underway on two others, one of which will involve a land swap.

He said the minimum parcel size the fund looks at is about 100 ha and to date the partnership model had worked "quite well."

The firm would continue seeking properties where suitable marginal land can be planted, and productive land can be farmed "for the benefit of our economy and rural communities."