A forestry project which is experimenting with fast-growing, drought-resistant trees has outlined plans to plant 100,000ha of forest in the driest parts of New Zealand.

The Drylands Forestry Initiative, which received a $5 million grant in last month's Budget, wants to encourage alternative uses for land in regions which receive rainfall of less than 1000mm a year.

The organisation is developing eucalypt trees genetically improved to thrive in dry regions between Canterbury and Gisborne, and wants to develop a multimillion-dollar industry by 2050.

Its founders said rainfall was likely to become more unpredictable as the increasing impacts of climate change were felt in New Zealand.


In an unusual move, the private organisation was backed by a parliamentary select committee this week.

Primary production committee chairman Ian McKelvie said the initiative diversified the forestry industry and was making use of land in very dry regions.

"We're damn good at growing pines but not much good at anything else," he said.

McKelvie said the project would also assist with the industry's environmental sustainability.

The eucalypts combated soil erosion because they had extensive root systems and continued to regenerate and grow after felling.

Committee member and Labour MP Damien O'Connor said the wine industry, which created huge demand for treated wooden posts, was taking a great interest in the project.

If the forest project was successful, millions of treated posts in vineyards could be replaced with the New Zealand-grown, environmentally friendly hardwoods, he said.

Forestry Owners Association chief executive David Rhodes said that New Zealand had developed world-class expertise in growing and manufacturing radiata pine.


But he welcomed the Government's investment in alternative species, because pine was not suited to all environments and market needs, and there were also biosecurity risks in depending so heavily on a single species.

Economic Development Minister said the $5 million in funding allocated in the Budget was to increase the competitiveness of the forestry sector.

The grant would go towards a partnership between the Drylands Forestry Initiative, Scion and the University of Canterbury. The Ministry of Primary Industries, regional councils and private industries had also backed the project.