The Government has rebooted a scheme which pays farmers and other landowners $1300 a hectare for planting trees on their land.
Associate Primary Industries Minister Jo Goodhew said that next week's budget would allocate $3.75 million a year for the afforestation grant scheme (AGS), over a period of six years.
The funding would cover up to 15,000ha of new forest. Applicants had to plant new forests of between 5ha and 300ha, and landowners who planned to address environmental issues such as erosion would be given priority.
"Farmers and landowners can ... use the AGS to make better use of marginal land and increase farming diversification," Ms Goodhew said.
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Under the previous scheme, 12,000ha of forest was planted between 2008 and 2013.
Much of this was on erosion-prone land and helped to improve water quality and reduce the impact of flooding, the minister said.
"Increased forest planting ... also led to an additional 1.6 million tonnes of carbon dioxide stored in our forests, mitigating climate change and counting towards New Zealand's national emission reduction targets," Ms Goodhew said.
In return for the grants, recipients would have to forfeit their carbon credits to the Crown for up to a decade. Landowners can currently claim the credits for storing carbon in their forests.
National promised in August to restart the afforestation grant scheme if it was re-elected.