Forestry the fallback as carbon values tumble

Wairarapa forest owners hit by plummeting carbon credit prices should only be worried if they never saw the wood for the carbon, according to a Wairarapa consultant.

Steve Wilton of Forest Enterprises said he was unaware of Wairarapa forest owners selling up as the value of carbon credits diminishes, as have some elsewhere in New Zealand.

Once pegged at around $25, the importation of overseas carbon credits has reduced the value in New Zealand to less than $3 a tonne of carbon "sequestered" in the ground as wood.

However, Mr Wilton says the price of carbon should always have been only one consideration for forest owners.

"If [people] are entertaining carbon forestry, they should have made sure that their fallback position was a commercial forest," Mr Wilton said.

"The peril of not taking that into consideration is now obvious, if it wasn't before."

Describing a carbon credit as a "construct of international agreements and New Zealand's Emissions Trading Scheme", Mr Wilton contends the credits alone have "no intrinsic value".

Mr Wilton said his company had the "clear view from the time the ETS first included post 1990 forests, that extraordinary caution should be urged".

"We have held from the outset that if somebody wants to engage in carbon forestry, that somebody does so at considerable peril."

Mr Wilton describes the plummeting prices as "a precursor to what was going to happen anyway".

"Kyoto was meant to solve the world's carbon problem, and then carbon has no value, and all you have got is the trees in the ground. It [carbon alone] is a short-sighted investment."

With carbon credit prices falling, there is also a decreasing penalty for forest owners who might choose to harvest and not replant.

Under legislation, these owners are deemed to have lost the carbon credits and must purchase them from somewhere else.

This is now a cheaper option than it was, and commentators have noted that works against the Government's aims of encouraging forest planting and discouraging deforestation.