KEY POINTS:
The Government risks scoring an own goal in the land-use side of its climate change policy, critics say.
Proposals to impose a deforestation liability - either through a flat charge or through a cap-and-trade system - are set to intensify the incentive forest owners already have to get
rid of trees before the new regime comes into effect.
The country is unlikely to get anywhere near meeting Prime Minister Helen Clark's long-term aspiration of carbon neutrality unless there is a major expansion of forest land. But the rate of new forest planting has fallen from its long-term average of 43,000ha per year to 6000ha in 2005. And that was offset by an estimated 7000ha of deforestation, meaning that for the first time in decades the national forest estate did not increase.
Critics said the policy proposals on land use and forestry outlined yesterday had too much stick and too little carrot to turn that trend around.
The carrot would be to give those planting new forests post-2007 either a cash grant - Forestry Minister Jim Anderton indicated $100 million over five years might be available - or the relevant tradeable sink credits and the associated liabilities.
The stick applies to the owners of non-Kyoto or pre-1990 forests. At the moment if they switch to another land use upon harvest, the Government (or taxpayer) faces the liability that arises under Kyoto's rules.
But deforestation is occurring at what are high rates by historical standards and the effect on the national emissions bill is compounded if the land is switched to dairying, given cattle's propensity to belch methane, a greenhouse gas.
So the Government is considering a flat charge upon deforestation. Climate Change Minister David Parker said it would recoup all or some of the liability.
At present carbon prices and exchange rates that could cost up to $13,000 a hectare - often much more than the land would be worth as pasture. And that cost could rise if carbon prices go up and/or the exchange rate goes down.
The other option - which Parker said the Government preferred - would be to introduce a tradeable permit scheme, akin to a fishing quota.
Forest Owners Association chief executive David Rhodes said it was impossible to say what that cap-and-trade option might cost until the level of the cap and the rules for allocating permits were known.
But any system where forest owners gained nothing for the carbon absorbed by their forests, but would be penalised if they deforested, would immediately devalue forest land.
"Maori landowners, in particular, will be disadvantaged given pending Treaty settlement claims."
Meanwhile, the owners of Kyoto forests, about 200,000 hectares planted since 1990 on land not previously forested, will not receive any of the value that Kyoto's rules recognise for the carbon taken out of the atmosphere and stored in their trees.
Their only consolation is that they will not face a deforestation liability either.
Their spokesman, Roger Dickie, said plantings had plunged and deforestation began when the Government said in 2002 that it would "confiscate" those credits.
He said to now further undermine confidence in the industry by a proposed $13,000 a hectare retrospective tax was reckless idiocy.
Parker said the Government did not accept a property right for the owners of Kyoto forests had been created by its ratifying the climate change treaty.
National's environment spokesman Nick Smith said talk of a new tax of this size would get the chainsaws going straight away.
National's policy is for the Government to retain the sink credits and the deforestation liabilities for trees in the ground, but to move towards an emissions trading system for greenhouse gas emitters, starting with the electricity sector, which would create a future market for offsets and allow devolution of forest sink credits in the future.
GOVERNMENT PROPOSALS
* Owners of pre-1990 forests will incur a liability if they are harvested but not replanted.
* One option is a flat charge to recoup "all or some" of the bill the taxpayer already faces for deforestation. At present carbon prices and exchange rates that could be $13,000 a hectare.
* But the Government "inclines towards" the other option: A cap-and-trade system like fishing quota. No details yet on where the cap would be set and who would get the initial allocation, so the cost to forest owners is impossible to quantify.
* Owners of post-1990 forests get nothing, like now, even though the carbon in their trees is worth hundreds of millions of dollars to the taxpayer. They will not face the deforestation liability though.
* Owners of new post-2007 forests can expect some kind of incentive. Either a cash grant up front or, if they prefer to take the risk, tradeable credits for the carbon in their trees. In that case, they would face the associated liability as well.
