Forestry, pastoral livestock farming and their supply chains are complements.

Trees on farm reduce erosion, enhance water quality, biodiversity and aesthetics. Processing plant boilers use wood pellets rather than coal, and product is stored in renewable packaging made from tree fibres. In the future, this will be transported on trucks and ships with bio-blended fuels, thereby contributing to reduced emissions of export products.

The future of trees and livestock together, rather than as sector silos, needs to be viewed and planned through a multi-decadal lens.

New Zealand’s distinctive greenhouse gas emission (GHG) profile, where agriculture generates almost 50% and comparative advantage in growing high-quality renewable forests relatively quickly, means the forest industry is a key plank in meeting climate targets and adapting to a warmer future.

No surprise then that the Climate Change Commission’s 2021 report quantified the large contribution forestry is expected to make to both the Paris21 2030 and net zero 2050 targets.

Forestry plays a dual role. In the short term, it supports the reduction of GHGs and longer term, it helps with adapting to warmer weather and the switch from oil and gas to renewable energy and materials.

National demand for timber, fibre and other tree products in 2050 must therefore be kept front of mind. Because radiata pine planted next winter will be ready to harvest in the late 2040s, decisions on what and how much to plant need to be made within the next five years.

Panel calls for emission reductions

The Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report published earlier this year called for urgent, sharp reductions in emissions if global warming of 1.5°C and 2°C is not to be exceeded during the 21st century.

An average temperature rise above this threshold will pose big challenges for pastoral farming – more extreme weather and animal welfare problems such as heat stress come to mind.

Due to this urgency, the IPCC also called for “strong, rapid and sustained reductions in CH4 [methane] emissions…” because it is a much “shorter-lived” GHG than carbon dioxide and nitrous oxide.

Methane emissions from pastorally grazed livestock obviously makes this aspect of the IPCC’s advice more challenging for New Zealand than most other economies.

Breeding low methane livestock and adopting management practices to reduce methane output are therefore critically important for the future of pastoral farming. Doing this in the absence of new breeding technologies, such as gene editing, will be both slower and harder than it needs to be.

This is true too for pollen free, sterile pine trees.

New Zealand’s own target challenging to beat

Meeting New Zealand’s 2030 reduction targets is made more difficult because of deforestation over much of the past 15 years (see Figure 1). Indeed, because of this short-termism, removals of carbon from plantation forests will exceed the carbon they sequester during the 2020s, exacerbating New Zealand’s decarbonisation challenge.

The Climate Change Commission’s advice requires an annual net increase in planting rates through to 2035 of 25,000ha for exotic species plantation and woodlot forests, and around 20,000ha for native species.

These planting rates are higher than recent times and include much larger areas of native forest reversion and new planting. Natives are three to four times more expensive to establish and sequester carbon much slower than radiata. Nevertheless, they have a role to play and will contribute to biodiversity restoration and other environmental outcomes.

To meet the 2030 targets cost effectively, exotic species with high sequestration rates and straightforward establishment are attractive. Indeed, higher carbon prices may enable planting to be self-funded and add an asset class and liquidity to the farm balance sheet.

It follows, given this operating context and as confirmed by the Climate Change Commission’s modelling, that land use change from the present mix toward forestry, horticulture and enterprises with lower emissions than present pastoral livestock systems will be necessary.

Water quality targets may force land use change

In some catchments freshwater reform will also require land use change away from pastoral farming if water quality targets are to be achieved.

The “Our Land” (2021) report² from the Ministry for the Environment (MfE) confirmed, especially for high quality soils near urban centres, that land use planning policies and property rights under the Resource Management Act (RMA) have not been effective in managing either cumulative effects or needs for growth (such as infrastructure).

Development has tended to be ad hoc and fragmented, including for forestry. It is improbable that the world class 190,000ha Kaingaroa Forest could be established in today’s operating environment.

The RMA Review Panel proposed the system be reformed to take an “outcomes approach” that uses regional spatial planning and combined region plans to ensure national, regional and local needs with respect to land are provided for, through a longer-term lens and in a more deliberate manner than present practice. This is akin to the approaches used in Denmark and the UK.

Forests need to be established in the right place, for the right purpose – and at the right scale to enable internationally competitive fibre and supply chain costs.

The Wood Fibre Futures Phase I report (September 2020)³ commissioned by Forest Ministerial Advisory Group bluntly highlighted New Zealand’s competitive disadvantages in attracting investment into bioeconomy processing plant and infrastructure as: ‘logs are relatively expensive and limited in availability [in part because of log exports], price signals to decrease carbon are weak and climate policy is uncertain, local investors are limited in number and scale; and, that global, specialist investors in bioproducts and bioenergy are actively being attracted elsewhere. Further, investors into wood and fibre processing require long-term wood fibre supply security before they contemplate large scale plant investment’.

Addressing these disadvantages and ensuring wood fibre supply at the right location and scale will require a more planned national and regional view of forestry than present policy settings either encourage or enable.

The ETS is not sufficiently targeted to achieve several more forests at a large scale (>30,000ha) to underpin a 2050’s circular bioeconomy rather than the present practice of spatially dispersed woodlots with marginal to uneconomic supply chains.

Piecemeal forest plantings are understandably contributing to anti-forestry sentiment and anxiety about the future rural social services.

However, dampening the ETS for production forestry (as opposed to carbon-only exotic forestry) would dissuade investment into tree planting and increase the likelihood of the livestock sector facing steeper GHG reduction requirements for New Zealand to meet its international climate obligations.

As pointed out by the Climate Change Commission, our GHG reduction targets are modest compared to other developed countries and will come under pressure to be increased.

Commentators scare-mongering on ‘forests taking over the country’ fail to acknowledge that as the NZU (carbon credit) price increases, so too does the affordability of low carbon technology substitutes for forestry offsets.

Substitutes to trees enable permanent emissions reductions, hence businesses are adopting a carbon ‘future’ price in their capital investment decisions. Farmers should do this too.

It is increasingly clear, the future for primary production here and offshore is going to be much (even radically) different to the past three generations of deforestation and land-use intensification.

The present mix of policies designed in the context of this ‘past’ are not fit for the future.

Land and other natural resource planning, carbon pricing and incentives for capital allocation (taxation) all are undergoing reform (as they are in other countries) to achieve the behaviours required for a prosperous primary sector in 2050 and a sustainable planet.

There will be forests and livestock and they will be highly complementary and valued for the respective contributions to New Zealand’s economic, environmental and social success.

Author: Warren Parker is chairman of the Forestry Ministerial Advisory Group, Farm IQ, and State-Owned Enterprise, Pamu.

 

Source code:

1 - Climate Change Commission report, June 2021 https://haveyoursay.climatecommission.govt.nz/comms-and-engagement/future-climate-action-for-aotearoa/supporting_documents/CCCADVICETOGOVT31JAN2021pdf.pdf

2 - Our Land (2021) report from MfE https://environment.govt.nz/publications/our-land-2021/

3 - The Wood Fibre Futures Phase I report (September 2020) commissioned by Forest Ministerial Advisory Group (FMAG) https://www.mpi.govt.nz/dmsdocument/41824/direct