Is “carbon farming” worth it?
At the Treasury’s international carbon price of $15.92/tonne of CO2e, it would be worth allowing natural regeneration if the management costs were less than $47.80 a hectare a year - or a one-off, upfront cost of $682/ha, discounting the future value of cash at 7% a year.
These figures would work for allowing natural regeneration, even with pest control, but active planting may be a less attractive option. For instance, the upfront planting costs of radiata pine could exceed $1000 a hectare (including the cost of ownership of the land in the case of privately-owned land).
When deciding whether or not to plant or allow natural or enhanced regeneration on private land for carbon sink purposes, the alternative value of the forest for harvesting would need to be considered. At notional revenues of around $25,000 a hectare for timber from mature radiata, carbon farming does not look like an option on forestry land, even when including the costs of pruning, thinning and harvesting. That said, an East Coast iwi, Ngati Porou, on careful consideration is investing in just such a scheme.
Carbon farming, generally speaking, would be more likely to work long term if combined with other spin-offs, such as green marketing, by reducing the costs of covenanting regenerating bush for conservation (if that was an objective the landowner always had), or by harvesting wood waste for biofuels production.
The landowner may be able to earn income in other ways, for example, by promoting the “carbon farm” as a tourist attraction. A Marlborough landowner is doing exactly this.
In the case of publically-funded carbon farming, other spin-offs benefiting society could include ecosystem services delivery - soil recovery, improved water quality, erosion control, biodiversity protection. These non-market values would be an incentive to continue managing forested land.
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