Chance to see the good for the trees

The much maligned Emissions Trading Scheme can provide even the owners of small forest blocks with a bonus return, if they make the effort to find out, as Peter Watson reports.

Owners of hundreds of small forestry blocks planted in Nelson before 1990 have been warned they risk either being surprised by some large bills or missing out on a one-off windfall if they don't get up to speed soon with the Emissions Trading Scheme.

Under ETS deforestation rules, owners of pre-1990 forest land – which makes up 91 per cent of the almost 97,000 hectares of plantation forest in Nelson – have a choice to make that can potentially earn or save them thousands of dollars per hectare.

They can either apply for a one-off allocation of carbon credits, which can be sold, or if they own less than 50 hectares they can apply for an exemption from their deforestation liabilities under the ETS.

More than 60 people, many of them small-forest owners, turned up to a MAF seminar in Nelson last week to better understand what their options were and when they had to make a decision by.

MAF spokesman Robert Miller said the turnout, the largest in the South Island, was an indication of the importance of forestry in Nelson and the high number – about 4000 – of pre-1990 blocks in the region.

While the Crown owns just over half of pre-1990 forest land, most of the rest of about 48,000ha is owned by scores of small owners with holdings of less than 100ha.

Ben Doherty, MAF's sustainable programme adviser for Nelson and Marlborough, said most of this forest was planted on marginal land that was not suitable for any other purpose so was likely to remain in trees, in which case the owners should apply for a free allocation of carbon credits. How many credits per hectare they received depended on how long they had owned the land, but at the current price of $18 per unit it was well worth applying for the one-off allocation by the deadline of November 30 next year.

For example, an owner of a 20ha forestry block could receive credits worth more than $8000 at current market prices, with potential for another windfall from 2013 depending on Government negotiations over the ETS rules.

Those with less than 50ha who intended to convert their forest land into pasture or subdivide had the choice of applying by September 30 next year for an exemption from the ETS otherwise they would be liable for the loss of the credits under the scheme, he said.

"Landowners have to work out what they intend doing with the land – if they might change its use they would be better off getting an exemption, but if it's going to be kept in forestry they should apply for an allocation.

"If they don't do anything they miss out on an opportunity."

Most smaller forest owners he had explained the scheme to were surprised they could benefit by so much from it, Mr Doherty said.

But Peter Wilks of forestry consultants PF Olsen said while his company was handling a steady stream of inquiries, many owners of pre-1990 forests remained unaware of the ETS rules or were confused by them "or just think it's all too difficult to be bothered with".

"I think a lot of them perceive it's just something else the Government is going to get them on and there is nothing in it for them or they can't grasp the concept of getting something for nothing and think there must be a catch to it."

But even for those "mum and dad-type owners" with just a few hectares of forest it could be worthwhile applying for their free allocation of units, he said. Most people would be better off applying for an allocation, unless there was a very good chance they were going to convert their land into something else.

The risk of doing nothing could be costly, he said. An owner who changed land use without having an exemption could potentially face a bill of up to $10,000 per hectare.

"Once people start realising the dollars involved they will wake up."

However, he cautioned that while people could apply to MAF themselves without cost, the process was time-consuming, often technical and the ministry rejected applications that weren't completely accurate.

"Unless you've got a lot of patience and fast broadband it can be a frustrating thing to do. Everything must be signed, witnessed and declarations made and there are hefty penalties if you get it wrong."

And he urged owners not to leave their applications to the last minute as they took time to process and verify.

Mr Wilks also advised those with forests over 20ha to get them mapped by a professional otherwise there was the risk of eligible areas being excluded with a loss of carbon credits.

Richmond plumber Gilbert Hunt, who owns a 20ha forestry block at Tophouse, said the seminar was useful but didn't answer all his questions and he would be seeking further advice.

He had initially thought about applying for his allocation windfall but some of his block, which was bought as a retirement investment, was potentially subdividable and he had to consider what his family might want to do with it later.

Another who attended the seminar, Sean Huxford, of Mahana, who owns a 147ha block near Murchison which was largely planted after 1990, said people had to carefully consider their options "rather than punching numbers into their calculators" to work out their windfall.

"I know that's how a lot of people are thinking, especially around here where historically they would have looked to get to the end of the rotation, mill the trees and subdivide the land. They are going to be in for a real shock and be penalised substantially if they aren't well informed."

CARBON CREDITS How many carbon credits (NZUs) each landowner gets for each hectare of eligible pre-1990 forest land:

60 NZUs (23 of them by the end of 2012, the rest in 2013) if you owned the land before and since October 31, 2002.

39 NZUs (15 by the end of 2012, the rest in 2013) if you owned the land from November 1, 2002.

18 NZUs (seven by the end of 2012, the rest in 2013) for Crown forest land transferred to an iwi under a Treaty of Waitangi settlement after January 1, 2008.

Note: The 2013 allocation of units is still to be confirmed and may change. NZUs are currently selling for $18 each. For more information go to maf.govt.nz/forestry-allocation or email ben.doherty@maf.govt.nz