22 March 2012

The head of the country's largest forestry company says carbon credits could be more of a burden than a blessing for many forest owners.

Bill McCallum, general manager of Hancock Timber Management NZ, says owners of "Kyoto" forests – those established after 1989 – were able to sell surplus credits as their trees grew.

He doubted reports that the credits were proving a windfall "but it's something that is improving the economics of forestry".

However it was quite different for owners of pre-1990 forests, who had been forced into the scheme.

McCallum said a forest owner who did not wish to replant might have to surrender 500 carbon "units" a hectare at harvest, but had only received upfront compensation of about 39 units a hectare.

With more than two-thirds of the forest estate established before 1990, "it's a very partial compensation for the loss of property rights".

Carbon prices had sunk from $20 a unit to less than $8 in the last 12 months. That had taken the cost of deforesting from $20,000 a hectare to less than $10,000, but it was still a significant "encumbrance" if the forester wanted to change the land use.

by Catherine Harris, The Dominion Post, © Fairfax NZ News. To read the full story, click here.