MAF has just released the latest version of its National Exotic Forest Description [PDF], giving a snapshot of New Zealand's forestry industry as it stood at 1 April 2006. And the picture it paints is not pretty: total forest cover declined for the third year in a row, new planting rates for the ninth year, and a record 12,900 hectares of harvested forest was not replanted. National has been quick to blame this on the government's climate change policies, but the blunt fact is that forest owners are doing this because it is profitable - because log prices are low (though apparently beginning to improve), while prices for dairy land are high. And they will continue to do it for as long as that is the case.
This is what the free market gives us: net deforestation, and new "forests" planted in scrub which are absolutely useless from a Kyoto perspective.
This is disastrous. Kyoto's rules around forests are complex, but given New Zealand's emissions situation the net effect is that every tree cut down must be offset with emissions reductions elsewhere or carbon credits purchased on the international market. The cost of this - almost $200 million for last year at Treasury's (lowball) estimated carbon prices - will be borne by the taxpayer. Meanwhile, forest owners get to laugh all the way to the bank.
They shouldn't be allowed to. Instead, they should be paying the full cost of their activities, rather than being allowed to dump them on society. The taxpayer should not be subsidising the profits of private businesses in this way.
As for ways of doing it, the government is currently proposing a deforestation permit trading system, which would cap deforestation at 27,000 hectares over 5 years and force forest owners to pay each other for the right to cut down trees. And if the National Party actually cared about the problem, rather than seeing it simply as another stick to beat the government with or an excuse to funnel public money into the private pockets of their donors and cronies, they'd vote for it.