Thursday, February 28, 2008

Climate change: offsets and land use flexibility

A group of large forestry interests has clubbed together to oppose the government's inclusion of deforestation in the Emissions Trading Scheme, arguing that it limits land use flexibility and could lock into forestry land which could be put to more economic uses (such as dairy farming). They're demanding that their forests be exempted, or at the minimum they be allowed to offset their deforestation emissions by planting an equivalent area of forest elsewhere. At first glance, the latter isn't a bad idea, except for one important fact: it's not a true offset. Forests accumulate carbon over time, but deforestation emissions are assumed to occur the moment the trees are harvested. While an equivalent area of forest will eventually hold as much carbon as the trees cut down, the key word is eventually. Given normal forestry cycles, it will take 25 - 30 years (or sometimes more). And in the meantime, we taxpayers would be carrying the can.

I agree that it makes little sense to reflect the Kyoto Protocol's artificial distinction between pre- and post-1990 land in policy - a tree is a tree is a tree, and it makes no difference where it is planted. But the way to do this is by imposing full liabilities on all deforestation (at the moment post-1990 forest is "opt-in"), not by undermining the ETS by giving pre-1990 forest owners a free ride.

(I should also point out that owners of pre-1990 forests will receive enough credits to cover expected levels of deforestation, which should allow large forestry companies like Carter Holt and LandCorp to easily manage their portfolios. They can also already offset with new plantings elsewhere, but those will accumulate carbon slowly over time - meaning that they will need to plant a larger area if they want to offset in a short space of time. OTOH, such overplanting would give them a long-term source of credits with which to offset future conversions - so why not just do that, rather than whining to the government for a handout?)

More generally, I take issue with the FLA's underlying concept of "flexible land use" as failing to properly acknowledge environmental costs. Any economic analysis of what activities land is best suited for must include all the costs - including the cost of carbon. And if its not economic to convert trees to cows when you include all the costs, then it's not economic - period. By trying to pretend these costs don't exist, forest owners and farmers are really demanding that the rest of us - the 95% of the country who don't work in those sectors and receive no benefit from them - subsidise their profits. And I really don't see any reason why we should.