Friday, April 29, 2022

Climate Change: Farmers versus trees

Farmers have been whining for years about carbon forestry, and now they seem to have got their way, with the government proposing to ban permanent pine forests from the ETS. Which is a mistake on multiple levels. The one the government may care about is that it will cost us $64 billion - $870 per household per year. Which is the cost of covering the emissions those trees would otherwise soak up on the international market. But its also a mistake because it doesn't address the political problem it is meant to solve, and its not a problem the government should be trying to solve anyway.

To put the last point first: farmers say they're opposed to carbon forestry because of the "destruction of rural communities": pine means fewer jobs, which means fewer people, which means small rural towns dry up and wither away. But the fundamental driver of this process is that traditional farming is a less profitable land use than simply planting trees and walking away. And this is the case at much lower carbon prices than we have now.

Farmers solution to this problem is their usual one: get the government to step in and protect them, allowing them to continue their unprofitable, inefficient, polluting lifestyle. And when put nakedly like that, you can see how backwards and immoral it is - effectively a return to Muldoon-era protectionism, albeit via regulation rather than financial subsidies. And it has very real costs to Aotearoa. Apart from the higher emissions, the value of the carbon in trees is worth significantly more than the rural economic activity it displaces. So protecting farms leaves us worse off than if we let the market take its course.

So, the complaint of farmers is fundamentally illegitimate, a demand that one of the richest and dirtiest industries in the country be protected by banning their competition, making us worse off in the process. But banning pine doesn't solve the problem. Why? Because the fundamental problem here is that a certain type of farming is uncompetitive against carbon. And you can get carbon from native trees too. It's less efficient - 25 year old native forest has 215 tons of carbon dioxide per hectare, versus 435 to 722 (depending on the region) for pine - but that just changes the carbon price required to break even. And the upshot is that if it pine was more profitable than farming a few years ago when carbon was $25/ton, then in much of the country native trees are already more profitable, and in the rest they will be very shortly (and if the government updates the carbon tables to reflect new data, the difference will disappear).

Farmers say they're fine with native trees. But you can bet if large companies start buying farms to plant them, they'll be whining just as loudly as they are now, and for exactly the same reason: because the world has changed and they are no longer competitive. And fundamentally, I just don't think that's something we should protect them from.

Finally, some people, including the Climate Change Commission, have expressed concerns about the risk of planting "too many" trees, and not cutting emissions fast enough as a result. I think this is misplaced. Obviously, we need to cut emissions as fast as possible, and its good to see the ETS finally paying off on that front, and government policy beginning to bend the curve in other areas. But at this stage of the crisis, we need to do all the things, and not waste time worrying about what is "optimal" or "perfect" or "most efficient". And that means soaking up carbon as well as cutting emissions. Beyond that, when we have decarbonised, we're still going to need to draw down the carbon we have already emitted. And the best way of doing that, the way which doesn't rely on imaginary magic technology and wishful thinking, is trees. we've all heard the saying about the best time to plant a tree being twenty years ago. Well, looking forward, we're going to need some trees in twenty years. So we should really be planting them now.