Evaluation of the Australian ETS approach for reforestation

Authors: Bruce Manley, Piers Maclaren
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2009, Issue N.Z.J.For. 54(3) 2009, pp 26-30, Nov 2009
Publisher: New Zealand Institute of Forestry

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Abstract: The draft Australian ETS proposes that carbon units can be received from reforestation - but only up to the average long term carbon stock. Carbon units do not have to be surrendered following harvest or a catastrophic event provided the crop is re-established. This approach is a variation of that first proposed by Maclaren in 1995. We evaluate this approach and compare it with the approach currently enacted in the New Zealand ETS. Although the approach reduces forest profitability the reduction is modest. It removes important components of risk that growers face under the current ETS - both the carbon price risk associated with post-harvest buy back of carbon units and also the risk associated with premature surrender of carbon units following a catastrophic event.

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