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Carbon financed conservation forestry

Authors: Sean Weaver
Publication: New Zealand Journal of Forestry, Volume N.Z.J.For. 2021, Issue N.Z.J.For. 66(1) 2021, pp 12-17, May 2021
Publisher: New Zealand Institute of Forestry

Abstract: The arrival of the forest carbon sector over a decade ago heralded a new era in forest conservation financing. In New Zealand, the restorative reforestation of erosionprone rural landscapes and native forest habitats would be limited only by the appetite for carbon credits among carbon buyers and a return on investment for investors. However, a native forest carbon industry has not yet materialised apart from a relatively small collection of projects on the margins, in spite of a carbon price that is (at the time of writing) just shy of $40/tCO2e. For forest conservation to be carbon financed at scale it needs to be commercially viable without the help of grants. The commercial viability of native forest carbon is challenged, however, by high costs and low revenues. A remedy that does not require blunt government intervention in the carbon market is a middle path that combines native and exotic carbon forestry, to deliver an economic performance profile sufficient to cross the stop/go threshold. This paper looks at the economics of this middle path and recognises it as an emerging subsector poised to take off in the coming decade.
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