Media Release

27 September 2012

Trees on Farms Delay

Hawke’s Bay Regional Council is delaying a decision on the proposed ‘Trees on Farms’ scheme, pending further information being provided about investing in the carbon market.

Councillors have asked HBRC staff for a further report on options, including ‘hedging’, plus information about risks of rising/falling carbon price on cash flows and potential impacts on ratepayers.

Their aim is to reconsider the proposal ahead of the 2013/14 Annual Plan.

HBRC had signalled the ‘Trees on Farms’ scheme in its Long Term Plan 2012-22, as a $47 million investment over 10 years funded from investment funds, and with returns based on the sale of carbon. The health of the carbon market is therefore critical and its current volatility is of concern.

The proposal is for HBRC to work with farmers to plant trees on steep, erodible parts of their farms. In return HBRC would receive a portion of the carbon credits.

This month, Councillors considered a carbon trading strategy and an operational plan which addressed the suitability of species, managing the tree crops, and site suitability, as well as achieving a balance of carbon and wood values.

Council has also considered investment options for how financial arrangements between HBRC and farmers would be structured. The initial options are for commercial forests, but an indigenous forest/manuka option will also be considered once initial assessments have been made of the manuka honey trials underway at Tutira.

A technical advisory group was established in June to advise HBRC on various aspects of the proposed ‘Trees on Farms’ project. Their recommendations and conclusions have been taken into consideration in the development of both the carbon trading strategy and operational plan.

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