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Carbon Farming Destroying Rural Areas

Firstly the phrase 'carbon farming' is a misnomer. A farmer tends the land - as a caretaker for the next generation.

What we are discussing here, is a one off corporate investment in land accruing a large amount of cash over a number of years then abandoning both the land and the surrounding communities - in that regard it is more akin to the asset stripping programs of the 1980's or junk-bond speculation - whatever it is - it is not farming.

Secondly let me clarify - if it was just an issue of forestry being more profitable than S&B - we would not have a problem with such conversions, we fundamentally believe in private property rights and unfettered market activities of willing buyers and sellers.

However this carbon speculation scourge, is something else entirely - and the more you delve into it the more you will find it is a product of government policy and subsidy both here and abroad which is cynically trading away our long term economic independence and health for short term carbon policy goals.

1. How much land use change are we talking?

The following article https://www.stuff.co.nz/environment/climate-news/116415334/the-sea-of-pines-that-is-going-to-be-needed-to-balance-the-nz-carbon-budget gives a good overview and balances both protagonists and antagonist arguments Here Parliamentary Commission for the environment Simon Upton warns that we will require a further 2.6M ha of trees by 2050 and then another 2.8M ha more by 2075 if we continue down this track. We have 7.7M ha of grassland in NZ; less 2.4M ha of dairy pastures (which are too expensive to be attractive for carbon conversions) that leaves around 5.3M has of sheep and beef land which will be targeted.

Basically, if we are going to pursue this plan of "offsetting" our emissions, then we will inevitably wipe out the entire sheep and beef industry and be left with a countryside that consists largely of dairy farms and pine-trees.

So the change being foisted upon NZ by current policy makers is massive and I have three key areas of concern about it - Economic, Social and Environmental. They are to some extent linked but I will attempt to separate.

2. Economic Impacts

Who pays the bill? When looking at land use economics, in addition to the immediate basic economic 'freedom to trade' prism, land use must be considered through another prism - a longer term one.

That is because the economic impact of afforestation, is strictly limited to the first cycle (28 years in the case of Pinus Radiata) and under the current carbon rules/pricing the possibility of changing back to another land use is economically prohibitive.

In that regard it is not just a normal buy/sell transaction but one of land being "sold out" from normal economic trading...in perpetuity.

If one thinks of land in financial terms as a kind of EFT-POS machine, which allows various members of society to make withdrawals and deposits over time - carbon speculation is more like a 'ram raid' where one corporate walks away with a large amount of cash and leaves the machine dysfunctional - forever.

There is a report produced by Baker Ag for Beef & Lamb NZ which details the impacts of carbon farming in the Wairoa area.

It’s well worth a read to look at what is already happening in a regional community. The key information is table 9, which shows that when comparing real returns for real products S&B returns are 6 x that of forestry. Yet when comparing against the returns from the so called carbon "market", S&B is half that of carbon speculation. Employment generated on S&B farms is 12 x that of carbon farming.

When these carbon speculators pay - they are paying for the land only - but we (the NZ taxpayer and in particular provincial NZ’rs) are paying for the longer term social and economic costs of this speculation. In policy speak - we are 'internalizing their externalities' or another way of looking at it is like going to dinner with a stranger who eats all the food, pays the tip and then walks out, leaving us with the bill.

Where does the money go? These types of large long term speculative investments are primarily the domain of wealthy offshore investors. So much so, that the current government was forced to fiddle the Overseas Investment Office (OIO) rules to give some advantage to forestry investments in order to attract such speculations by adding a "special forestry test" with a lower threshold for approvals.

Thus if you are a foreigner who wants to buy land to farm you have to jump through a series of OIO hoops and prove your investment is in the interests of NZ but if you are a speculator of carbon you don't. Thus far from being the free market at work - the government is in effect subsidizing the transition of productive NZ owned land into unproductive foreign owned pine forests.

Thus most of the profits that accrue from carbon speculation will swiftly evaporate into offshore bank accounts rather than being spent in the surrounding local communities as would have been the case with profits accruing to a local NZ farmer.

The 4 largest private landowners in NZ are now foreign owned forestry companies (Tamatua Holdings Ltd, Tiong family, New Forests Asset Mgmt and Matariki Forests). This will only increase as carbon speculators are attracted to NZ. This government likes to trot out statistics which purport that there is "nothing to see here". These statistics are so far out of date they are laughable.

Belatedly recognizing this, the Ministry Primary for Industries has started to survey rural land agents asking them to report back pastoral sales to forestry companies. When asked late last year one of the key East Coast land agents stated that 26% of his sales (by area) were to forestry conversions but importantly that did not include some large area sales awaiting OIO approval.

What will be the opportunity cost? Possibly worse than the loss of our economic sovereignty is the opportunity cost of our lost export revenues as land becomes locked up non-harvested pines in perpetuity. Currently our beef lamb and wool exports are around $8B/yr. Are we prepared to forgo say $7B/yr. (cull dairy cows/bobby calves would still contribute something) every year - forever?

The sector has grown by $2B in value over the past 5 years alone. What is the opportunity cost we are facing as a nation by eliminating this sector and then multiplying that by the potential growth over 50 years? - Horrendous.

If COVID19 has taught us anything it is that hard won export markets which have been are built up over many years are an essential lifeblood for an economy and only a fool would dismiss this impact.

3. Social Impacts

Employment. As the above mentioned Baker Report sets out - carbon speculation requires neither shepherds, truck-drivers, pilots, wool buyers, stock agents, bulldozer drivers, shearers, loggers, saw millers, farriers, mechanics, cooks, fencers, dockers, - nor the ancillary industries of hardware, homeware, clothing and baking for all of these workers.

It may provide some initial pencil work for accountants, and investment advisers, then some hefty commissions for real estate agents but thereafter will only ever, rip the heart out of community employment.

Tipping Points

Like all communities, regional and rural facilities require a critical mass to operate. Talk with people on the East Coast after Bola where large amounts of land were put into production forestry; the gradual population collapse sparked a series of tipping points for the farming families left behind.

First their neighbours moved away, then the community hall folded, then the school bus stopped, then the school closed - it goes on and on. Of course the process will be much faster with carbon speculation, as the employment per ha is much less than production forestry.

We have all seen the dire social consequences of unemployment leading to opioid abuse, crime and family dysfunction in the "rust belt" of the United States, as US steel production and manufacturing was outsourced for more efficient Chinese production.

Do we really want policies that will push our regions down this track? Is the deliberate creation of huge swaths of long term unproductive land and under resourced disenfranchised provinces all worth it, to try save the rest of the world, including China, India and the US, (who refuse to save themselves) - from the perils of global warming? If so fine - but at least be honest enough to include these social costs in policy discussions BEFORE we get to those Tipping Points.

Recreational Access

Many New Zealanders are fortunate to have access to back country lands for pig-hunting, deer stalking, duck shooting, trout fishing, motor biking, horse trekking etc. This access is often granted by the grace of private landowners - predominantly the hill country farmers. Charity events such as motorbike rallies are often organised across a dozen local farms to provide much needed funds for local schools and community halls.

As corporate owned carbon forests substitute these family farms, these access privileges will also disappear due to fire risk, and the severing of the linkages between the local community and the landowner. Eventually New Zealanders will be locked out of this back country.

Aesthetics

How does NZ feel about living in a gigantic pine forest? Has anyone asked the people who live in our regions how they feel about their unique part of the country? NZ's beauty is inextricably linked to its diversity - a mozaic of farms, forests, mountains and plains. Will New Zealanders wake up in 20 years’ time and say - "you know what? we don't really like it...we don't like that when we drive around our country we don't see much except bloody great pine-trees on both sides of the road?" Will the tourists still come to NZ to see Pine trees? Definitely not the Scandinavians or the Canadians - but maybe not the Australians and the Chinese either.

4. Environmental Impacts

There are many questions needing answers here. Is "offsetting" the best way to reduce global warming - or does it simply reinforce consumer behaviour and buttress the fossil fuel industry?

Is it right that certain businesses can treat whole communities as their private carbon sinks? What if that community doesn't want to become somebody else's carbon sink?

What is the impact of blanket afforestation on our streams?

Sediment is undoubtedly the main water pollutant in extensive hill country farming (whereas N and P are the main issues in intensive lowland farming) and has been shown to be able to be reduced significantly (47% in Horizons data) through individual farm planning and voluntary farmer led sub-catchment approaches. Yet the govt. for some reason persists with this nonsense that forestry is better than farming for sediment exports - in our region there is much scientific evidence to the contrary.

There is much evidence that this madness of planting huge areas of our country in pine-trees, will not only destroy our communities but will also adversely affect our creeks and beaches - those very creeks and beaches that Minister Parker and others say they want to protect.

Finally - is it really worth it? Is all the carnage described above really going to save the world from global warming?

Or are we just destroying our hinterlands to salve the conscience of those - who burn thousands of litres of jet fuel on their overseas trips but feel OK about it because they have 'ticked the box' that asked if they wanted to plant a few trees 'somewhere' else.

Well that 'somewhere' is here. It is in heartland New Zealand. It is a real place, a livelihood and a community and those things have been built up over a hundred years by people in the provinces.

Are emission reductions through people changing their behaviour so hard to achieve that we must instead pay the price here in the provinces? That we must sacrifice all that our forefathers have built up around us so that they can feel good about cruising around the Maldives?

Undoubtedly trees have a place in this carbon policy - but there must be a better way than turning the country into one big pine forest. If we are going to offer incentives and "create" markets for carbon through regulation...then could current incentives that attract a few wealthy few overseas investors to turn huge areas of productive land into pine forests be better used?

Could appropriate local incentives persuade 1000's of NZ farmers to plant small areas of less productive land into natives, improving biodiversity whilst retaining our future export receipts and economic sovereignty?

We’re all for private property rights and for profits accruing to those who hard and take risks. But government policy needs do more than that.

It needs to steer the country in the long term and should be honest enough to explain the whole picture to voters - including the longer term impacts of policy.

What we have right now is a government, transfixed upon the rear vision mirror of the Paris Agreement, hell-bent on driving this country along an ideological pathway and seemingly uninterested in what lies ahead on that road.

How does it profit us, as a nation, if we make a minuscule and one-off contribution to reducing global warming and we yet destroy our countryside, our regional employment and our export revenues along the way? We need to start looking forwards not backwards. We need policy that works for people in the regions.

By Mark Ball who can be reached at markb@heartlandparty.org.nz.

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