Background Reports and Analysis

Agriculture in a New Zealand Emissions Trading Scheme

  • Identification of requirements for verification technologies to support farm and paddock scale greenhouse gas mitigation
    This report provides a detailed “Requirement Specification” for technology a farmer needs to verify farm and paddock scale Green House Gas (GHG) mitigation practises. It is intended to assist developers of Global Positioning System (GPS) technology and developers of GHG mitigation technologies in understanding requirements for farmer-ready technologies that will allow verification of GHG mitigation.
    This report is the result of a partnership between TracMap, a developer of agricultural GPS technologies, and AgResearch, an agricultural research institute with skills in the application of agricultural technologies and GHG mitigation.
    The report consists of three separate parts:
  • Soil Carbon and Pastoral Agriculture [584K PDF]
    There is currently a great deal of interest in the possibility that soil carbon (soil C) sequestration in pastoral land might offset greenhouse gas emissions from livestock farming. In addition there is the possibility that international accounting rules might require the addition of soil C to national greenhouse gas inventories. In order to assess potential emission reductions and to include soil C in the accounts it is necessary to have an inventory method that shows soil C change over time and is sensitive to management factors that might modify soil C storage. This report uses a similar framework as the Inter-Governmental Panel on Climate Change (IPCC) to make a first evaluation of the possibility of developing a methodology for estimating soil C that will enable MAF to (a) calculate national and local soil carbon amounts for 1990 and for the present, (b) specify management practices that will modify soil C in a predictable manner that is linked to the present inventory, (c) calculate the size of the “opportunity” or “liability” provided by inclusion of soil C in the national green house gas inventory, and (d) have an option to develop a national soil C inventory that is connected - through use of the same data - to existing methane and nitrous oxide inventories.
  • Projected Impacts of the New Zealand Emissions Trading Scheme at the Farm Level [ 82K PDF]
    This paper summarises the results of a range of analyses carried out by MAF on the potential impacts of the New Zealand Emissions Trading Scheme (NZETS) at the individual farm level. The purpose of these analyses is to inform the policy process and indicate how typical farms of varying types could be financially affected by the NZETS.
    Updates:
    • One change which aims to improve the consistency in the analytical approach impacted the results for the Pipfruit model. The earlier Pipfruit results took into account the impacts from downstream processing costs, which were not included in any of the other analyses in the report. These earlier results for the Pipfruit model will be re-published in an addendum that will also include new results for the Dairy model taking into account downstream processing costs.
    • Other changes in the report relate to the text and include:
      • Updating to reflect recent Government decisions relating sector entry and allocation;
      • Additional context related to the potential for variation around the impacts estimated here, and with respect to the potential gains from nitrification inhibitors;
      • Making explicit the key assumption that flow-on costs from downstream processing were not taken into account.
  • Point of obligation designs and allocation methodologies for agriculture and the New Zealand Emissions Trading Scheme [1.0M PDF]
    This report outlines the process by which the Agricultural Technical Advisory Group assessed the options and made a recommendation regarding agriculture's point of obligation for entry into the Emissions Trading Scheme. The TAG's focus was two critical policy decisions: 1) Who should be the participant and be responsible for complying with the ETS and 2) How could NZUs be allocated to the sector.

Biofuels

Forestry in a New Zealand Emissions Trading Scheme

  • Predicting the Spatial Distribution of Sequoia Sempervirens Productivity in New Zealand [413K PDF]
    Sequoia sempervirens or coast redwood naturally occurs within a narrow coastal belt from southernmost Oregon to the south Monterey County, California. Recently there has been renewed interest in this species because almost all old-growth coast redwood has been set aside in public holdings in California. This leaves an opportunity for New-Zealand-grown timber to compete with second-growth coast redwood. The emergence of an emissions trading scheme and the likelihood of attaining carbon credits for forests has spurred interest in establishing Sequoia sempervirens over the longer-term. The objectives of this study were to (i) develop a multiple regression model of site index and 400 Index using independent variables obtained from maps and interpolated surfaces and (ii) using this model develop 400 index and site index surfaces for New Zealand. Site index is defined for this species as the height of the 100 largest diameter trees per hectare at breast height age 40 years. The 400 index is defined as the stem volume mean annual increment at breast height age 40 years for a reference regime of 400 stems/ha.
  • Establishing Indigenous Forest on Erosion-Prone Grassland: Land Areas, Establishment Methods, Costs and Carbon Benefits [1.95M PDF]
    There is increasing interest in New Zealand in establishing new indigenous forests to provide 'environmental services' associated with forest lands - soil conservation, water quality, improved indigenous biota conservation, carbon storage, recreation, and aesthetic values. Experience in establishing indigenous forest, particularly over larger tracts of land, is much less than that for exotic forest. Information about the different techniques and where they might be appropriately applied is sometimes difficult to access. This report seeks to bring together such information to make it more readily accessible and allow landowners and others to make informed decisions about indigenous forest establishment.
  • Forestry Insurance, Risk Pooling and Risk Mitigation Options [581K PDF]
    The Climate Change Response Act 2002 and subsequent amendments established a regime that rewards sequestration of carbon through the Government allocating New Zealand Units (NZUs) to participating owners of eligible forests. These forest owners may generate pre-harvest income by selling the NZUs they have been allocated.
    The NZU regime penalises a reduction of sequestered carbon by requiring surrender of NZUs to the Government. Such a reduction may occur from harvesting or from adverse events such as disease, fire or wind throw. There are two main risks associated with carbon sequestration under the NZU regime. Firstly there is the risk of adverse events (referred to as “technical risk” in the report) unexpectedly reducing sequestered carbon and creating a NZU liability. Secondly there is the risk (referred to as “market risk” in the report) that NZUs may have been sold to generate pre-harvest revenue and at harvest time the forest owner may need to buy NZUs to surrender to the Government. However at harvest time the market price of NZUs may be higher than when NZUs were sold.
    Pooling of risk is a possible way that both these risks may be mitigated. This report examines the economic and legal issues related to pooling and managing risk.
  • Forestry Insurance, Risk Pooling and Risk Minimisation Options [430K PDF]
    Under carbon forestry and the Emissions Trading Scheme the forest grower is subject to two types of loss from physical risk such as catastrophic wind or fire events - loss of the tree crop, and the premature surrender of carbon units. Although there are a number of insurance products that cover the loss of a tree crop, the majority of New Zealand plantations are not insured. This report evaluates current and potential financial market opportunities, including insurance and risk pooling for post-1989 forest owners, that may provide relief from the physical risk associated with carbon forestry.
  • MAF deforestation accounting opinion with KPMG review
    MAF has produced an opinion on how a forest/land owner who has no exemptions from applicable accounting standards should classify and present in Financial Statements a deforestation penalty under the New Zealand Emissions Trading Scheme (NZETS).
  • Indicative Forest Sequestration Tables
    The Ministry of Agriculture and Forestry (MAF) has requested estimates of carbon stocks by stand age for various tree species and tending regimes on various sites. These carbon stock tables are intended to be used as illustrative examples of carbon sequestration through afforestation.
  • Area of Forest "at risk" from deforestation
    Large-scale deforestation of planted forests is a new phenomenon. This report uses a range of methods to determine the "profitability" of switching land use from forestry to agriculture. All suggest that switching from forestry to pastoral use is commercially justifiable only if the land is capable of sustaining intensive stock production (in some cases) or dairying. Between 170,000 and 280,000 ha of forest land may be deforested over the next 15 years.
    Download the full report as a PDF [393K PDF]
  • Deforestation Intentions Survey
    These reports provide a structured review of the deforestation intentions of large-scale forest owners (owners with more than 10 000 ha of forest), and an estimate of deforestation by smaller owners. The first survey was undertaken in December 2006 when ETS proposals were under discussion but largely undecided, and the second between November 2007 and January 2008 and after the announcement of the Emissions Trading Scheme (ETS) but before the proposed policy has become law.
  • Financial returns and forestry planting rates
    Over the last twelve years the annual rate of new plantings of commercial forestry has been trending downward and since 2004 there has been a decline in the replanting rate. "Expected" forestry financial returns over the past decade were compared with the recorded areas of new planting and total planting for each year. This showed a clear positive correlation between returns and both the new planting and total planting rates - with higher expected returns associated with higher levels of forest establishment.
    Download the full report as a PDF [ 73K PDF]
  • Further Material on Pre 1990 Forests
    This paper discusses a number of issues relating to the treatment of pre 1990 forest in the NZ ETS. All sections include discussion of options that have been suggested by key stakeholder groups, especially Māori.

Legislation and Regulations

Sustainable Land Management and Climate Change

  • Business opportunities arising from climate change
    This research was commissioned prior to the passing of the Emissions Trading Scheme (ETS) legislation. The research is to identify emerging opportunities resulting from the indirect impacts of climate change for New Zealand's land based primary sector. The research is a key input into the development of the strategy and five year plan of action for the government/primary sector partnership to maximise business opportunities from climate change.
  • Climate change and agricultural production
    New Zealands climate is likely to change over this century in response to increasing greenhouse gas emissions. We need to know how those changes will affect land managers and primary production systems. A report is now available that takes that first step in understanding the effect on agricultural production: Costs and Benefits of Climate Change and Adaptation to Climate Change in New Zealand: Agriculture: What do we know so far?
  • Climate Change Policy: Measures to address - Agriculture Sector GHG Emissions - Bruce White Report
    This report, commissioned by MAF, assesses a selected range of policy instruments for mitigation of greenhouse gases in agriculture.
    These include:
    • Government pricing of emissions
    • Cap and trade models
    • Offset Schemes
    • Mandatory emission standards
    • Voluntary emission reduction and reporting programmes
    • Extension activities
    • Agricultural sector research and development.
    The report assesses these options against evaluation criteria and looks at short term options and longer term strategy.
    The report was produced by Bruce White, former economist at the Reserve Bank.
    Download the full report as a PDF [845K PDF]
  • Mechanisms for recognising rights to carbon sequestered by land-based activities in New Zealand
    People undertaking land-based carbon sequestration activities in New Zealand may have the opportunity to generate voluntary carbon offsets. The buying and selling of voluntary carbon offsets is dependent on the tradability of the carbon represented by those offsets. The seller must be able to demonstrate ownership of the carbon and their ability to transfer it, or the rights to it, to the purchaser. This report identifies and analyses existing and new mechanisms for securing rights to carbon sequestration.
  • Voluntary carbon market opportunities - soil carbon management in New Zealand
    This report offers an overview of existing carbon offset programmes and provides an analysis of the key programme elements relating to soil carbon offset credibility and applicability to New Zealand. A total of eleven voluntary and compliance offset programmes were evaluated based on the credibility of their methodology, verification and certification, registry, and monitoring and reporting protocols. Offset programmes were further evaluated for their applicability to New Zealand and were assessed according to whether they included grazing and cropland management practices, their potential transaction costs, their infrastructure requirements, and their accessibility for New Zealand farmers.
  • Voluntary greenhouse gas reporting - Feasibility study
    Voluntary greenhouse gas reporting was identified in the Sustainable Land Management and Climate Change discussion document as a method through which farmers could estimate their greenhouse gas emissions and report them to a central registry. Such a system would provide farmers with a tool to identify and track emissions, and to record and verify emissions reductions. MAF commissioned an in-depth feasibility study of a VGGR system, and preparation of a business case for the system. This included advice on the likely use of the VGGR for farmers, incentives for uptake, and optimal system design.
    It should be noted that:
    • The report was commissioned to assist the development of policy advice;
    • MAF has not accepted all the recommendations in the report;
    • MAF is committed to the role and ongoing development of Overseer.
    Download the full report as a PDF [1.0M PDF]

Archived Reports

  • Archive
    Documents on how climate change is likely to affect agriculture and forestry in New Zealand placed on the MAF website prior to July 2005.

Contact for Enquiries

Sustainable Land Management and Climate Change
MAF
Pastoral House
25 The Terrace
PO Box 2526, Wellington
Tel: 0800 CLIMATE (254 628)
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