How New Zealand’s Climate Fight Is Threatening Its Iconic Farmland
GISBORNE, New Zealand – Horehore Station, a sheep and cattle ranch, stretches over 4,000 acres on New Zealand’s North Island, with its jagged expanse of uneven hills and steep gullies covered in lush green grass.
Despite the rugged landscape, it is good, productive farmland. But soon it will no longer be a farm.
The land’s owner, John Hindrup, who bought it in 2013 for 1.8 million New Zealand dollars, sold it this year for $13 million or $8.2 million. His windfall was due to a newly lucrative industry in New Zealand: forestry investors will cover the property with trees and make money, not with their wood, but with the carbon the trees will suck from the atmosphere.
“If you’d told me this two years ago, I wouldn’t have believed you,” said Mr. Hindrup, 67, of the land’s sky-high value.
So-called carbon farming has become an important part of New Zealand’s drive to… climate neutral by 2050. Under a competitive emissions trading programbusinesses in carbon-intensive industries must buy credits to offset their emissions. Many of those credits are bought from forest owners, and as the price of the credits has risen, forestry investors have sought to raise money by buying ranches.
The Emissions Trading Program is New Zealand’s most powerful tool for reducing greenhouse gases. But the loss of farmland to carbon agriculture could threaten one of its most iconic industries and change the look of idyllic rural areas. Farmers and agricultural experts have expressed concern that sheep and livestock farming, a major employer in many communities and one of the country’s main export sectors, is on track for significant decline.
“We’re talking about a land-use transformation beyond anything we’ve likely seen in the last 100 years,” said Keith Woodford, an honorary professor of agriculture and food systems at Lincoln University in New Zealand, who is also an industry consultant. “It’s a big land use change, and we just need to make sure it’s what we want.”
The country’s emissions trading program is the only one in the world that allows companies to offset 100 percent of their forestry emissions. (The United States has regional carbon trading initiatives, but no national program.) New Zealand has made such a move toward carbon farming, in part because it isn’t doing enough to reduce emissions.
Although New Zealand’s emissions were small on a global scale, they were still rising before the pandemic, and it is one of the largest carbon polluters among developed countries per capita. The agricultural sector belongs to New Zealand largest emitter of greenhouse gaseslargely due to methane released by animals.
Current policy decisions, in response to the long road ahead in tackling climate change, are essentially holding back land use for decades, Mr Woodford said. Permanent carbon forests must remain planted with trees, and forests deserving carbon credits must: replant trees after they are harvested – usually in the 28th year – or face a financial penalty.
The amount of ranch land sold to forestry interests has already skyrocketed, with many of the sales to foreign buyers coming from places like Australia, Malaysia, and the United States. In 2017, the cattle and sheep farms sold as a whole for forestry amounted to approximately 10,000 hectares, according to a report commissioned by Beef + Lamb New Zealand, an industry group. Two years later, the figure was 90,000, and although sales fell early in the pandemic, they are expected to have increased by 2021.
Land sales have increased as the price of carbon credits has tripled to 80 New Zealand dollars over the past three years. The rise reflects an imbalance between supply and demand of credit as New Zealand’s emissions remain heavy, as well as the influence of speculators who expect carbon credit prices to continue to rise as the country faces the need to further tighten climate policy. to hone in on fulfilling his promises.
At current prices, credits can generate revenues from CO2 farming of more than 1,000 New Zealand dollars per acre per year, compared to about $160 for sheep and beef farms.
David Hall, a climate change policy researcher at Auckland University of Technology, said the price of credit is likely to exceed $100 in the coming years, but that a price above $200 would be needed to accommodate changes in the transportation sector. necessary to achieve the CO2-neutral target.
How many trees New Zealand will need to fulfill that promise is unclear. It will depend in part on how quickly the country transforms into a low-emission economy, with technological advances reducing the need for carbon farming.
According to current projections, the country’s Climate Change Commission estimates the figure at: 2.7 million hectares of carbon forests by 2050, but other models saw a need for more than 13 million hectaresabout 70 percent of the area occupied by sheep and beef farms in New Zealand.
Cutting down 2.7 million hectares of the sheep and beef sector could lead to a loss of New Zealand dollars 2 billion a year in exports, said Mr. Woodford. Meat and wool are New Zealand’s second largest export category, totaling approximately 12 billion dollars, or 15 percent of total exports.
If there is no clear industry to fill the export gap, the exchange rate would come under downward pressure, ultimately increasing import costs for New Zealanders, Mr Woodford said. “This in itself will not cause catastrophe, but it is certainly significant,” he said of the loss of large areas of cattle and sheep farms.
For rural communities, there is a risk that carbon farming creates “green deserts” of trees that provide few jobs. Permanent carbon forestry provides approximately one job per year per 2500 hectares after planting a report from Te Uru Rakau, New Zealand’s Forestry Department. Timber forestry generates dozens of jobs during planting and harvesting, but few for the nearly three decades in between. Beef and sheep farming provides regular and seasonal employment of about 13 full time jobs per 2500 hectares.
Horehore Station, the ranch that was recently sold, employed three people full-time and many others part-time, such as shearers, fencers and helicopter pilots, Mr Hindrup said. Then there were the truck drivers, cafe owners, and others who were indirectly dependent on the farm’s income.
“It’s just going to wreck those communities, that decimate regional economies,” said Kerry Worsnop, a farmer and councilor for Gisborne, one of about 10 areas concerned about converting farms to forestry.
A report of a business consultancy found that if all the steeper, more challenging land in the Gisborne area became a permanent carbon forest, nearly half of its jobs — about 10,000 — would evaporate.
Farmers face a range of pressures from New Zealand’s environmental goals. The government has considered changes to the rules that would take some of the heat from selling land in rural areas, but withdrew despite opposition from Maori landowners. As more farmers sell their land, operating costs will rise for those who stay, as they share expenses on things like veterinary care, said Toby Williams of Federated Farmers, an industry group.
In addition, the agricultural sector will soon receive a financial fine for its emissions, after being exempted from the CO2 trading program. And new environmental regulations have led to protests from farmers in which they have congested city streets with tractors.
“It just wasn’t worth my mental health and my physical health,” said Charlie Reynolds, who sold his ranch this year after being given a $250,000 fencing bill to comply with the new regulations.
Ultimately, the extent to which New Zealand’s ranch lands become carbon forests will be determined by farmers’ choices. Some plant their own property in trees. Others earn an income both livestock and carbon by turning underutilized ranch areas, such as erosion-prone gullies, into forests.
Niven Winchester, an economics professor at Auckland University of Technology, said the areas of the economy that have contributed significant amounts of greenhouse gases, such as agriculture, need to be reduced.
“We as a society need to do something about climate change,” said Mr Winchester, “and it will be costly.”