Forestry has been in the news recently for the wrong reasons such as taking up valuable food producing land, environmental and infrastructure damage from slash, and the impact on jobs and rural communities.
But there are other stories. Mitigating climate change, preventing soil erosion, rebuilding New Zealand’s natural environment, supporting rural communities through job creation, and providing a business model, with decent risk adjusted returns, to fund the initiative.
MyFarm’s latest offer, Terra Verde Investments LP, which is open to wholesale investors, supports this alternative story. The scheme, which is being jointly promoted by MyFarm and Colliers Syndication team members Kris Ongley and Ben Jamieson, will buy up to three existing pine forests and establish one new forest.
The existing forests are to be preserved thereby improving New Zealand’s carbon budget, and the new forest is to be established on poorer quality land. And over the long run, what started as a Pinus radiata forest will be encouraged to regenerate into native species. The pine acts as a nurse crop, and with the right interventions, native seedlings are established and eventually take over.
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Andrew Watters, Chief Executive, MyFarm Investments, says like most Kiwis, MyFarm believes New Zealand has a responsibility to do their bit for the environment.
“As an investment specialist, we look for smart investment solutions that balance the competing needs of people, planet, and prosperity,” Watters says.
“Permanent regenerative forestry helps mitigate climate change. New Zealand Treasury forecasts the government will need to spend $3 to $24 billion on carbon credits to meet its Paris Climate Accord commitment.
“Under this agreement, New Zealand has agreed to cut net greenhouse (GHG) gas emissions by 50 per cent by 2030 (versus 2005 gross emissions).”
By retiring three forests, and planting a new one, Terra Verde’s forests are forecast to reduce net emissions by 1 megaton by 2030, the equivalent of over 50,000 families’ annual GHG emissions.
Concerns about forestry replacing productive farmland are valid. Regenerative forestry in the right location can help to create value on less productive land, particularly land prone to erosion as tree roots help prevent topsoil loss. This view is supported by the Ministerial Inquiry into Land Use, which recommended transitioning erosion-prone areas on the East Coast to permanent regenerative forests.
Ongley, Director of Investment Sales at Colliers, notes that studies show regenerative forestry can benefit rural communities, supporting up to 25 per cent more jobs than farming the same land.
“Actively managing for native regeneration requires a wide variety of skills, including ecology, pest control, and forest management,” Ongley says.
“Re-establishing native forests is important for restoring biodiversity in New Zealand's natural environment. But presently planting native forests is neither economic nor effective at scale.”
Native forests only store one third of the carbon over 30 years compared to pine trees and the cost is five to 10 times higher than planting radiata. Adopting a native-only planting approach would require three times the land and large subsidies would be needed to attract capital.
Regenerating forests by utilising Pinus radiata as a cover crop for native species regeneration brings the best of both solutions – the fast sequestration of pine initially, and the increasing biodiversity of a native forest over time.
The approach is not without risk. Some sites are better than others for successful regeneration and some pine trees may remain in the forest for more than a century. But given our challenges, permanent regenerative forestry, actively managed to transition from pine to native, offers a viable transitional solution for New Zealand.
- Article supplied by Colliers
