Owners of forests planted before 1990 have obligations to repay to the Crown up to 800 carbon units per hectare for stands that are not re-established after being destroyed. While the owner has 4 years to re-establish the forest, now presents a good time to think about possible land use changes because of low carbon prices. At the peak of $21 per unit in 2011, deforesting and changing the land use of a pre-1990 forest would cost a landowner over $16,000 per hectare in buying replacement units. This cost was largely prohibitive for owners looking at forest conversion into uses such as dairy.
At present with foreign credits priced at less than 30c the same exercise would cost just $240 per hectare. However the opportunity is limited because the cheap international credits will be banned from NZ sometime early 2015. If the flattened forest has not been re-established within 4 years then it will incur the deforestation carbon obligation in 2017/2018, by which time the only eligible unit will be our domestic NZU, and the price may well have increased.
Owners of forests planted after 1989 have to account for carbon loss due to windthrow damage regardless of whether the forest is replanted or not. Reporting can be delayed until June 2018 at the latest which is when the next mandatory emissions return is due to be filed to MPI.
The Ministry of Primary industries have indicated they will be releasing more information about storm damage and forestry under the ETS in their next Sustainable Forestry Bulletin.