The New York Times reports that in New Zealand, investors are buying up pastureland to grow trees that absorb carbon from the atmosphere in their place.
The government raises greenhouse gas emission charges and encourages the abandonment of animal husbandry. Landowner John Hindrup, who bought productive farmland for NZ$1.8 million in 2013, recently sold it for NZ$13 million. He made good money on the deal thanks to the expansion of the arborist business, and they make money not from wood, but from the carbon dioxide that the trees absorb.
So-called carbon farming is a key element in New Zealand’s move towards carbon neutral status by 2050. As part of the strategy, there is a program for the sale of quotas for emissions: large companies buy loans to offset the impact on the climate. As the price of loans has risen sharply, large investors are looking to capitalize on buying ranches.
It is worth noting that New Zealand’s greenhouse gas trading program is the only one in the world. It allows industrialists to offset 100% of their emissions through forestry development.
The loss of pastures due to carbon farming is jeopardizing one of the most iconic industries and the idyllic landscape of rural areas. Farmers and agricultural experts are concerned that sheep and cattle farming, which provides employment to a large part of the population – a significant export sector of the New Zealand economy – is doomed to decline.
“We are seeing a transformation in land use that is beyond anything we have seen in probably the last 100 years,” says Keith Woodford, industry consultant and emeritus professor of agriculture and food systems at Lincoln University in New Zealand, who is also industry consultant. “And we need to make sure we get exactly what we want.”
Hasty political decisions limit land use for decades, he said. If in 2017 meat farms sold 10,000 acres (4046.86 hectares) of land to forestry, then in 2019 – already about 90,000 acres. Many ranches have been purchased by foreign corporations from Australia, Malaysia and the United States. Between 2019 and 2021, the price of carbon credits tripled to NZ$80. At current prices, they could generate more than NZ$1,000 per acre per year from carbon farming, compared to about NZ$160 per acre from farming.
According to Keith Woodford, the reduction in the sheep and meat sector could result in a loss of exports worth NZ$2 billion NZD a year. Red meat and sheep wool account for 15% of New Zealand’s total supply to the world market. He noted that there is no industry in the country that has made up for this failure. As a result, the exchange rate of the New Zealand dollar will be subject to downward pressure, and in place of farms, there will be “green deserts” of trees that create one job per 2,500 acres per year.
The New Zealand Climate Change Commission has estimated 2.7 million acres of carbon forest needed by 2050, but other models indicate a need for more than 13 million acres, about 70% of farmland.