The Labour-Progressive coalition Government has confirmed today that it will proceed with the Permanent Forest Sink Initiative (PFSI), a major initiative that provides a new economic use for some of New Zealand’s most difficult and erosion-prone land.

Minister of Agriculture, Jim Anderton and Minister Responsible for Climate Change Issues, David Parker said that the PFSI allows landowners to get the economic value of removing carbon dioxide from the atmosphere and sequestering (storing) it in the form of new forests. They said that under the Kyoto Protocol, this process generates so-called forest sink credits, which can be sold on the international market.

"New Zealand land managers now have access to a radically new business opportunity from which to generate income-carbon farming. Because carbon farming does not necessarily require roads to be built or trees to be harvested, it is particularly well suited to isolated and highly erosion-prone land," Jim Anderton said.

"The PFSI provides an important new opportunity for land managers to protect vulnerable land, while still generating an economic return from it. Consequently, we expect regional authorities will be particularly interested in how the PFSI can help them respond to the risks of adverse weather events," Jim Anderton said.

David Parker said climate change was expected to increase both the frequency and intensity of storms. "The recent storms and serious erosion of hill country around New Zealand have highlighted the need for better protection of our hill country and the rivers and lowlands into which it drains."

The PFSI has been under development for a number of years. Following a review of climate change policies in 2005, the government took another look at the PFSI. This was in light of the findings of the review and the analysis of various work programmes considering long-term climate change policy, including for forestry.

"Though the Government is developing other policy options under the climate change work programmes, we are now satisfied that the PFSI is consistent with any likely climate change policy scenario," David Parker said. "We are also satisfied that it has significant potential benefits, not only for climate change, but also for the environment and the economy."

Jim Anderton said the sooner forests can be established the sooner economic and environmental benefits dividends will begin to flow. "The government is aware that a number of investors are keen to establish forests in the winter of 2007, and this means placing orders for seedlings now. Consequently we have decided to announce the PFSI decisions today."

"The Government is still developing other options for consultation to encourage afforestation and address deforestation as part of the forestry climate change work programme. These are challenging issues, and Ministers are still working through a range of options. Importantly, the announcement today on the PFSI does not close off any options for addressing deforestation or other options encouraging afforestation," the Minister of Forestry, Jim Anderton concluded.

The Government also agreed to a number of changes to operational details of the PFSI. These included:

1. Changing the way harvesting restrictions will be applied and removing the 35 year prohibition on harvesting;
2. Changing the date of eligibility for forests entering the PFSI to forests first established after October 2002 (the date the PFSI was initially announced), with an exception for indigenous forests, which are eligible from 1 January 1990.

• Details of these changes and other operational details of the PFSI are covered in the attached Q&A (60Kb MS Word doc, downloadable by clicking on the link at the head of this webpage)
• To make the PFSI operational, legislation must first be passed. This legislation, the Climate Change Response Amendment Bill, has already been through a Select Committee process and has been reported back to the House. Details of the bill are on the Parliament website, here.