Economics of managing New Zealand silver beech for timber and carbon
Implementation of the New Zealand Emissions Trading Scheme (ETS) has raised questions about its impact on the economics of indigenous forestry in New Zealand. One of the fastest growing (and hence economically most promising) indigenous forest types is silver beech (Nothofagus menziesii (Hook.f.) Oerst). An economic analysis carried out using data from a long-term thinning trial in silver beech in Alton Forest, Southland provided some answers to the following questions: What is the potential financial impact on the economics of indigenous forestry of participation in the ETS? How does provision of this environmental service affect potential returns from timber? The analysis shows that, under some circumstances, participation in the ETS might provide favourable returns to indigenous forest owners. The option of timber production later in the rotation could be retained, although under current cost and price assumptions this would not be profitable. Because of the generally unfavourable economics of timber production from indigenous forest, some methodological issues involved with the use of NPV analysis for these types of projects are also explored.