Food or Forests?

More lunacy from government.  The unintended consequences of just being able to boost your country’s “green image” are enormous.

Carbon Profit Grows on Trees as Kiwi Farmers Ditch Sheep

New Zealand’s sheep farmers are flocking to a government carbon trading program that pays more to plant trees than sell wool and mutton.

The system, begun in 2008 and the only one of its kind outside Europe, awards farmers credits that are sold to offset greenhouse gas emissions. The project may earn them about NZ$600 a hectare ($172 per acre) a year on land unprofitable for grazing animals, said David Evison, a senior lecturer at the University of Canterbury’s New Zealand School of Forestry.

Forests planted for carbon credits may increase to 30,000 hectares a year compared with 3,500 hectares in 2009, the government estimates. The system is a welcome alternative for sheep farmers who’ve struggled for decades from a combination of slumping wool prices, drought and competition for land from the dairy and lumber industries, says Neil Walker, a forester in the Taranaki region of New Zealand’s North Island.

“If you’re an industry in decline, you have to see what options are available,” said Walker, who also heads the Taranaki Regional Council’s policy and planning committee. “There’s an economic case to be made for converting hill- country sheep farms to forests.”

These farmers are being shoved into the industry of forestry, as the government is creating distorted economic incentives for political purposes, kindly funded by the taxpayer.  The taxpayer has been conned into believing it is in his own best interest, yet all around him the cost of maintaining a certain standard of living rises mercilessly, as a result of similar policies that have gone before.  This is how it will impact taxpayers:

• Taxpayers will now subsidise farmers to grow forests not mutton.
• Every taxpayer will pay higher taxes on carbon emmissions related to the use of hydrocarbon fuels.
• Taxpayers will pay a higher price for mutton as supply of mutton declines.

For the farmer the case is clear as succinctly put by the head of the Taranaki Regional Council’s policy and planning committee:  “There’s an economic case to be made for converting hill-country sheep farms to forests.” Purposefully distorting economic cases in the market create unintended consequences for other sectors of the economy.

Now that there are severe droughts in the Black Sea region that have helped the price of wheat and grains spike significantly higher in recent weeks, will the economic incentive be there forNew Zealand farmers to plant wheat and earn a profit from the higher global wheat prices?  The higher wheat prices call forth new production from elsewhere.  If the economic case isn’t there to be made for farmers to plant more wheat in New Zealand, and rather to stick to forestry subsidised by government (which distorts the economic case), wheat prices will not fall as no new supply will come on stream.

Furthermore, how do you measure the forest’s performance to emit oxygen?  Sounds like a guaranteed income to me.  Who could turn that down?

In New Zealand’s case, the area of forestation planted for carbon credits is estimated to go up ten-times in years ahead.

The question now is, if forested areas the world over increase ten times, will there be enough CO2 in the atmosphere for these forests to actually grow?  Do forests not need to grow in balance and harmony with the environment?  If increasing the area of forest plantation irrationally could put this relation out of whack, is that not a bigger threat to the environment and its people?