Owners of forestry land need to be aware of decisions they should make this year under the Climate Change Response Act 2002. The Act was created to enable New Zealand to meet its international obligations to reduce carbon emissions.

As it affects forestry, the Act divides forests into two main categories: 
1. Pre-1990 forests, ie: forests planted in non-native species before January 1990, and 
 2. Post-1989 forests, ie: forests planted after 31 December 1989 either with native or non-native species on land which was not in forest on 1 January 1990.

Under the New Zealand Emission Trading Scheme certain foresters will be allocated New Zealand Units under the Kyoto Protocol, but there are then restrictions placed on the land regarding deforestation and disposal.

Pre-1990 forest land

Pre-1990 forests are automatically brought under the Emission Trading Scheme, and the owners of these forests may be entitled to a free allocation of units but not to future emission units. The owners may not deforest more than two hectares in any five year period.

The critical date for ownership and allocation of units of a pre-1990 forest was 20 July 2010.

If you owned the land on that date you are entitled to an allocation of units. If you owned the land prior to 31 October 2002, you will receive 60 free units/hectare of forest land. For land acquired after that date, however, you will only be entitled to 39 free units/hectare.

However, if the size of the pre-1990 forest was less than 50 hectares as at 1 September 2007, you have two choices. You can: 
1. Apply for an exemption from the scheme, or 
 2. Elect not to apply for an exemption and elect to receive the free units. The land, however, will be locked into forestry unless you (as the owner) pay for the cost of deforestation, surrender the units and pay a fee to the government.

An application for an exemption for an under-50 hectare pre-1990 forest must be made before 30 September 2011. An exemption notice will be placed on the title to the forest; exemption is permanent and cannot be traded or transferred to another area.

A pre-1990 forest of more than 50 hectares is automatically part of the scheme. This means that you cannot permanently deforest the land unless you meet certain costs. In this case, you, as the owner should apply for a free allocation of units before 30 November 2011 which will give compensation for the restriction of the future land use; you will then be granted a certain number of units into your account on the Emission Unit Register. These units can be sold to other participants or retained so that they can be returned to the government to defray the costs if in the future you wish to permanently deforest the land. If no application is made for the units they will not be allocated.

Post-1989 forests

Post-1989 forest land could earn units from 1 January 2008. You must opt into the scheme in order to obtain the units. If you don't opt in, you can deforest the land without any scheme liabilities.
If you intend to change the use of the land to a use other than forestry, eg: grazing or dairying, do not opt in.

The principal benefit of becoming a voluntary participant in post-1989 forests is to earn units from the government for any increase in the total carbon stocks. If you opt in before the end of 2012, units can be earned for the total carbon absorbed by the forest between 2008 and 2012. If you register after 31 December 2012 you will only be able to earn units for the period after 2013. To opt in as a voluntarily participant you must own the forest land, have a registered forestry right or registered lease over the forest land, or be a party to a crown conservation contract.

The effect of opting in as a voluntarily participant means that you are required to report carbon levels every five years, notify the sale or transfer of the land, surrender any units if the total carbon stock is reduced and return any units if part (or all) of the forest is harvested or destroyed.

Crucial dates for 2011
30 September: Application for exemption for under 50 hectares pre-1990 forests.
30 November: Application for free allocation of units for pre-1990 forests.

Furthermore, if you are selling or buying forestry land you need to be clear as to the proper treatment of the units. Specific units are transferrable and some are not. If units are retained and not transferred with the property the value of the units (at present about $20/unit) must be paid back to the government.

You may need expert advice to navigate your way through this entangled undergrowth.