Forestry contributes $5.4 billion to New Zealand’s GDP, but rising regulatory costs could affect future investment and replanting decisions, new research shows.
The NZ Institute of Economic Research (NZIER) reports the sector plays a particularly important role in several regional economies.
Forestry accounts for 7.9% of Tairāwhiti’s GDP — the highest proportion of any region — and contributes more to the regional economy than beef cattle farming in Tairāwhiti and Nelson-Marlborough.
It also contributes more than sheep farming in Northland and Nelson-Marlborough.
New Zealand Forest Owners Association chief executive Dr Elizabeth Heeg says forestry supports employment throughout the supply chain.
“Forestry keeps crews, contractors, truck drivers and mills working, along with processors, manufacturers and the local businesses that supply and support them.
“Those wages are spent locally, so the impact reaches well beyond the forest.”
NZIER modelling estimates a 10% reduction in forestry output in Tairāwhiti would cut household spending by 1.4% and exports by 4.4%, while also reducing employment and wages.
The research found regulatory costs had increased across most areas since national environmental standards came into effect, with smaller forest owners carrying a proportionately greater burden.
“A small grower can pay almost as much to prepare a resource consent as an operator with a forest 100 times the size, and monitoring fees can add another 20% to 50% of the original consent cost in some regions,” Heeg says.
“Growers expect to meet high environmental standards, but costs also have to reflect the size of the forest and the risk involved. Otherwise they start affecting decisions about whether people keep investing and replanting.”
NZIER estimates production forests provide approximately $1.6b annually through carbon capture and $312 million in avoided soil erosion.
The research also identifies benefits for water quality, biodiversity and recreation, including walking, mountain biking and hunting.
Heeg says planting and replanting decisions have long-term consequences for contractors, processors and other businesses that depend on the sector.
“We want forestry to keep providing long-term work and investment in regions where communities have built businesses around it, while continuing to improve how forests are managed and environmental risks are reduced.”
*Click here to read the full report.
