Seeing the forest for the trees: Exploring alternate land use options for the native forests of Tasmania
November 29, 2023
Australia is home to some of the world’s most ancient forests. These native forests are some of the most biodiverse environments on the planet, and are a valuable tool in the fight against climate change through their ability to capture and store carbon and regulate the water cycle.
This paper offers policymakers a blueprint for assessing the true value of our native forests. Recognising the inherent preferencing of the quantitative (particularly when it comes to Expenditure Review Committee processes), we conduct a comprehensive cost-benefit analysis of conserving Tasmania’s native forests, in particular those which are currently subject to logging by the state-run firm Sustainable Timber Tasmania (STT). This paper builds upon Blueprint’s previously published studies on the economic potential of alternate land uses of native forests in Victoria’s Central Highlands, and New South Wales’ North Coast.
Using a cost-benefit analysis based on cash flows, we evaluate the economic potential of native forest conservation by modelling the value of carbon sequestration against continued logging. Our forecast shows that if STT ceased their native logging operations in FY2025 instead of FY2049, the use of this land for carbon sequestration would provide a net-benefit valued at $72 million in present day dollars. We find that a move to alternate land uses will result in a positive net present value, even when factoring in the estimated cost of providing a transitional package to the broader forestry industry to facilitate its move toward a more sustainable plantation-based future.
Our cost-benefit analysis incorporates a range of assumptions that were deliberately designed to overstate the costs and minimise the benefits of halting STT’s native timber logging. Were we to remove these assumptions from our cost-benefit analysis, we find a net benefit of $936 million in ceasing logging immediately. By including these favourable assumptions, we, methodologically speaking, have given the logging industry the benefit of the doubt—demonstrating that even when every conceivable dollar is counted in favour of STT’s native timber operations, it nevertheless shows itself economically uncompetitive against alternate land uses.
The native forests of Tasmania have significant capacity to generate major alternate revenue streams that can replace that which is generated from logging—on the proviso that a robust carbon methodology is put in place, to enable the generation of Australian Carbon Credit Units (ACCUs) from a cessation of timber harvesting. In particular, we find that managing Tasmania’s native forests in a manner consistent with conservation principles would abate an average of one million tonnes of carbon annually. This equates to a net present value of $345 million at current ACCU spot prices.
Lastly, we must comment upon the unusual and declining transparency in STT’s annual reports. Other state-run forestry corporations that we have studied were noticeably less opaque, particularly with respect to pricing information. The lack of publicly available pricing information likely acts as an impediment to private investment by increasing uncertainty, thus deterring private plantation-based competitors from entering the market.
In light of our findings, we encourage the Tasmanian Government and Opposition to work in concert with the Federal Government to enact the following recommendations:
- Immediately cease all government subsidies to STT.
- Legislate the end of STT’s native forest logging operations in Tasmania by FY2025.
- Implement a robust carbon methodology that would enable the generation of ACCUs through a cessation of native timber harvesting and a suite of conservation-based management practices.
- Expand timber plantations to meet timber demand.
- Incentivise private investment in timber plantations.
- Improve STT’s transparency to match that of other state-run forestry corporations, particularly as it relates to the price of timber.
- Create a ‘natural capital’ weighting that increases the value of native forests, thus ensuring that they have a higher Benefit Cost Ratio when Expenditure Review Committee decisions affecting them are made.
- Support the development of environmental markets to channel private capital toward nature-positive biodiversity outcomes in Tasmania