Modeling the impact of carbon farming on land use in a New Zealand landscape

Abstract The opportunity for private landowners to receive carbon credits from reforestation, or “carbon farming,” will change the relative value of land uses for landowners, potentially having an impact on land-use decisions. We constructed a spatial model to evaluate the potential scale and location of carbon farming in a New Zealand landscape, the size of resulting carbon stocks, and the economic trade-offs for landowners considering carbon farming. We modeled the carbon accumulation, economic value, and potential uptake of a carbon farming management system that utilized native forest regeneration on set-aside land. For the study area, the Gisborne District of New Zealand, we found that regrowth of native forest species on estimated Kyoto-eligible marginal pasture has the technical potential to store 104.2 Mt CO2-e over 70 years over 379,000 eligible hectares. We found 102,951 ha where the potential economic revenues from carbon in our most conservative scenario could generate NZ$912 million in excess of expected grazing revenues over 70 years of forest regeneration. Our results suggest that reforestation could out-compete grazing on at least 27% of eligible land in the Gisborne District. Sensitivity analysis shows that uncertainty about the scale of carbon sequestration can have a sizeable effect on the estimated profitability of carbon farming, but estimated land conversion is strongly affected by the choice of discount rates among landowners and the utilization of compatible incentives for other environmental services. Potential profits from carbon farming are strongly affected by the uncertainty of the future value of carbon credits.