NZ Government should rethink its forestry policies

Friday 9 Aug 2019

New Zealand’s forestry policy is in a mess according to one academic commenting this week. We have drifted into a situation where the big decisions are made outside of New Zealand. Governmental forestry policy is like steering a dog by the tail. And this particular dog has a mind of its own.

Let there be no doubt that forestry has been and will be of great importance to New Zealand. The problem is that key decisions affecting forestry and hence New Zealand land-use are being made outside of New Zealand. The key decisions are being made by international investors who are figuring ways of making money in a new global environment where there is lots of capital looking for a home.

If we go back to the forestry boom times of late in the 20th Century, then forestry investments were only for those who were prepared to wait a long time for a cash return. Even then, investors had to be satisfied with returns on capital of something around six percent or less, net of inflation. It was also a highly risky investment, requiring thirty-year foresight as to timber demand.

All of that has now changed, and here is why.



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