The case for renewed development in plantations Identifying forest values and the constraints to attainment – Stage one and two
31st March 2012
High upfront costs, high opportunity costs due to the long time period before harvest and insufficient revenue stream to compensate for risk makes investment in long rotation plantations economically challenging for many investors.
Stage one of the report assesses the case for investment in long rotation forestry and confirms that the level of investment in Australia could be below the economically efficient level.
The report considers the environmental values of forestry; analyses factors affecting the markets for environmental and wood values; discusses the capacity of different forms of forestry in supplying sawlogs; and draws conclusions and inferences on the key identified constraints for investors and the scope to improve the case for renewed investment by removing the identified barriers.
Stage 2 of the report considers 13 distinct groups of policy options covering values such as carbon, biomass, salinity, mixed environmental values as well as options including taxation reform and the removal of pricing distortions. The report tests these groups of policies against a comprehensive set of criteria.
The key message from the research is that all options put forward will require government intervention either through the provision of resources or through regulatory/policy reform. Industry will also have to stay involved to ensure the target objectives are achieved without compromising other objectives, and that policy design reduces the risk of unintended consequences.