Comparative economic evaluation of different regimes

The NZDFI has developed growth models for selected species based on permanent sample plots in our trial network. This has enabled us to model outputs from three of our different proposed growing regimes, and make a comparative economic appraisal of the three regimes.

 

Evaluation of three NZDFI regimes

The potential economic feasibility of three NZDFI regimes has been evaluated:

(i) peeler poles – 15-20 year rotation

(ii) peeler/sawlogs – 30-40 year rotation

(iii) permanent forest – no harvest involved.

Data from NZDFI trials on a high and a low productivity site have been used to model potential productivity under each regime for both sites. The economic feasibility for high and low productivity scenarios for each of the three regimes is shown in the table below.

The analysis shows the required stumpage values per cubic metre (i.e. net returns at harvest) to achieve an 8% internal rate of return (IRR) for each growing scenario.

Stumpage values are calculated by estimating forest growing costs against the total recoverable volume predicted by the models across a range of harvest ages.

The table also shows the effect of the Te Uru Rākau ‘One Billion Trees’ (1BT) establishment grant on the long-term economic outcomes.

 

Regime and site type Optimum rotation length Required $/m3 stumpage to achieve 8% IRR with 1BT grant Required $/m3 stumpage to achieve 8% IRR without 1BT grant

High productivity site

Peeler pole regime

15-20 years $12-$14 $23-$27
Saw log/peeler log regime 30-40 years $56-$87 $87-$133
Permanent forest regime Indefinite Carbon price required to achieve 8% IRR over 50 years: $2.30 Carbon price required to achieve 8% IRR over 50 years: $6.80

Low productivity site

Peeler pole regime 20-25 years $31-$42 $58-$81
Sawlog/peeler log regime 30-40 years $113-$150 $177-$233
Permanent forest regime Indefinite Carbon price required to achieve 8% IRR over 50 years: $4.10 Carbon price required to achieve 8% IRR over 50 years: $11.70