Opinion: Carbon credits lie at the heart of forestry, sheep and beef economics, but it is not a simple story

Posted: 22 Apr 2024

I looked at the economics of sheep and beef farming relative to various farm-forestry options.

There is no doubt that most sheep and beef farmers are doing it tough right now.

Carbon credits are the business to be in if converting pasture to trees. They can rapidly turn a likely unprofitable timber-production business into a profitable dual business.  It did not matter what scenario I looked at, as long I used a carbon price of $60 then the internal return was acceptable, and in many cases much more than acceptable.

These projected returns raise questions as to why the big investment companies are not doing this right now. The most important reason is that confidence has been knocked around so much over the last two years, with Governments changing the regulatory rules of the game multiple times, that commercial investors lack confidence that the rules won’t be changed again. Forestry is a long game.

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