Policy on Forestry Slash

This is a post by PaulL, regular commenter and sometime contributor.

The recent floods have highlighted (again) the problem of forestry slash. It seems only a couple of years ago that there was a washout on the Napier – Taupo highway because of a bridge blocked then blown out by forestry slash. There was talk in the media, then no action.

I see again talk on twitter about this being a problem, but mostly in the context of blaming forestry or blaming global warming. I haven’t seen proposed solutions.

This post proposes a two part potential solution.

Let’s start with the problem. We have lots of pine forests because govt policy encourages them in many situations as compared to alternative farming. Those forests need to be harvested to provide an income both to their owners, but also to the country as a whole. We’re ultimately an agricultural country, and our farmland needs to remain productive.

Harvesting trees means cutting them down. The logs that have commercial value are extracted, and there is a lot of residue – logs that were unsuitable, tops and tails, branches, stumps etc. This residue is typically left to rot where it is. The larger bits (logs and stumps) take a long time to rot. A major flood or rainfall event can drive this residue into a river, from where it can back up against bridge pilings and then cause a dam. That dam will either blow the bridge out from the weight of water behind it, or cause the river to jump out of it’s channel and go places we’d rather it wasn’t.

The slash is clearly a by product of the forestry operations, and it’s imposing a cost on the rest of society. It’s an externality from logging. The logging operations currently have no reason to do anything about slash. It’s hard to trace a problem (e.g. a bridge blowing out) to an individual forestry operation, and therefore hard to attribute liability. There’s no penalty for not managing slash, and it would cost money for the logging operation to do something.

Standard economic theory says that we need a way to internalise this externality. We need to make it cost money to fail to manage it, or we need to make it profitable to manage it.

My potential solution includes both those elements.

Firstly, let’s consider what the slash that we care about is. It’s the larger logs/branches/roots that are big enough to get stuck behind a bridge, and big enough to take time to rot down. They’re not economic to extract, so they’re forestry waste. But they’re also quite substantial stores of carbon – a log is basically sequestered carbon. Left on the ground they’ll rot and return the carbon to the atmosphere as CO2.

However, some research is suggesting that if you bury them in the proper way, they don’t rot and the CO2 doesn’t return to the atmosphere. You’d be sequestering the carbon in them.

Refer Biomed journal, New Republic, Technology Review

Those articles are looking at growing trees specifically to bury them and sequester carbon, and think that it could be economic as compared to carbon prices in the ETS. If we consider instead burying forestry waste (wood that has no other value), presumably the economics could be better. The research isn’t done, because nobody has the incentive to do it. But NZ is a agricultural country with a strong science base – we could easily do this research and develop thought leadership on it.

Part one of my proposal is that the govt work with the forestry industry to ascertain how exactly slash could be buried in a way that sequesters carbon, and to offer carbon credits to forestry operations that bury slash. This is the carrot bit of the policy – it could make it financially viable to bury the slash.

Of course, burying waste will use a lot of diesel. I don’t know if that’s more or less than the carbon sequestered. Luckily though we have an ETS, if the diesel used in burying the slash is more than the carbon credits returned, then the diesel will cost more than the operation returns in carbon credits….and so the problem is automatically solved by the ETS.

The second part of my proposal is the penalties. All forestry operations would be required to demonstrate that their slash is contained and not going to leave the property in a flood or other event. This could be by burying it (per the first part of the proposal). But it might also be because the property isn’t susceptible to flooding, or they use a forestry mulcher to grind it up, or they sell the slash to make into wood pellets, or they pile it all up and burn it, or some other idea I haven’t thought of.

The way I would implement this is that all forestry operations are required to pay a levy that assumes they haven’t managed their slash. The levy goes to a central fund and is used to reconstruct things ruined by slash. If a given logging operation is certified “slash free” then they don’t pay the levy. The industry and government would work out what the definition of “slash free” is, and how you certify. Perhaps some operations could self certify (with an appropriate audit regime and penalties), or there could be forestry consultants who could certify (again with audit regime and penalties), or govt could create an agency that comes and checks and certifies (this would be the worst option from my viewpoint).

Under this proposal, if the numbers stack up, forestry companies would receive carbon credits for buried slash (payment for managing the problem), and those that don’t manage their slash would pay a levy for their mismanagement (internalising the current externality).