Balancing agricultural productivity with environmental stewardship is a constant endeavour for many landholders. In our CarbonCurious session with Alice Shanks we discuss the practical side of forest covenants and the Emissions Trading Scheme (ETS), for landholders looking to balance productivity and conservation for both the environment and the bottom line.
Explore the practical advantages of combining forest covenants and the ETS for farmers. Drawing from Alice’s real life experience shared in the session, we'll highlight real-life examples of projects covenanted under respected organisations, like the QEII Trust, where landowners have successfully embraced conservation while also successfully participating in the ETS for carbon credit registration. Discover how these combined efforts not only enhance environmental sustainability but also create tangible economic incentives for farmers.
What is a covenant?
In New Zealand, a forest covenant refers to a legally binding agreement between a landowner and a conservation organisation or government entity to protect and preserve a designated area of native forest. It is a voluntary initiative that aims to safeguard the ecological value and biodiversity of forests by placing permanent restrictions on land use and development. Forest covenants serve as a powerful tool for conservation, allowing landowners to make long-term commitments to the protection of their land while retaining ownership and management control.
When a landowner enters into a forest covenant, they commit to a set of conservation objectives that align with the principles of sustainable forest management and ecological restoration. The specific terms of the covenant vary depending on the agreement between the landowner and the covenant holder, but typically include provisions that prohibit activities such as logging, mining, and intensive farming within the protected area. The covenant may also outline guidelines for sustainable land management practices, such as controlling invasive species, restoring degraded habitats, and maintaining water quality.
Forest covenants play a crucial role in preserving New Zealand's unique and diverse ecosystems. They help to safeguard native forests, which are home to a wide range of endemic plant and animal species, many of which are threatened or endangered. By protecting these forests, covenants contribute to the conservation of biodiversity, the mitigation of climate change through carbon sequestration, and the preservation of cultural heritage associated with the land. Forest covenants also provide opportunities for scientific research, environmental education, and recreational activities such as hiking and birdwatching, enabling people to connect with nature and appreciate the beauty and value of New Zealand's forests.
What’s the difference between a covenant and registering for the ETS?
While both approaches contribute to environmental goals, they have different focuses and mechanisms.
Covenanting emphasises conservation objectives. As a legally binding agreement between a landowner and an organisation to protect and preserve a designated area of native forest. It focuses on conserving and safeguarding the ecological value, biodiversity, and cultural heritage associated with the land. When a landowner enters into a covenant, they commit to specific conservation objectives within the protected area. The covenant ensures long-term protection of the forest, and the landowner retains ownership and management control while adhering to the agreed-upon terms.
The ETS registration centres around emissions reduction and financial incentives. The primary goal of the ETS is to reduce greenhouse gas emissions and mitigate climate change. It operates as a market-based system where participants trade carbon credits, representing emissions reductions or carbon sequestration. Landowners can register their forested land as a carbon sink, earning carbon credits for the amount of carbon dioxide their forests absorb. These credits can be sold to emitters who need them to offset their own emissions. Registering for the ETS provides financial incentives for landowners to engage in carbon offsetting activities.
How do covenants work with the ETS?
If you have covenanted land, you can register in the ETS. There's nothing that says that you can't, it just means that the ETS criteria applies. You can register covenanted forest and non covenanted forest at the same time, so you don't have to separately register a covenanted forest.
One thing to note is, if you enter forest into the ETS under the permanent forest category it’s somewhat similar to covenanting. A covenant might have more conditions attached to it, depending on how you do it, but the principle is the same - the forest must be permanent and cannot be removed.
Below are some examples of forests which have been, or are going through the process of being, covenanted and registered for carbon credits under the ETS.
Hidden Valley, Banks Peninsula
Area | 72 Hectares |
ETS Status | Registration to be submitted |
QEII Status | Registered |
Rates Remission | Full |
Grants | QEII, Regional Council, City Council |
"We went through the covenanting process that gave us all peace of mind that our investment in this land is secure. That was a really important part of the covenanting process for us. We haven't quite finished our emissions trading scheme submission to register for carbon credits, but those fees coming up in October are a real incentive to get going.
The Covenant document we did, we worked with, the QEII rep in the area called Miles Giller, and we have a special clause in the Covenant just just to make it really clear that the group, they'll own it, which is us. We own all carbon. That's created as we naturally regenerate this process.
So QEII have an interest in a certain aspect of the property rights, and you have full use of your land. You can sell it, you can register it for carbon, you can put walking tracks in. If you agree with help from QEII, you may be able to put Huts on. Everybody wants huts. Yes. We haven't got a hut. We've got a shed.
So it is on its way to be carbon and biodiversity together and the emissions trading scheme, when we do get in, will just give us that small income to manage our liabilities, which are fencing, pest control and weed control materials.
The good thing about doing a whole of Title Covenant here under the Christchurch City Council area is that there are no rates to pay long. May that last, but that's not the same all around New Zealand. I have a property on the, and the Buller, a very small council with very few ratepayers and they don't give you any leeway for having a covenant." - Alice Shanks
Little River, Banks Peninsula
Area | 535 Hectares |
ETS Status | Registered |
QEII Status | Registration In Progress |
Rates Remission | Not yet eligible |
Grants | QEII, Regional Council, City Council |
"This has had a small amount registered with the emissions trading scheme, and we will probably go back as those trees come up and past you, we'll go back and we'll register more. That is in the process of getting a covenant at the moment.
We're working with the rep to decide on our boundaries. One good thing about QEII is that they will partner with you for the cost of getting your fencing up to stock proof stage and on this property we have quite a few sheep that wander in, so we need to do the fencing. We will get an approved covenant, which will release a contribution from QEII towards the fencing, and it's only after we finish the fencing and make it stop proof that it will be surveyed and registered on the land title." - Alice Shanks
Charleston, West Coast
Area | 11.5 Hectares |
ETS Status | Lack evidence of land cover in 1989 |
QEII Status | On the waiting list |
Rates Remission | No |
Grants | - |
"This is a small block at Charleston. It was planted in Pines in about 1992, they all blew down in Cyclone Ita in 2014, and then most of the rest came down in, Cyclone Fay and Gita in 2017.
What happened was that it all came up in Manuka, and it's just racing ahead. It wants to go back to being a swamp forest and I thought it'd be really easy to get this into the emissions trading scheme. It's not. I've got this permanent forest coming away and I don't need to worry about the pine because it's rotted down, but the imagery's not clear enough to decide whether it was gorse or forest or grass paddock in 1990.
I'm still working on that because I happen to know it was a paddock, a gorse paddock. QEII reps often have waiting lists and I've got this on the waiting list with the local West Coast rep." - Alice Shanks
How should I move forward?
If you’re looking to protect your land long term, both the ETS or a covenant can work for you.
The choice between the ETS and covenanting land depends on your priorities as a land owner, including financial considerations, conservation goals, and desire for land management control. Some landowners may opt to register for the ETS to benefit from the income they may receive from their forests through carbon credits, while others may prioritise the direct conservation impact of forest covenanting. Both approaches contribute to mitigating climate change and protecting New Zealand's natural heritage, albeit through different mechanisms.
Not sure if the ETS is right for you? Get a free CarbonCrop land assessment to get started and our team can provide you with the information you need to make the best decision for you and your land.