1. NZ Forest Policy Project Introductory Comments: ‘Futures’ Analysis Wayne Cartwright

2. These brief comments are based on the outcomes of two Workshops the FPP process – that were part of the briefing to the WPs The first Workshop in February  Established future insight into the situations in which NZ forestry will exist and operate out to the 100 year time horizon that was chosen  Assessed the implications of this situation for NZ forestry – future opportunities, risks and limitations

3. A second Workshop then used the understanding of these future situations to decide, for the purposes of developing FP  The future intended contributions of the forest sector to the wellbeing of NZ citizens – economic, social, and environmental – from identified sources of forest utilisation  Provisions for commitment to existing and future international agreements In this way, overarching strategic objectives were provided to the WPs

4. The Future Situations of the NZ Forest Sector There are many future drivers of change that will take human civilization into situations where there is no precedent, quite early in the 100-year horizon of the FP. The FPP Workshops focussed on just two of these drivers because their effects will be very large and they are already ‘locked-in’ - are certain to occur  Global warming/climate change  Sharply rising costs of energy within about 10 years.

5. Key Aspects of Climate Change  Increasing global average temperatures - the current path is towards 4 degrees in about 60 years – 2 degrees is ‘locked-in’  Increases beyond 2 degrees can be reduced if global emissions of GHGs are reduced sharply (at least 40%) very soon, and continuing to decline rapidly – but there is no compelling evidence that this will happen  Widening ranges of temperature variation - globally, and with regional differences.  Major regional shifts in rainfall patterns  Increasing frequency and intensity of severe weather events – such as droughts, rainstorms, snowstorms, floods, high winds, tidal surges, unseasonal frosts  Rising sea levels – most likely more than 3m by the end of the century

6. Direct Effects of Climate Change on the Global Forestry Sector Forest health and growth Feasible land use for forestry Risks arising from drought, rainstorms, high winds, floods, and coastal inundation/salination Risks from each source to current and future forests Risks to infrastructure – especially roads – and how to mitigate them The role of forestry in mitigation of wider risks to the environment, economy and social wellbeing

7. Indirect effects of Climate Change on the Global Forestry Sector Global economy Regional economies Ways of human living – how individuals, families, and communities are able to function There is broad consensus among researchers that these changes will be profound – outside the range of historical experience

8. Implications of Economic Effects Ownership of forests in the sector will change as global capital markets become stressed Finance for international trade will tighten as a consequence of stresses on the banking and financial sector Markets for wood fibre products will change greatly Reduction in overall international demand Some traditional regional markets decline drastically as their underlying economies are severely disrupted Regional pockets of much higher demand due to effects of climate change Markets for wood products as fuel expand

9. Energy Costs Forestry sector policy should expect the costs of producing energy to rise sharply within about 10 years, to at least US$120/bbl equivalent because, with major effects  Disruptive and recessionary effects on the global economy and financial markets that far exceed the GFC of 2008-11  Global economy will adjust to reduced energy usage - new ways of living that have much lower energy requirements  Quite different economic and financial structures will emerge as a basis for eventual stabilisation The economic effects of climate change and energy costs are similar and will reinforce each other

10. Implications for New Zealand  New Zealand can be buffered from the energy cost effects to a limited extent because about 70% of our electrical energy comes from hydro generation which has relatively low costs – but this buffer depends on pricing policy  There is no buffer from the global economic disruptions driven by rising energy costs  These will have direct effects on New Zealand’s export markets and the international financial markets that New Zealand relies upon

11. Future Intended Contributions of the Forest Sector Identified by FPP Workshop  Financial returns to forest owners who are NZ citizens (noting that returns repatriated to offshore owners do not contribute wellbeing to NZ citizens)  Direct employment of NZ citizens and purchase of goods and services from NZ suppliers, irrespective of forest ownership  Delivery of conservation that NZ citizens value  Delivery of carbon sequestration that results in payment to NZ owners and/or meets international agreements  Delivery of amenities and recreational opportunities that NZ citizens value  Net revenue to NZ operators from tourism that engages the forest sector  Maori values not recognised in the other contributions

12. Sources of Contributions Identified by FPP Workshop  Commercial wood fibre production, processing, and marketing  Carbon sequestration  Sources of energy  Land and water protection and recovery  Conservation of biodiversity  Recreation and tourism  Complementary and novel products The proposed role of the WPs has been to develop the Strategies to attain the Contributions from these Sources