6 min read

Offsetting carbon ETS Measuring carbon Earning and trading Registering post Tree Planting guides

Tree planting on your dairy farm can provide multiple benefits including timber, livestock shelter, shade, fodder, soil conservation and biodiversity. It also enhances the visual appeal of your farm. Additionally, you can earn carbon credits (New Zealand Units) under the Emissions Trading Scheme or Permanent Forest Sink Initiative by planting certain types of trees. But remember, the trees you plant must meet specific criteria, and their carbon sequestration rates may vary. It's crucial to understand all financial implications before starting any offsetting programmes.

The New Zealand climate offers many tree species options. There’s no real limit to what you can achieve once you get started.

Trees can provide many perks. Plantings for timber, livestock shelter, shade, fodder, soil conservation and biodiversity can deliver significant benefits. Each has the potential to add capital value to your farm as well as character and visual appeal. You can also earn carbon credits (New Zealand Units) under the Emissions Trading Scheme or Permanent Forest Sink Initiative for forests which meet the schemes’ criteria.

This section describes the basics of carbon farming and the ETS, the different schemes available for farmers who want to gain carbon credits, and the criteria that must be met to enter them.

Trees for offsetting carbon

Planting trees can help ‘offset’ emissions from your farm business. As trees grow, they store carbon in trunks, branches, leaves, and roots. When trees are cut down much of the carbon leaves the forest as logs to be turned into wood products; the remaining carbon is released back into the atmosphere over time as stumps, roots and woody debris decay. If a forest is replanted after harvest the overall carbon stock will continue to decline for a short time before the second rotation growth overtakes the decay from the first rotation. If a forest is converted into a different land use (i.e. deforested) all carbon is released back into the atmosphere over time. In essence, planting trees may not be a permanent reduction of emissions but they can go a long way in the short term.

The New Zealand Emissions Trading Scheme (ETS)

New Zealand has an Emissions Trading Scheme (ETS) to reduce emissions domestically to meet international obligations. The ETS puts a price on greenhouse gas emissions in the form of New Zealand units (NZU). An NZU is equal to 1 tonne of carbon dioxide equivalent. Sectors that absorb greenhouse gases, such as forestry, can earn and trade NZUs, while sectors that emit greenhouse gases must purchase and surrender NZUs to the Government.

The transport, energy, industrial processing, waste, and forestry sectors are fully included in the ETS and are obligated to surrender units for emissions. The agriculture sector reports emissions in the ETS, but is not obligated to surrender units.

Forests in the ETS

Planting trees in the NZ ETS can offset emissions from other sectors in the scheme. Forests play a big role in the ETS because they are New Zealand’s largest potential carbon ‘sink’ and thus supply of units. The ETS discourages deforestation (a change from forest to another land use) and encourages afforestation (a change to forest from another land use). Forests first established before 1990 are considered “baseline” while forests established after this date are considered “new” forest. This creates two types of forests in the ETS, ‘pre-1990’ and ‘post 1989’.

Pre-1990 forests in the ETS

Exotic forests established before 1 January 1990 are ‘pre-1990’ forests. Owners of these forests cannot earn NZUs but are required to surrender NZUs in the ETS if they deforest (change land use).

Indigenous forests on private land established before 1 January 1990 are not included in the ETS. They are instead managed under the Resource Management Act 1991 and the Forests Act 1949.

Post-1989 forests in the ETS

Forests established after 31 December 1989 are ‘post-1989’ forests. Post-1989 forests can be voluntarily registered in the ETS and earn NZUs. If a post-1989 forest is registered in the ETS, NZUs must be surrendered if it is harvested or deforested.  Units must also be surrendered in the event of a fire or natural event.

Determining ETS eligibility for post-1989 forests

Before you want to enter a forest (new or existing) into the scheme, you should ask yourself a few questions first. There a few criteria that a forest must meet before it can gain carbon units.

Is the forest primarily forest species?

Can grow to at least 5 metres at maturity where it is planted (including mānuka and kānuka)

  • Does not include fruit or nut trees
  • Does not include gorse, broom or native shrubs

Does the land meet the definition of “forest land”?

  • At least one hectare of forest species
  • Tree crown cover at maturity of at least 30% in each hectare
  • Average tree crown cover at maturity at least 30 metres wide

Does it meet the criteria for ‘post-1989’ forest land?

  • Was not forest land on 31 December 1989
  • Was forest land but deforested between 1 January 1990 and 31 December 2007
  • Has a new forest established or is reverting to native forest since 1 January 1990

Examples of eligibility

  • 20 hectares radiata pine was planted in July 1990 into an area that was pastorally farmed since the 1960s. Livestock numbers before planting were enough to stop regeneration of any forest species. This area is ‘post-1989’ forest land, established in July 1990.
  • 5 hectares back paddock pastorally farmed since the 1960s, with enough livestock to stop regeneration of woody species. In early 1991 livestock were removed to let the area regenerate naturally. Extensive manuka and kanuka seedling regeneration was visible over the whole area by the end of 1994. This area is ‘post-1989’ forest land, established in 1994.
  • 5 hectares steep gully was originally indigenous forest but was deforested and converted to farmland in the 1930s. It was farmed until the early 1980s then abandoned ad was left to revert to indigenous forest and is still forest today. This area was established before 1990 so is NOT ‘post-1989’ forest land.

Measuring carbon in your forests

Different species accrue carbon at different rates. Exotic species tend to grow quickly so accrue carbon faster. Indigenous forest tends to grow slowly so accrues carbon slowly. For forests 100 hectares and under MPI has default ETS look up tables to calculate the carbon stock per hectare for different species and regions.

The Field Measurement Approach is used to calculate the carbon sequestered from forests which are over 100 hectares.

Earning and trading New Zealand Units

Dairy farmers who own exotic or indigenous forests first established after 31 December 1989 can voluntarily register their forests in the ETS to earn NZUs as the forest grows.

Participants in the ETS earn units by submitting an Emissions Return that states the amount of carbon the forest has stored or lost over time (see ‘Measuring carbon in your forests’). An Emissions Return is required every 5 years and can be submitted voluntarily every year. If the Emissions Return shows an increase in carbon the Government will allocate NZUs to the forest owner. If the Emissions Return shows a decrease in carbon the forest owner is required to surrender NZUs to the Government.

NZUs earned in the ETS can be traded on a carbon trading platform and provide a source of income. It is important to keep in mind that if the carbon in your forest decreases for any reason you may be required to pay NZUs back to the Government. Explore all options and gain an understanding of the financial implications of offsetting programmes before initiating. More information about these implications can be gained by contacting the Ministry for Primary Industries on 0800 CLIMATE.

Registering post-1989 forests in the ETS

Dairy farmers who wish to register forest with the ETS must be able to prove the land did not already meet the forest land definition on 1 January 1990; this includes areas of reverting indigenous scrub species such as mānuka and kānuka. Aerial imagery of the property from around 1990 will give you the best idea of the land use at that time. Where land is in doubt, providing old photographs and receipts can help with determining eligibility.

To find out how to register a post-1989 forest in the ETS visit the Ministry for Primary Industries’ website.

With good planning and design, trees create a pleasant, diverse and interesting place in which to live and work.

Trees have the power to inspire awe and wonder. For generations they have been used to beautify the landscape.

Trees have many attributes. Plantings for timber, livestock shelter, shade, fodder, soil conservation and biodiversity can deliver significant benefits. Each adds capital value to your farm as well as character and visual appeal.

The New Zealand climate offers many tree choices. There’s no real limit to what you can achieve once you get started.

Tree Planting guides

Trees for bees

Pollination is crucial to agriculture and horticulture in New Zealand and worldwide.

Trees for bees guide

Trees for fodder

Growing trees for fodder is one way to mitigate the risk of feed shortages in times of drought.

Trees for fodder guide

Trees for shade

The right trees planted in the right place will provide excellent shade for livestock.

Trees for shade guide

Trees for shelter

Carefully designed shelter plantings have the potential to provide many benefits to farms.

Trees for shelter guide

Trees for soil conservation

The planned planting of trees for soil conservation can prevent erosion.

Trees for soil conservation guide

Planting for biodiversity

Trees for biodiversity can be planted on all farms and add capital value.

Planting for biodiversity guide
Last updated: Sep 2023

Related content

Critical Source Areas


1 min read



1 min read