Spatial and Temporal Responses to an Emissions Trading System Covering Agriculture and Forestry: Simulation Results from New Zealand

We perform simulations using the integrated Land Use in Rural New Zealand (LURNZ) model to analyse the effect of various New Zealand emissions trading scheme (ETS) scenarios on land-use, emissions, and output in a temporally and spatially explicit manner. We compare the impact of afforestation to the impact of other land-use change on net greenhouse gas emissions, and evaluate the importance of the forestry component of the ETS relative to the agricultural component. We also examine the effect of land-use change on the time profile of net emissions from the forestry sector. Our projections for the mid-2020s suggest that under a comprehensive ETS, sequestration associated with new planting could be significant; it may approach 20 percent of national inventory agricultural emissions in 2008. Most of this is driven by the reward for forestry rather than a liability for agricultural emissions. Finally, we present projections of future agricultural output under various policy scenarios.