REMEMBER the Dr Evil character in Austin Powers who threatens to blow up the world in exchange for $1 million?
Those whom he threatened were so unimpressed that they laughed. Loudly.
He later changes that price to $100 billion – a much more impressive figure.
On Thursday, Climate Change Minister Cassy O’Connor released a study that contained some very slippery dollar figures.
The ground-breaking Tasmanian forest carbon study calculated how much carbon was stored in Tasmania’s 1.3 million hectares of trees – and attached a price-tag to them under various scenarios.
The most commonly repeated dollar figure was the $280 million that could be made if all native forest harvesting ceased on public and private land.
Note the word: Could.
Among the many “ifs” and the “buts” are the following points:
$280 million is the maximum that could be made from the carbon stored under existing market conditions. It could be as little as $80 million.
That income would be spread out over the next 38 years – not per year.
The study doesn’t factor in the money that would be lost from harvesting, and the wood products sold as a result.
The cessation of all native forest harvesting is highly unlikely – so, therefore, is cashing in on that price.
The report did not compare the financial benefits of cutting down trees versus leaving them standing, but others were quick to do some calculations.
Ms O’Connor was at pains to point out that the “carbon cash” sitting in our trees could be almost tenfold of $280 million – up to $2.6 billion – if Australia signed up to article 3.4 of the Kyoto Protocol.
As Premier Lara Giddings put it, the Commonwealth “with the stroke of a pen” could create a ready-made cash cow for the state.
Big “if”, though.
CO2 Australia authored the Australian-first study and the company’s James Bulinski made it very clear that the dollar figures mentioned in the report would be very difficult to realise.
As he put it, “it’s one thing to count carbon in forests, but an entirely different thing to cash in on it”.
Even Ms O’Connor admitted that “carbon markets are highly dynamic and the rules for participation are complex and the extent to which we can profit from Tasmania’s forest carbon is not clear at this point”.
In short, there is no way state Treasury will be banking on a single dollar.
The Greens, meanwhile, must be disappointed with the price-tags that were arrived at after the Labor-Green government paid $250,000 to the consultants, who took nine months to put the study together.
The findings are interesting scientifically, could inform public policy into the future and can certainly be built on academically in this emerging field.
But it is not evidence supporting the argument that our trees are worth more standing (in a strictly financial sense) than they are cut down.
Naturally, Ms O’Connor argued that money made from carbon stored in trees wasn’t the only reason not to chop them down.
There was the advantage of fresh air, biodiversity and tourism – to list just a few.
The study certainly reinforces the value of the forestry industry to the state’s economy.
The opposition likes to the use the figure of $1.4 billion a year that forestry was previously worth.
Not any more, of course.
Forestry Tasmania used the figure of $585 million – the final value of products sourced from state forests last financial year.
No mention, though, that the state-owned company announced a $12 million operating loss in 2010-11, which was ever so slightly better than the previous year.
A consultant’s review into its operations predicted that FT would lose up to $30 million a year for the next five years.
And no matter what happens to the company, taxpayers can be assured that they will pay.
That same review also concluded that a realistic market prospect for carbon credits could not be identified for the short-term.
In short, money doesn’t grow on trees.
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