Maximising the benefits of trees on farms in Tasmania – a desktop review of investment opportunities to improve farm enterprise productivity, profitability and sustainability

ABSTRACT Demand for forest products in Australia exceeds domestic capacity for local production and supply, resulting in a significant trade deficit in forest products of around AUD 2 billion per year. Domestic demand for forest products is forecast to continue increasing because such products are recognised as more sustainable than many alternative materials used in construction and as feedstocks for other industrial processes. There is increasing pressure to establish more forest plantations to meet this need. Tasmania has around 16% of the national plantation estate and large areas of natural forests that have been protected and conserved. However, there has been a recent decline in the area of the plantation estate, both nationally and in Tasmania, mainly due to increasing competition from agricultural land uses, which provide higher returns and drive land prices higher than can be justified by returns from forestry. This declining trend will be hard to reverse, given that substantial new areas are unlikely to be available for greenfield plantation establishment. A more prospective area for expansion is likely to be the establishment of trees on farms. This option has significant potential because strategic investment in trees on farms can create valuable assets for increasing farm-level sustainability, resilience and profitability. The choice of appropriate species and planting configuration can help improve the financial balance sheet, stocks of natural capital and flows of ecosystem services. Past investment motives for tree-planting in Australia have mainly been based on anticipated returns from timber. If more tree-planting is to be achieved in Tasmania in the future, it will have to be on cleared private land, and the investment motivation will need to encompass the broader values of trees beyond wood production. This review explores the prospective investment opportunities to facilitate greater establishment of trees on farms and sets out seven key areas where research and policy effort is needed: engaging with leading agricultural financial institutions; engaging with institutional investors; engaging with grower organisations around ‘zero carbon’ and ‘nature positive’ branding; research to support the better quantification and adoption of natural capital and its financial benefits; encouraging joint ventures between the industrial plantation sector and farmers; better monetising the carbon sequestration by trees; and the reinvigoration of social capital around growing trees.