The visible hand in economics

The delay of the ETS and forestry

Posted on: November 20, 2008

One thing that does upset me about the constant delays to the emissions trading scheme is the impact it has on the poor old forestry industry.

Forestry has struggled from high shipping costs, strong competition from places like Russia which has driven down prices, a large decrease in demand as building activity collapsed (especially in the US), and uncertainty surrounding the ETS.

Finally the government was clear – the ETS will be introduced and if you cut down trees that were planted before 1990 you owe a liability.  As a result, people cut them down before it was introduced – not getting the best price or having to store the timber.  Furthermore, companies started to look at planting trees – as a way of making some money off marginal land.

Now the whole scheme is up in the air – so forestry has to put up with more uncertainty, and people that have acted in the belief that the ETS would occur have been screwed over.

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