Calculating Investment Potential Scores

Information about the suitability of growing trees for timber, biodiversity and carbon values is summarized as a investment potential score (low, medium, high). The investment potential scores should be viewed as approximate indicators of the types of revegetation most likely to be suitable for a specific land parcel. For example, land parcels near timber processing facilities and with adequate rainfall could potentially attract interest from timber plantation investors, whereas parcels far from timber processors and near remnant native vegetation may be suitable for habitat restoration for biodiversity.

The estimated index values included in the current version of the Trees on Farms platform are based on publicly available information. For example, timber index values are based primarily on the land’s proximity to timber processors and average annual rainfall, both of which are publicly available data.

Timber Investment Potential: Sawlog and Pulp

The investment potential for establishing trees for timber on cleared land is influenced by the growth potential of the site for different tree species and operational factors that determine harvest and transport costs for wood, such as slope and distance from the processing plant.

To estimate forest investment potential, land potentially available for tree growing was identified and assessed based on its suitability.  The focus for developing this prototype platform is an area within 200km of the major processing facilities of key timber industries in western and eastern Victoria, which is an approximate upper limit on the distance that harvested timber can economically be transported to processing facilities.

The timber investment index combines elements of land availability and suitability by excluding locations with existing woody vegetation and where timber production is incompatible with current land uses. Land remaining after this screening procedure was ranked for investment suitability using approximate net harvest returns. Plantation growth rates were based on estimates developed by CSIRO for three different wood-production scenarios: hardwood sawlog, softwood sawlog, and hardwood pulp.

The Plantation Investment Index is calculated using three factors:

Plantation Investment Index = Productivity (Tree growth x Product values) – Haulage Cost – Harvest Cost

Harvest costs are influenced by slope and whether the purpose of harvesting is thinning (the selective removal of individual trees within a stand) or clearfell (all the trees in the stand are harvested at the same time). A 20m Digital Elevation Model was used to determine four slope classes: 0-10o, 10-20o, 20-30o and >30o. These classes relate to the capacity to use different types of harvesting equipment and the cost of harvesting

Biodiversity Investment Potential

The biodiversity index is based on estimates of the number of native species (flora and fauna) that would re-establish on land parcels after 50 years following revegetation with previously existing native flora species.

The biodiversity index were estimated by the Department of Environment, Land, Water and Planning (DEWLP, unpublished data) for the entire State of Victoria, subdivided into square land parcels of 225m side length (or 5 ha in area). The index value for a specific land parcel is increased for parcels that are adjacent to rivers and streams, and for parcels that are adjacent to existing habitat. The latter adjustment is made for two reasons: an assumption that the use of a land parcel by fauna is more likely if it is near existing habitat, and that the biodiversity value of restored habitat is higher when it provides a buffer around existing habitat. The biodiversity score is further increased for land parcels that contain threatened species, reflecting their importance in Victorian conservation policy.

The biodiversity index values are currently being re-estimated by the Department, with the new estimates due to be available later in 2019. The current estimates should therefore be viewed as temporary and subject to change. Furthermore, the current index values may not accurately reflect the priorities of potential investors in biosecurity-focused revegetation projects because the values are based on a theoretical model of native species recolonization potential rather than explicit preferences of potential investors.

Carbon Investment Potential

The carbon index is based on the Maximum Potential Biomass dataset (MaxBio, Department of Climate Change and Energy Efficiency, 2004). The MaxBio dataset is an estimate of the maximum above-ground biomass that potentially would exist if native vegetation is present under current climatic conditions. MaxBio is estimated from a Forest Productivity Index based on monthly climate data, solar radiation and leaf area index.

Although the MaxBio values are useful for indicating broad suitability of land parcels for sequestering carbon, the value of carbon plantings will depend not only on the maximum biomass eventually reached but also on the rate at which carbon is sequestered. One site may have a larger discounted monetary value than another site where biomass grows more slowly and reaches a larger maximum future level.

The Carbon Investment Potential ratings include sites with more than 600mm average annual rainfall. Under existing rules relating to the Australian Government Emissions Reduction Fund plantations grown on sites with long-term average annual rainfall greater than 600mm may not eligible to receive carbon credits under the current rules for the Australian Government Emissions Reduction Fund. The Carbon Credits (Carbon Farming Initiative) Regulations 2011 Division 3.12 (specifically Section 3.37 – specified tree planting) outlines the conditions where trees planted in areas where the long-term average annual rainfall is higher than 600mm may be eligible as carbon offset projects within the Emissions Reduction Fund.