The Farm Forestry Association has accused the Government of denying small-scale foresters carbon income from their trees.
It is objecting to the Government's decision to treat forestry blocks of less than 100 hectares differently from larger plantations in the way they are measured for carbon storage.
The Cabinet has adopted the Ministry of Agriculture and Forestry's recommendation to restrict the use of the Field Measurement Approach (FMA) in estimating carbon sequestration to forests of 100 hectares or more.
Owners of smaller post-1989 forests seeking carbon credits will have to use an older, less sophisticated method of calculation based on a set of tables on the MAF website.
Farm foresters president John Dermer says the 'look-up' tables, as they are called, significantly under-estimate the carbon stored in trees, in particular those growing on more productive land.
In some cases, it could amount to a loss of hundreds of thousands of dollars in potential carbon income, he says.
MAF acknowledges that the Field Measurement Approach does allow for greater accuracy and fairness than the look-up table approach, which is based on nationally or regionally-averaged forest data.
However, MAF director of sustainable programmes Clive Lilley says the Farm Foresters' Association view does not take into account the compliance burden on small land owners of participating in the FMA, or the costs to the taxpayer of the extra administration.
Mr Lilley says including all forests irrespective of size also raises the risk of giving out more credits nationally than are warranted by the carbon being removed from the atmosphere.
Mr Dermer accepts that many smaller growers would not want to pay the cost of setting up measurement sites under the FMA system, but they should at least have the choice.
MAF says with the 100-hectare threshold, the FMA applies to about 90% of registered forest land, which in its view will encourage the optimal level of carbon sequestration.
For the other 10% it says the look-up tables represent a genuine average rate of carbon storage, so overall, the Crown will be paying out about the right number of credits for small land owners.
Mr Lilley says what is important is that the look-up tables provide accurate data on the rate of change in carbon stocks, and this is what landowners claim in their emissions returns - not the overall stock of carbon.