A Waikato study has concluded that growing trees for carbon credits on poorer hill country could be a better income option for farmers than running livestock.
Waikato Regional Council is working with the forestry Crown Research Institute Scion to develop a carbon forestry strategy.
Dr Graham West from Scion, who led the study, says there are environmental gains and economic benefits from planting land prone to erosion in trees.
He says that within a few years of planting fast-growing exotic trees such as radiata pine, farmers can get an income from selling carbon credits.
"Generally, traditional forestry hasn't been terribly profitable and the addition of carbon revenue substantially improves it in the order of probably five times from about $100 a hectare up to about $500 a hectare in annual returns.
"When you compare that with lifestock farming, particularly on the harder hill country that's carrying five or six stock units and may be eroding, that's probably producing something in the region of $100 to $200, so it is significantly above that as well," he says.
Graham West says the economic gains still stack up if trees are harvested and farmers then have to pay carbon penalties.
He says while meat and wool prices may currently be high, carbon farming could protect farmers' incomes during periods of poor returns.