Primary Industries Minister David Carter says the Government is considering whether there should be further initiatives to encourage forestry planting in view of the collapse of the carbon trading price.
The forestry sector was the first to be brought into New Zealand's emission trading scheme, giving foresters the option of selling carbon credits earned from planting trees.
But foresters say the carbon price collapse has undermined that option, and some landowners who went into forestry as a carbon investment say they may have to sell up.
Mr Carter said the Emissions Trading Scheme is no longer giving an incentive to plant trees now the carbon price has dropped from $25 to $1 a tonne.
"There may be need for Government to look again at whether we need some other programmes to facilitate reforestation, more planting of trees in New Zealand.
"At $1 a tonne I suspect we are getting into that awful space where we're actually seeing net deforestation in New Zealand."
Foresters say New Zealand needs 20,000 hectares of new forest a year to meet its Kyoto emissions targets, but last year there was a net loss of more than 18,000 hectares.