Limits to restrict farm-to-forest conversions

The Act will let you register up to 25% of LUC class 1 to 6 land on each farm as exotic forest in the ETS. The 25% allowance will be calculated as a quarter of all LUC class 1 to 6 land within a farm boundary.

A farm boundary is defined by what’s in the record of title. If a farm has more than one record of title, the titles must be adjacent and owned by the same person. The farm boundary will be defined as the outer boundary of the combined adjacent records of title.

A record of title can only be used for one 25% allowance calculation. When any land is used as part of a 25% allowance calculation, the regulator will attach a notice to the title.

You will not have to register your full 25% allowance all at once, as long as there are no changes to who owns the land or to the farm’s boundaries.

An additional 15,000 hectares of LUC class 6 farmland will be able to be converted to exotic forest and registered in the ETS each year nationally. We will allocate the right to apply to register this land by title through ballots and a permit system. Getting a permit will not guarantee the land can be registered in the ETS – all other ETS eligibility criteria must still be met. 

The Act requires some of the annual allocation to be reserved for smaller ballot applications. The size of the reserve and the definition of a small application will be set in regulations.

The national annual allocation limit has been initially set at 15,000 hectares. The Act includes a provision to review the annual limit to the enable Ministers to adjust the limit if needed. Reviews can occur in 2028, then 2034, and then every five years after. 

How the ballots will work

If you enter a ballot and are successful, you will get a permit allowing you to apply to register up to the permitted amount of LUC class 6 farmland.

The permit will be valid until 31 December of the third full year after it was issued. We may accept applications with a permit for a further 3 years if a temporary adverse weather event or similar circumstances stop you from registering before the permit expires.

Permits for LUC class 6 land can be in addition to the 25% allowance per farm. This means you could:

• register 25% of LUC 1 to 6 class land on a farm, then seek a permit through an LUC class 6 ballot for the opportunity to register more land, or
• enter a ballot for LUC class 6 land and register the 25% allowance later.

More details on how the ballots work is set out in the Act and will be supported by further details in regulations and on the MPI website.

The Act includes transitional exemptions for people who began the investment process of converting farmland to exotic forestry before the changes were announced on 4 December 2024.

To be eligible, you will need:

• to show you had a clear interest in the LUC class 1 to 6 land that you want to register, before 4 December 2024, 
• evidence that you made one or more qualifying forestry investment between 1 January 2021 and 4 December 2024
• to submit a valid and complete application to register in the ETS by 31 December 2027.

Demonstrating a clear interest in LUC class 1 to 6 land

To show you have a clear interest in the land you want to register, you must have one of the following:

• ownership of the land
• a registered lease or a registered forestry right, or an agreement to get a lease or a forestry right
• a conditional or unconditional sale and purchase agreement for the land
• a written offer to buy the land along with either:
  • a written indication of the seller’s intent to negotiate further, or
  • a written acceptance of the offer.

Evidence for a qualifying forestry investment

A qualifying forestry investment means any of the following:

• an emissions ruling under section 107 that land is eligible to be post-1989 forest land has been applied for or has been made by the EPA
• in relation to the establishment of a forest:
  • a resource consent has been applied for or has been granted by a local authority under the Resource Management Act 1991
  • a notice has been given under the Resource Management (National Environmental Standards for Commercial Forestry) Regulations 2017 to a local authority in relation to a permitted activity
  • a notice has been given under section 87BB(1)(d) of the Resource Management Act 1991
• investment in preparation for afforestation has been made, for example ordering seedlings or undertaking land preparation for forestry
• a recognised local or central government grant to afforest land has been received
• a third party has been contracted to undertake due diligence for the purposes of afforesting land.

These are the only investments that we will consider for a transitional exemption. The investment must relate to the LUC class 1 to 6 land you want to register in the ETS.

There is not a specific list of evidence that the regulator will accept as proof of a qualifying investment. This is to make sure there is flexibility for a range of investment situations. We will publish more information on applying to register with a qualifying forestry exemption.

Land that is existing forest land before the restrictions come into effect on 31 October 2025 will be exempt from the restrictions.

Read about what counts as "forest land" in the ETS

The restrictions apply to land that has been used for farming purposes in the past 5 years. Farming purposes could be:

• arable
• horticultural
• pastoral land use
• a mix of the above.

If only part of a farm meets this definition, it will count as being used for farming purposes.

Land that is not used for farming purposes will be exempt. There is a specific definition of unfarmed land in the Act.

The restrictions do not apply to LUC class 7 and 8 land.

• Highly or severely erosion prone land identified in a regional or district plan.
• Areas not on the national-scale LUC map.
• Registering new indigenous forestry in the ETS.
• Specific types of Māori land.
• Crown-owned land available for afforestation.
• Pre-1990 offsetting land.