The report of the Comptroller and Auditor General in 2018, referred to by the Deputy, noted that the Cost Benefit Analysis carried out by the Department in 2014 excluded several cost factors due to the difficulty in quantifying them, including the tax treatment of forestry and the report went on to make the following recommendations:
• Where significant programme changes are being considered, a revised and updated cost benefit analysis should be undertaken. The analysis should take account of any revised targets and consider the alternative methods to achieving those targets.
• The Department should review the impact of changes to grant payment rates to ensure that continuation of the programme represents good value for the State.
In the extensive consultation process and the economic analysis that preceded the launch of a new Shared Vision for forestry, the Draft Forestry Strategy, and the Draft Forestry programme these and many other issues were considered.
The Cost Benefit Analysis that was carried out on the draft proposals took full account of the recommendations cited above in the Comptroller and Auditor General’s report and included deadweight and the displacement of agricultural activity as well as an estimate of the value of carbon based on the shadow price as provided for in the Public Spending Code.
In developing the new programme proposals my Department was conscious of declining afforestation trends and the need to increase the level of afforestation to meet climate action targets. It was important to make proposals which would be realistic and attractive enough to encourage landowners to make a permanent land use change to forestry. To achieve this and to deliver the significant economic and societal benefits of forestry, an assumption of continuing tax-free timber benefits was made, especially given the long rotation period of all tree types and the much shorter duration of premiums paid for income foregone on the land.
The achievement of climate action targets and the accrual of the benefits to society of forestry requires a balancing of the societal costs against the costs and benefits to the landowner. I am confident that our economic analysis strikes an appropriate balance to increase afforestation levels and deliver significant societal benefits.
