By Dr Suzi Kerr and Catherine Leining, Motu Economic and Public Policy Research
While people's eyes often glaze over when they hear the words “emissions trading”, we all respond to the price of carbon.
forest nurseries in New Zealand boosted production. But when prices plunged thereafter, hundreds of thousands of tree seedlings were destroyed rather than planted, wiping out both upfront investment and new forest growth.
Emission prices have since recovered but no one knows if this will last. With consultation underway on improving the New Zealand Emissions Trading Scheme (NZ ETS), the government should seriously consider a "price floor" to rebuild confidence in low-emission investment.