7 September 2026

Forestry worth $5.4b to economy, but new research shows what's at risk

Forestry is deeply embedded in the economies of several New Zealand regions, with new NZIER research showing how strongly some regional economies depend on the sector and how widely a drop in activity can flow through jobs, wages, household spending and exports.

New Zealand Forest Owners Association (NZFOA) chief executive Dr Elizabeth Heeg says the research shows how closely local jobs and businesses are tied to forestry in parts of the country.

“Forestry contributes $5.4 billion to New Zealand’s GDP and in some regions it makes up a big part of the local economy,” Elizabeth says. “In Tairāwhiti, it accounts for 7.9 percent of GDP, the highest share anywhere in the country.

“In some regions it is also one of the biggest contributors among land-based industries. Forestry contributes more to the regional economy than beef cattle in Tairāwhiti and Nelson-Marlborough and more than sheep farming in Northland and Nelson-Marlborough.

“Forestry keeps crews, contractors, truck drivers and mills working, along with processors, manufacturers and the local businesses that supply and support them. Those wages are spent locally, so the impact reaches well beyond the forest.”

NZIER modelling in Tairāwhiti shows how lower forestry activity can spread through a regional economy.

“NZIER found that a 10 percent drop in forestry output in Tairāwhiti would cut household spending by 1.4 percent and exports by 4.4 percent, with jobs and wages also falling,” Elizabeth says.

The research also shows that keeping forests operating has become more expensive. NZIER found regulatory costs have increased across most areas since national environmental standards came into force, with smaller growers carrying a greater share of the burden.

“A small grower can pay almost as much to prepare a resource consent as an operator with a forest 100 times the size, and monitoring fees can add another 20 to 50 percent of the original consent cost in some regions,” Elizabeth says.“For a small business, that’s a massive hit. Growers expect to meet high environmental standards, but costs also have to reflect the size of the forest and the risk involved. Otherwise they start affecting decisions about whether people keep investing and replanting.”

Those decisions also affect what environmental benefits forests provide. NZIER estimates production forests provide around $1.6 billion a year in carbon capture and $312 million in avoided soil erosion. The research also identifies benefits for water quality, biodiversity and recreation, including walking, mountain biking and hunting in production forests. 

“So when we make decisions about where forestry belongs and how it is managed, we’re talking about jobs and businesses, but we’re also talking about what that forest is doing on the land.”

Elizabeth says forestry decisions made now will shape regional economies for decades.

“A decision about whether a forest is planted or replanted affects future work for contractors, the wood available to processors, the businesses built around the sector and the investment that stays in a region.

“We want forestry to keep providing long-term work and investment in regions where communities have built businesses around it, while continuing to improve how forests are managed and environmental risks are reduced.”

Download the NZIER reports:

• Economic contribution of forestry
• Environmental contribution of forestry
• Forestry: Cost of compliance

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Jen Nolan
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