New rules around carbon farming and the Emissions Trading Scheme (ETS) are reshaping how rural land can be used across New Zealand. Following significant growth in carbon forestry, the Government has introduced new limits on converting farmland into forestry for ETS purposes. The key point is that entry into the ETS is no longer straightforward

Last year, eligibility to enter the ETS became and now depends largely on land classification. More productive land faces greater limits, while less productive land remains comparatively less restricted.

The ability to enter the ETS has been a major driver of rural land demand and pricing. The changing regulatory environment may impact land value, future options, and investment strategies. Land once considered suitable for carbon farming may no longer qualify, reducing or removing that potential. The market may take time to adjust, and the full economic effects are not immediately apparent.

Due diligence is increasingly important in rural property transactions. Purchasers should seek advice, avoid relying on past assumptions, and instead confirm eligibility, assess land use options, and ensure alignment with their objectives.

We advise clients across the rural sector on land use, investment and operational issues. We can assist with your due diligence, including assessing land use constraints and provide practical advice so you can make a decision that works for you. Get in touch with our team if you would like to discuss your next project or venture.