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Terms of Reference: Marlborough Sounds Sustainable Land Transition Fund: Feasibility Study – Plantation Forestry Practices.

Purpose: To evaluate and report on the viability of a Sustainable Land Transition Fund (SLTF). The STLF would facilitate better management and protection of the Marlborough Sounds from excessive sediment loads entering the coastal marine area from a range of land uses, including plantation forestry.

Of the various land uses that result in raised sediments loadings entering the coastal marine environment plantation forestry is the initial focus. In that context the STLF will achieve its’ objective by identifying and enabling the implementation of operational improvements to plantation forestry practices, including setbacks and/or changes to existing harvesting techniques or retirement and/or introduction of alternative land-use management practices.

Issue statement: The Marlborough Sounds are a Jewel in the Crown of Marlborough and New Zealand. It is one of New Zealand’s iconic coastal ecosystems. The labyrinth of waterways has a rich history and holds special importance to Te Tau Ihu iwi. Captain James Cook visited Queen Charlotte Sound/ Tōtaranui during each of his three voyages. He noted the profusion of marine life, including an abundant fishery. That richness has declined to a struggling ecosystem of relative scarcity. This is manifest in the decline in blue cod, snapper, shellfish, and kelp. Once thriving green-lipped mussel reefs and scallop beds have been fished-out of the inner Sounds. The seabed has been damaged by generations of dredging and trawling, by a proliferation of swing moorings and by the removal of vegetation on steep hillsides and disturbance of erosion-prone soils which have poured silt and clay into the water to smother seabed ecosystems and cloud the water column. Sedimentation rates are now variously 5-20 times above pre-European rates, which are choking estuaries with mud, especially in Pelorus Sound/Te Hoiere (see satellite image left) and smothering any recovering sea life that forms structure on the seabed. Whilst acknowledging there are multiple sources of sediments entering the marine environment soil tracking analysis1 in the inner Pelorus Sound/Te Hoiere indicates that plantation forestry is a significant source of soil loss and resultant sedimentation relative to other land uses. The need to address these legacy issues and in an equitable way is now urgent.

Objectives: Provide a comprehensive background/contextual report outlining the factors that have led to the present situation.

Frame the alternate land use options and management practices. Scope and assess the feasibility and the desirability of such practices with

1 Although aspects of this analysis remain disputed by forestry industry parties, at the time of writing it represents best available information and, regardless, industry are committed to doing all they can to minimise the environmental footprint of plantation forestry activities.

Pelorus Sound sediment, 12 July 2018. 3 days after annual rain event

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affected landowners and regulators. Refine the outcomes sought and just transition practices to enable natural

capital to be retained at source as much as feasibly possible Evaluate a range of operating models for the SLTF and include different

potential arrangements for governance oversight. Outline the key dimensions and broadly scale the economic model that

could result from alternative land-use management practices.2

Undertake ‘broad-brush’3 cost-benefit4 analysis of preferred option(s) including incentives and disincentives for landowner participation in the SLTF.5

Broadly outline an implementation pathway(s); staging, involved parties’ key risks and milestones. The implementation pathway should recognise and include Te Ao Maori contemporary and traditional views.

2Scenario models must allow for a multi-generational perspectives to be drawn. 3 Provide relativity and ranges to support cost benefit analysis sufficient to inform decision making to proceed to next stage. Next stage would require full and detailed cost benefit analysis and implementation planning.4 Analysis should be presented on each of the four dimensions of wellbeing (Environmental, Cultural, Social and Economic) on inter-generational time horizons.5 Identify and discuss the associated impacts of alternate land-use management practices on other activities and values in the Marlborough Sounds.

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Policy Context: The NZ Coastal Policy Statement (NZCPS) requires councils to protect indigenous biological diversity (Policy 11). This is done by avoiding adverse effects of activities on threatened species, habitats and ecosystems; and avoiding significant adverse effects and avoiding, remedying, or mitigating other adverse effects of activities on habitats in the coastal environmental that are important during the vulnerable life stages of indigenous species. This also includes effects on estuaries, coastal wetlands, eelgrass and saltmarsh.

Policy 4 of the NZCPS requires Council to provide for the integrated management of natural and physical resources in the coastal environment, and activities that affect the coastal environment. The policy requires consideration of land use activities that affect, or are likely to affect, water quality in the coastal environment and marine ecosystems through increasing sedimentation and/or where of significant adverse cumulative effects are occurring or can be anticipated.

Policy 22 of the NZCPS requires Council to control the impacts of harvesting plantation forestry on sedimentation into coastal waters.

Soil tracking analysis1 in the inner Pelorus Sound/Te Hoiere shows that plantation forestry is a significant and disproportionate source of soil loss and resultant sedimentation relative to other land uses. The scale of exotic plantation forestry affecting the Marlborough Sounds is in the vicinity of of seventeen thousand five hundred hectares. The Pelorus catchment adds significantly to this area. The environmental, cultural and long term social and economic impacts coupled with the need for a just transition requires a strategic and cohesive response.

Councils are required to give effect to the NZCPS through their planning documents. In Marlborough’s case, this is the proposed Marlborough Environment Plan (MEP). Since the notification of the proposed MEP in June 2016, the Government has introduced the National Environment Standard for Plantation Forestry (NES-PF). The NES-PF allows Councils to put more stringent rules in place to protect sensitive receiving environments.

Although Marlborough has yet to consider greater stringency in the MEP it does provide a strategic planning framework for non-regulatory approaches. While Volume 1 (MEP) Objectives /Polices/Methods contains policy in the landscape provisions (7.2.7) to avoid planting of new exotic forestry in the sounds there is also a method (7.M.7/8) relating to undertaking research and providing information regards alternative forestry and land use options/including options for alternative land transitions. And, the provisions of Resource Quality policy (15.1.27) provide for the promotion of retirement and planting of riparian margins to intercept contaminant runoff. Further, there are Plan methods that provide for establishing groups to work on sustainable land management

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practices.

A compatible non-regulatory solution to be run in tandem with regulatory frameworks is the subject of this feasibility analysis. This is considered necessary as the inter-generational legacy and equity issues at hand are of such scale that, alone, the Marlborough District Council is not able to resolve.

The Sounds Advisory Group (SAG) to Marlborough District Council has identified the Provincial Growth Fund (PGF) as one funding mechanism to establish the SLTF.

The PGF have an Express Application fund to obtain up to $100,000. Access to this would enable an analysis into the feasibility of a SLTF across the four dimensions of wellbeing and would result in the development and completion of a full PGF application. The SLTF concept meets the environmental sustainability ethos of the PGF. It also fits with the PGF’s goals for forestry to: “deliver positive environmental outcomes, including for native ecosystems and habitats”.

The Sounds Advisory Group sees the SLTF as creating new ‘assets’ for the region, which will be new environmentally and economically sustainable land use practices. At this early state the SAG considers sustainable and commercially viable alternate (or adapted) land use practices might include:

Native plant species regeneration providing for carbon sequestration and broader ecosystem service benefits.

Native plant species supporting with beekeeping/honey production.

Supporting the continued adoption of alternate exotic plantation harvesting techniques minimising roading, tracking and land disturbance from tree hauling.

Native tree regeneration and native tree silviculture.

Creation of new, low impact6, tourism activities such as walking or biking trails.

Nature conservation and scientific study

In addition, the diversification of land use will drive increased resilience for both the place and people.

The SAG suggests Government funding is essential to creating those new assets and enabling the transition to a more ecologically sustainable future. The initial capital required to create momentum for changing land-use management practices is beyond the capacity of the MDC and, while regulatory tools may be an option such regulations will likely have adverse short-term economic impacts

6 There is a note that tourism impacts require very careful consideration and management in areas where the value of the natural environment, intrinsic and amenity values are high.

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on the region and cannot ensure the better environmental outcomes sought.

This assists with achieving the sustainable management purpose of the RMA, as well as the functions of the Local Government Act. It also delivers on the Government’s regional development programme, as well as help to fulfil our international obligations, for example the Rio Earth Summit.

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Scope: It is envisioned that the feasibility study is the first stage of 3:1. Feasibility Study.2. Implementation Planning.3. Execution / Implementation.

The conclusion of each stage provides the opportunity to determine whether to proceed or not.

The scope of this first stage, the feasibility study is:

Background context: A review of the history of forestry development in the Marlborough Sounds.

Geographic scope: the Marlborough Sounds and surrounding catchments, including the Kaituna and Pelorus/Te Hoiere catchments.

Existing Land Management & Use Activities: Plantation forestry, including harvesting and earthworks activities.

Potential Future Land Management & Use Activities: These could include such activities as: carbon farming, conservation restoration, honey production, bike trails, walking trails, restoration-tourism, scientific studies, boutique nature lifestyle blocks, homestays.

Governance and operating models: owning land is out of scope. Encumbrances and cutting rights are within scope. Financial self-sustainability should be aimed for – the ability to achieve this will depend on the quantum of capital for the establishment of the SLTF.

Impact analysis on the four well-beings – Environmental, Cultural, Social and Economic.

Methodology: To be provided by prospective suppliers for the feasibility work.

Outputs: The feasibility study will provide a comprehensive analysis and options required to achieve the objectives outlined in the above section. It will include a recommendation as to whether the Council should proceed to the next stage.

Should the Project Leadership Team determine that the interim decision is to proceed the feasibility study will include a full application7 to the PDF for a SLTF fund which will provide Marlborough Sounds landowners with production forestry with incentives, technical expertise and financial assistance to:

a. Identify and implement exotic plantation forest setbacks where required, and

b. identify and assist with the retirements of erosion prone slopes

c. from plantation forestry,and

d. identify and mitigate the adverse effects of ground disturbing forestry

7 Including a detailed project/implementation plan for the execution stage

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operations on Marlborough Sounds Coastal Marine Area (CMA).

The fund will also help, where appropriate and agreed with landowners, those landowners transition exotic production forest land to alternative ecologically sustainable uses through weed and pest control assistance.

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Project Management: The Feasibility Study stage of the project will be jointly managed by the Project Leadership Team (PLT) which will be comprised of a staff member(s) from the Marlborough District Council and appointed representative(s) from the Sounds Advisory Group.8

The PLT will report through to the Project Steering Committee (PSC) which will be comprised of a subset of Councillors, Iwi, SAG and the senior Council staff.

The Feasibility Study will be outsourced9. The contract will be advertised, seeking expressions of interest. The PLT will be responsible for writing the request for information and pricing, and evaluating the responses. The PLT will provide a recommendation to the PSC for sign-off.

Risks: If a feasibility study is not undertaken into the SLTF, Council can still offer landowners a low level of non-regulatory advice through catchment management outreach programmes. This is voluntary and has the advantage that it can be accommodated through reprioritisation of existing resources. Additional resources have been secured through the MPI Hill Country Erosion Fund, and may also emerge from the MfE ‘At Risk’ catchment programme. However, in some circumstances this may be dependent on uptake and landowners willing to forgo economic opportunities and carbon liabilities10 by not re-establishing existing forests, even if projected returns appear sub-optimal. The consequence of little uptake is that it compounds legacy issues with the reality of ongoing soil loss and sediment charge in a way and at a rate that compounds the ongoing negative ecological effects. The other consequence is that Council will be relying almost solely on regulatory intervention, which is required under the NZCPS. This will likely be contested, notwithstanding the policy imperatives.

The risk of undertaking a feasibility study is that it may build expectations in the community and with landowners that the SLTF will happen, and that the Council is committed to addressing the legacy issues, and social, economic and environmental transition in an equitable way supported by technical expertise and landowner support. However, that risk does not stand up to reasoned analysis, as it is essentially a matter of framing and communication. What Council would be committing to is a feasibility study. That sends a message to the community that Council is committed to exploring a range of potential solutions to a complexproblem. Not doing so, in light of the discussions at the Sounds Advisory Group, sends the opposite message to the community, and that Council will rely on regulation possibly augmented by the Hill Country Erosion and At Risk Catchment funding.

8 The SAG includes industry representation.9 An alternate approach may be to engage an individual under direct management.10 Or mechanisms through Central Government to provide for ‘greater good’ outcomes through the provision of exemptions.

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There is a risk that the SLTF will be aligned with these two programmes. This can be addressed by making it clear that the SLTF is about changing the paradigm, addressing the mechanisms and costs to drive the widespread change of land use; whereas the other initiatives focus on managing the ongoing stabilisation of land and nutrient retention through revegetation to protect the natural capital of the soil resource.

Engagement: Engagement will be somewhat limited through this feasibility stage to primarily iwi, larger corporates and industry associations, residents groups, and governance agencies. This is because that stage of the project will address the conceptual principles, operating models and functions of a STLF and broad-brush cost benefit analysis. There would be limited need or value in contacting potentially individually affected landowners or other individual stakeholders. That level of engagement would occur at the subsequent stage if the project were to proceed beyond the feasibility study. That said, it may be worthwhile to undertake targeted interviews with selected landowners likely to be affected by the SLTF to seek their views.

Key Participants: Likely participants for feasibility study:

Te Tau Ihu Iwi

Marlborough Forestry Industry Association

Cutting rights holders

Sounds residents associations

Federated Farmers

Marlborough Beekeepers Association

Marlborough Chamber of Commerce

Destination Marlborough

Project Plan, Timetable and Costs:

Project Plan and Timetable to be finalised with the successful provider.

It is envisaged that, from the time of commencement on the feasibility study the final outputs would be produced within three months.

Total cost for the feasibility stage is to be limited to $150 000.

The detailed budget will be developed in conjunction with prospective suppliers but is envisioned to be structured broadly as:

A PGF Express Application will be made for half that total cost, i.e. $75 000.

Direct financial contributions from MDC and other groups with a direct financial stake, $50 000 (i.e. 33%)

In-kind support from MDC, Industry and other staff, $25 000 (i.e. 17%)

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Terms of Reference Sign-off ___________________________

Signed:

Date:

Version: 1

Date: 18 October 2018

Prepared by: Sounds Advisory Group

APPENDIX 1

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Sustainable Land Transition – Core Principles.

Marlborough Sounds are the jewel in Marlborough’s crown 11

The environment is the beneficiary

Fairness in the process.

No party better or worse off (gifts and gains approach)

Decision making is based on the most relevant publicly available scientific information.

Develop solutions as a community together.

Embrace new technology in informing solutions.

Recognise legitimacy of existing uses of the Sounds.

Recognise there are multiple sources of fine sediment into the Sounds

11 1 Marlborough Environment Plan volume 1 page 4 “Recognise that the Marlborough Sounds is the “jewel in the crown”. In addition, in volume 1, page 3 it states: A healthy Marlborough economy requires a healthy environment”

APPENDIX 2

⸆We are here 12* Decision may be made to proceed via another route at this pointꝉ Stage dependent upon decision to proceed

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Scope and Staging:

FeasibilityStudy

• Develop and Agree Terms of Reference⸆• Assess and Source Funding Requirements• Tender Process for Feasibility Study• Complete Draft Feasibility Study• Interim Decision to Proceed• Review and Sign-off Completed Feasibility Study and PDF Application for Implementation Planning Stage*

Implementation Planning⸆

• Refine Alternate Practice Options and Implementation Pathways• Engage with other Management Agencies• Engage with Potentially Affected Landowners• Case by Case Assess Options, Uptake Preferences and Costs• Review at Regional Scale• Plan Transition, including Ongoing Governance• Decision to Proceed to Secure Funding

Implementation

• Secure Funding• Establish Governance• Operationalise

APPENDIX 3

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Policy Context: