Least-cost domestic heat energy investments for Great Barrier Island under restrictions on the harvesting of native fuelwood species : a thesis to the value of 75 points presented in partial fulfilment of the requirements of the degree of Master of Agricultural Economics in Natural Resource and Environmental Economics at Massey University

Abstract

The Auckland City Council's 1992 district plan for Great Barrier Island introduced areal restrictions upon the clearance of manuka and kanuka (teatree), which is one of the main sources of energy for domestic heatloads on the island. The restrictions will force many households to change the way in which they allocate their resources to heat energy production, and many households will incur additional compliance costs as a result. This study addresses the alternative energy investments available to households on the island (including teatree and eucalyptus biomass energy crops; petrol, diesel, solar, and wind generated electricity; LPG; and solar waterheating) and identifies the least-cost energy investments under the restrictions for a number typical island households. Biomass growth rates are derived for a teatree fuelwood crop, and the cost of domestic heat production is modelled for each household through the use of energy expenditure models. The optimal energy investment for each model household, both under restrictions and in the absence of restrictions, is determined, and the total financial cost of compliance for each model household is calculated. The effectiveness of the council's current restrictions and policies is assessed, and alternative energy and environmental conservation policies are evaluated. The study found that the current policies were not effective, and that 63% of model households would incur additional energy costs from complying with the restrictions. Of all the energy sources compared, teatree fuelwood was found to produce heat at the lowest cost per kW. However the high capital cost of wood-fuelled appliances made LPG the least-cost fuel type where no appliances were owned, and appliance capital costs were found to be the main factor determining the overall economics of a particular energy system. The study also found that rather than promoting the development of eucalyptus fuelwood crops on Great Barrier Island, the promotion of sustainable methods of teatree fuelwood crop management, such as the Swiss method, would both lead to environmental conservation and would satisfy the heat energy needs of island households.