Copyright is owned by the Author of the thesis. Permission is given for a copy to be downloaded by an individual for the purpose of research and private study only. The thesis may not be reproduced elsewhere without the permission of the Author. Massey University Library New Zealand & Pacific Collection 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. TONY L. WHARTON 1995 - MASSEY · UNIVERSITY Great Barrier Island Ratepayer Energy Survey ~ - THIS SURVEY SHOULD BE COMPLETED BY THE HEAD OF THE HOUSEHOLD. Tirrough this survey an understanding is sought about the different uses of land, and the energy sources and appliances used by houses on Great Barrier Island. Please follow the instructions below, and answer the questions which follow by ticking the boxes or filling in the spaces where appropriate. Where a question does not apply to you, please tick the box marked Not Applicable or N/a. All of your answers to this survey are strictly confidential and will not be seen by any person other than myself. SECTION 1: HOUSEHOLD DETAILS. 1) Do you currently own, rent, lease or use any property or land on Great Barrier Island? l!.,I =--IYES If you answered ''NO" to the above question, please go straight to page 8. Otherwise, please continue with question 2. 2) What is the TOTAL COMBINED LAND AREA (in EITHER hectares OR acres) of ALL of the property which your household uses, rents or owns on Great Barrier Island? EITHER: ---- Hectares OR ____ Acres 3) Please tick the box below which best applies to the property which you own, rent or use on Great Barrier. bl =-==='I All of the land is contained within one property lot. e:.:I --c1I The total land area is made up of more than one property lot - How many lots in total would you own or use? _1 ___ 1 The land is less than or part of one whole property lot. - What percentage of the lot would your household have direct control over? % ----- I!:::: ==di Uncertain/ not applicable. '1) Is there a house, bacb, hut, caravan or any other dwelling situated on any of the property? .. 1 __ _,IYES ._1 __ INo If you answered ''NO" to the above question, please go straight to page 8. Otherwise, please continue with question 5 6) Is this dwelling used by you, or by any other person as a MAIN residence? 11!:::1 =~IN° If you answered "YES'~ please go straight to question 6. Otherwise, please answer part a) beww. a) For how many weeks of each year would somebody usually stay or live in this dwelling ? Either: ___ weeks; OR: 1=1 ===='I Dwelling not usually stayed in. If this dwelling is not usually lived or stayed in, please go straight to page 8. Otherwise, please continue with question 6). 6) Is any part of your land or property used to earn any type of income? (eg farming, renting it out, or growing vegetables or firewood for sale). l!:::o:I =::=::!IIN° If you answered ''NO" to question 6 above, please go on to question 7. Otherwise, please continue with parts a) and b) below. a) Please describe the MAIN income-earning activity for the land is used. Main Activity: ________ _ b) In an average year, approximately how much money would be earned in total from this land (before tax) ? Income from land: $ ____ per year OR: l!:I = __ _.I Don't know/ no answer. 2 7) Is any part of the total land area used to grow or produce food, firewood or any other products for use by yourself, or for use by the occupier of the dwelling, ie: not for selling? If you answered "NO" to question 7 above, please go on to question 8. Otherwise, please continue with part a) below. a) How much do you think these products would cost EACH YEAR if they had to be bought, rather than produced on the property? Approximate yearly value: $ _____ _ 8) Please estimate the total percentage of your land area that would be used to produce food, firewood or other products, both for sale AND for use by yourself (or the occupier) Total Percentage of Land Used: ____ % SECTION 2: HOUSEHOLD ENERGY USES. 9) For both the cooking table below, and the home heating table on the next page, please tick the box which best describes the fuel and the appliance or method that would MOST OFTEN be used in your house on Great Barrier Island COOKING: FUEL · Wood Gas/LPG Electricity Coal None used Other, please describe: APPLIANCE Stove, oven or range Burner or hotplate only Open fire Microwave oven None used Other, please describe: ;lease tick the box which bests describes the fuel and appliance or method that you ,ould MOST OFfEN use for home heating on Great Barrier Island. .fO1\1E BEATING: FUEL Wood Gas/LPG Electricity Coal Kerosene None used Other, please describe: APPLIANCE Single-fuel stove (eg wood fire) Pot-Belly type stove Open fire Cooking range or oven Heater (Gas/electric/kerosene) None used Other, please describe: fhe table below shows a number of alternative fuels and methods which can be used to heat ·1ot water. For both the Fuel and Method tables, please tick in the columns labeled ''MAIN'' the hel and the method that would most often be used as the MAIN method of water heating in rour house on Great Barrier. [f, in addition to the main method of water heating you also regularly use another tuel or method as a backup, please indicate the BACKUP fuel and method used by :icking the appropriate boxes in the backup fuel and method columns labeled "BI U". HOT WATER HEATING - MAIN AND BACKUP l\1ETHODS J\tlAIN B/U FUEL Wood Gas/LPG Electricity Coal Kerosene Sunlight None used Other, please describe: :METHOD/APPLIANCE MAIN B/U 4 Wetback/water jacket to stove or range Wetback or water jacket to open fire Water heated over open fire Water boiled on top of stove or range Solar-heated hot water cylinder LPG/Gas fuelled instant water heater Electric hot water cylinder system. None used Other, please describe: SECTION 3: HOUSEHOLD FUEL USE: 11) Is any type of generated electricity used in your house on Great Barrier? lb=,I --' YES b,a, __ INO If you answered ''NO" to the above questwn, please go straight to questwn 12. Otherwise, please continue with a) and b) below. a) Which of the following devices would be regularly used for generating electricity? Please tick all that are applicable. § Solar-electic panels [==:J Diesel or petrol powered generator. Wind turbine t=::J Micro-hydro generator Other, please describe:. _______ _ b) Of these, which ONE would you consider to be the main source of the house's electricity? If you consider that two or more of these devices are of equal importance, please tick . both boxes. § Solar-electic panels c::J Diesel or petrol powered generator. Wind turbine c=J Micro-hydro generator Other, please describe:. _______ _ 12) Hyou use WOOD as a fuel in your household, for either cooking, heating or water-heating, please answer parts a) and b ). Otherwise, please go straight to question 13. a) Of the following types of wood, which one would you MOST OFTEN burn? Please tick: § Pine Manuka/Kanuka Don't use wood. § Euc~yptus Macrocarpa Other, please describe:. _____ _ b) Which of the following best describes you MAJN source of firewood at the present? [==:J Grown on own section [==:J Purchased. c::=:J Collected from elsewhere (::::J Other, please describe:. _____ _ eg: Beach, forest scrap, friends. 5 SECTIONFOUR. The Auckland Qty Council bas recendy introduced restrictions on the.amount of native scrub and timber which can be cleared from any property lot on Great Barrier Island Could you please amwer the questions which follow relating to your responses toward the restrictions. Please be as frank as possib~ remembering that your individual answers are · totally confidential, and will never be seen by any person other than myself. ~) Are there any substantial areas of native scrub or teatree growing on your land? If you answered ''NO" to question 13 above, go straight to to question 14. Otherwise, please answer question a): a) As best as you are able to, can you please estimate the OVERALL PERCENTAGE % of your total land area which is covered ONLY by teatree, that is, don't include · any areas of your land where teatree grows mixed with other tree types. Percentage covered: ____ % L4) Have the restrictions on firewood harvesting in any way caused you to modify or change the fuels which you use for cooking, water-heating OR home-heating? '~==I YES ~' ===='INO . If you answered "NO" to question 14 above, please go straight to question 15 Otherwise, please answer parts a) to d). a) What was the MAIN fuel which you used for COOKING before the firewood harvesting restrictions? If you have not changed the fuel you use for cooking, tick "No Change". Cooking fuel: ________ _ c.:I :::z:=a:; __ 1 No change 6 b) Which fuel did you most often use for your MAIN source of HOME HEATING before the restrictions? If you have not changed the fuel you use, plea5e tick ''No change'' . Home Heating fuel: _______ _ .. I __ -ml No change c) Which fuel did you most often use for your MAIN source of WATER HEATING before th restrictions? If you have not changed the fuel you use, please tick "No Change" • . Water Heating fuel: _______ _ l!.a[ __ ..il No change d) Which fuel did you most often use for your BACKUP source of WATER HEATING befor, the restrictions? If you have not changed the fuel you use, or you don't use a backup method, please tick "Not applicable". Backup Water Heating fuel: ____ _ l!=I ====I Not Applicable 15) ·Have the firewood restrictions caused you to·change or modify your firewood sources or collecting methods? c::,1 __ llllill Not applicable If you answered "NO" or "Not applicable" to the above question, please go straight to page 8. Otherwise, could you briefly describe how you have changed your firewood sources or methods in reponse to the restrictions? 7 T -ank you for taking the time to complete this survey form. Your results will collated along with those of the other respondents, and will be used as the b sis for constructing fuel and energy models for Great Barrier Island. you have lost the envelope provided, please post the results to: Tony Wharton Department of Agricultural Economics Massey University Palmerston North New Zealand It is anticipated that the results of this project will be published in "The Barrier Bulletin" early next year. However, if you would like a copy of the results, or of the project findings, please write to me at the above address. Please feel free to use the remainder of this page if you have any further comments about the Council's restrictions on firewood harvesting. Any comments you may have on this survey would be very helpful and greatly appreciated. Once again, thank you for your help with my project. Tony Wharton. 8 TABLE OF CONTENTS. LIST OF FIGURES 1v LIST OF TABLES vi ACKNOWLEDGEMENTS vu ABSTRACT Vlll CHAPTER 1. INTRODUCTION 1.1 RESOURCE CONFLICT ON GREAT BARRIER ISLAND. 1 1.2 THESIS OBJECTIVES AND APPROACH. 7 CHAPTER 2: REVIEW OF THEORY AND TIIE LITERATURE 2.1 THE ECONOMICS OF CLEARANCE RES1RICTIONS. 11 2.2 THE ENERGY INVESTMENT DECISION. a> 2.3 REVIEW OF THE LITERATURE. 23 CHAPTER 3. ENERGY EXPENDITURE MODELS. 3.1 EXPENDITURE MODEL METHODOLOGY. :I> 3.2 FUELWOOD EXPENDITURE MODELS. 32 3.3 LPG ENERGY EXPENDITURE MODELS. 54 3.4 ELEC1RICITY ENERGY EXPENDITIJRE MODELS. 51 3.5 SOLAR WATER ENERGY EXPENDITIJRE MODELS. 6.5 CHAPTER 4. DERIVATION OF FUEL WOOD CROP BIOMASS GROWTH FUNCTIONS. 4.1 EUCALYPTUS SALIGNWBOTRYOIDES BIOMASS GROWTH RATE. ()8 4.2 TEA1REE BIOMASS PRODUCTION FUNCTION. 'X> CHAPTER 5. HOUSEHOLD QUESTIONNAIRE AND FIELD TRIP. 5.1 FIELD 1RIP. 84 5.2 QUESTIONNAIRE DESIGN AND IMPLEMENTATION. 8.5 5.3 QUESTIONNAIRE RESULTS. 92 5.4 DERIVATION OF MODEL HOUSEHOLDS. 100 CHAPTER 6. ANALYSIS AND RESULTS OF ENERGY EXPENDITURE MODELS. 6.1 MODEL VARIABLE VALUES. lffi 6.2 EXPENDITURE MODEL RESULTS BY FUEL TYPE. 114 6.3 RESULTS BY HEAT-LOAD. la> CHAPTER 7. MODEL HOUSEHOLD LEAST-COST ENERGY INVESTMENTS. 7.1 MODEL HOUSEHOLD CLASS 1 m 7.2 MODEL HOUSEHOLD CLASS 2 131 7.3 MODEL HOUSEHOLD CLASS 3 132 7.4 MODEL HOUSEHOLD CLASS 4 133 7 .5 MODEL HOUSEHOLD CLASS 5 134 7 .6 MODEL HOUSEHOLD CLASS 6 135 7.7 MODEL HOUSEHOLD CLASS 7 136 7.8 MODEL HOUSEHOLD CLASS 8 137 7.9 MODEL HOUSEHOLD CLASS 9 138 7.10 MODEL HOUSEHOLD CLASS 10 138 7.11 MODEL HOUSEHOLD CLASS 11 l.J) 7.12 MODEL HOUSEHOLD CLASS 12 l.J) CHAPTER 8. ANALYSIS OF TEA TREE PROTECTION POLICIES. 8.1 EFFECTS ON MODEL HOUSEHOLDS. 141 8.2 ALTERNATIVES TO CURRENT RESTRICTIONS. 143 11 CHAPTER 9: DISCUSSION OF RESULTS AND CONCLUSIONS. 9.1 ALTERNATIVE ENERGY INVESTMENf EVALUATION. 149 9.2 EVALUATION OF RESTRICTIONS & COUNCIL POLICIES. 153 REFERENCES. 158 APPENDICES: 161 1) TEA1REE CLEARANCE RESTRICTIONS BY LAND UNIT. 2) LPG ENERGY EXPENDITURE MODELS. 3) ELECTRICAL ENERGY EXPENDITURE MODELS. 4) SOLAR WATER HEATER ENERGY EXPENDITURE MODELS. 5) EUCALYPTUS FUELWOOD ENERGY EXPENDITURE MODELS. 6) TEATREE FUELWOOD ENERGY EXPENDITURE MODELS. 7) QUESTIONNAIRE. 8) QUESTIONNAIRE RESULTS. 9) TEA TREE PRODUCTION UNDER CLEARANCE RESTRICTIONS. 10) ZERO OPPORTUNITY COST OF LABOUR ANALYSIS. 11) SENSITIVITY ANALYSES - MODEL HOUSEHOLD 2. 12) CALCULATION OF COMPLIANCY COSTS. 111 LIST OF FIGURES. FIG PAGE 1.1 GREAT BARRIER ISLAND LOCALITY MAP 2 2.1 HOUSEHOLD ENERGY SUPPLY FUNCTION 18 3.1 GRAPIDCAL REPRESENTATION OF IHA ROTATIONAL FUELWOOD CROP 35 3.2 LPG APPLIANCES USED IN MODELS 54 3.3 ELECTRICAL APPLIANCES USED IN MODELS 59 3.4 DIESEL AND PETROL GENERATORS USED IN MODELS 60 4.1 TEATREE DBH INCREMENT AS A FUNCTION OF AGE 72 4.2 RELATIONSHIP BETWEEN TEATREE AGE AND STEM DENSITY 74 4.3 TEATREE VOLUME GROWTH AS A FUNCTION OF DBH 81 4.4 HARVESTABLE VOLUME AS A FUNCTION OF TREE AGE 83 6.1 NON-RESIDENT PRODUCTION MODEL RESULTS 111 6.2 RESIDENT PRODUCTION MODEL RESULTS 111 6.3 COMPARISON OF FUELWOOD MODEL COSTS ·- NON-RESIDENT 115 6.4 COMPARISON OF FUEL WOOD MODEL COSTS - RESIDENT 115 6.5 ELECTRICITY MODEL RESULTS - NON-RESIDENTS 117 6.6 ELECTRICITY MODEL RESULTS - RESIDENTS 118 6.7 LPG EXPENDITURE MODEL RESULTS 119 6.8 COOKING COSTS - NON-RESIDENT 121 6.9 COOKING COSTS - RESIDENT 121 6.10 SPACEHEA TING COSTS - NON-RESIDENT 122 6.11 SPACEHEATING COSTS - RESIDENT 123 6.12 WA TERHEA TING COSTS - NON-RESIDENT 124 6.13 WA TERHEA TING COSTS - RESIDENT 125 6.14 MULTIPLE HEATLOADS - NON-RESIDENT 126 IV 6.15 MULTIPLE HEATLOADS - RESIDENT 127 6.16 FUELWOOD COST Willi LOWER APPLIANCE AND NIL LABOUR COSTS 129 8.1 COMPLIANCE COSTS BY MODEL HOUSEHOLD CLASS 142 8.2 FUELWOOD CROP MANAGED UNDER THE SWISS METHOD 147 8.3 COMPLIANCE COSTS AS A DISCRETIONARY ACTIVITY 148 V LIST OF TABLES. TABLE PAGE 4.1 COMPARISON OF HUBER, WHYTE AND SMALLEN METHODS OF SECTIONAL VOLUME ESTIMATION a) 5.1 RESPONSE RA TES TO PILOT QUESTIONNAIRE ~ 5.2 RESPONSE RATES TO MAIN QUESTIONNAIRE 91 6.1 COMFORT LEVEL 1 SPACEHEAT REQUIREMENTS lffi 6.2 ANNUAL USEFUL HEA1LOAD ENERGY REQUIREMENTS 105 6.3 TEATREE STERES DEMANDED ANNUALLY 105 6.4 EUCAL YPTIJS STERES DEMANDED ANNUALLY 107 6.5 OPTIMAL PLANTING DENSITIES AND ROTATION LENGTHS 108 6.6 LAND USE VARIABLE VALUES 113 6.7 NON-RESIDENT EXPENDITURE MODEL RESULTS 114a 6.8 RESIDENT EXPENDITURE MODEL RESULTS 114a 7.1 LEAST-COST FUEL WOOD - CLASS 1 MODEL HOUSEHOLD 131 7.2 LEAST-COST FUELWOOD - CLASS 5 MODEL HOUSEHOLD 135 8.1 PROPORTION OF MODEL HOUSEHOLDS ACHIEVING A · LEAST-COST INVESTMENT FOR AT LEAST ONE HEA1LOAD FROM FUELWOOD PRODUCTION 143 VI ACKNOWLEDGEMENTS. I would like to express my gratitude to the following people and organisations for their assistance in the production of this thesis: Professor Anton Meister and Dr Robert Alexander of the Department of Agricultural Economics and Business, Massey University, for their supervision and guidance; Associate Professor Ralph Sims of the Department of Agricultural Engineering, Massey University, for his help and support; The Auckland City Council, for their financial support and assistance; Earth Energy Systems, Great Barrier Island, for their support and assistance; . Coombes memorial scholarship, for their financial support of the project; The Barrier Bulletin, Waiheke Island, for it's assistance; and to Fiona Taylor, Paul Seiler, and Sue Wharton for their encouragement and support throughout this project. Vll 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. Vlll CHAPTER 1. INTRODUCTION 1.1 RESOURCE CONFLICT ON GREAT BARRIER ISLAND. 1.1.1 INTRODUCTION. Humanity's use of energy is one of the characteristics along with culture, literature, religion, and art, which separates us as a species from animals. It was estimated in 1975 that humanity's consumption of energy from woody biomass was greater than the combined total of all of the energy which was consumed from hydroelectricity, nuclear power and geothermal energy (Earl, 1975). Although this situation has no doubt altered over the past 20 years, fuelwood is still a major source of domestic energy for a large proportion of the world's population, not only in less developed countries but also in the remote areas of developed countries (Ibid). Great Barrier Island is one of such places in New Zealand. Great Barrier Island lies in the Hauraki Gulf 90 kilometres north-east of Auckland City (Figure 1.1) and is the largest island off the coast of the North Island, and the fifth largest island of the New Zealand group after the South, North, Stewart and Chathams Islands. The Island is approximately 285 square kilometres in area and derives it's name from the protection or 'barrier' it affords the Hauraki Gulf as it's north­ eastern boundary (Great Barrier Committee of Enquiry, 1975). One of the significant attracti(?nS of Great Barrier Island is it's expansive native forests and scenic natural environment, which were considered by Clunie (1993) to be unique and outstanding. Because of it's extent and pervasive qualities, the native vegetation and communities of the native scrub species manuka and kanuka in particular, are considered to be a key element contributing to the distinctiveness, visual quality and character of Great Barrier Island (Auckland City, 1992; Clunie, 1993). 1 FIGURE 1.1 GREAT BARRIER ISLAND LOCALITY MAP. Mokohinau Islands 4 KEY: fill Hauraki Gull Islands j ~;;h·id Auckland Isthmus Little Barrier Island. ~-:::::. "(\ 0(.0 ~ q>? ~ ..... Hauraki Gulf 2 • Firth of Thames t N The permanent population of the island is approximately 1,200 people, many of whom are attracted to living on the island by the remoteness and the 'back-to­ nature' lifestyle which it offers (Great Barrier Committee of Enquiry, 1975). Indeed, one of the island's unique features which is considered to enhance it's appeal to many visitors and residents is the lack of any public reticulated mains electricity supply, forcing households to adopt alternative sources of energy in order to meet their domestic heat energy needs (Ibid, 197 5). 1.1.2 THE ROLES OF MANUKA AND KANUKA. Leyland et al (1986) reported that in the New Zealand the main requirements for domestic energy in order of annual quantity consumed are water heating, space heating, cooking, and lighting/other household appliances. The majority of energy demanded by households is in the form of heat, with up to 78% of a household's total annual energy demand being a demand for heat (Ibid). One of the principal heat energy sources of Great Barrier Island households is fuelwood from the native scrub species manuka (Leptospermum scoparium) and kanuka (Kunzea ericoides), each or collectively known as teatree (Auckland City, 1992; Clunie, 1993). Manuka and kanuka are prominent trees or tall shrubs which are found either growing together or growing separately throughout New Zealand, and are often considered to be a plant pest by many fanners and landowners (Allen et al, 1992; Grant, 1967). Vegetatively the species are similar, but the main difference between the two is in their flowers and fruit (Burrell, 1965). Both species can vary in habit from a small tree 10 metres high to a compact bush usually less than 4 metres in height. Estler et al (1974) reports that most teatree scrubland has developed from bare ground or from short open vegetation, and it's presence on land often indicates the destruction of previous native vegetation by fire. 3 Teatree stands cover well over half of the land area in the central and southern parts of Great Barrier Island, particularly on private land. The two species dominate the vegetation canopy in a substantial portion of the native vegetation on the island, much of which is regenerating from the past excesses of forestry exploitation and land clearance (Clunie, Ibid). Teatree's predominance in a naturally occurring state throughout the island combined with it's high biomass density and heat content has contributed to it's widespread popularity and usage as a fuel in many households throughout the island. In addition to being one of the major sources of domestic heat energy on the island, manuka and kanuka are also considered to play a number of important roles in the environment and landscape of Great Barrier Island. In addition to their aesthetic role as the predominant land-cover on the island, both manuka and kanuka also play a significant ecological role as a seral community or 'nurse crop' and are considered to play a key role in the re-establishment of native forests on sites from which they have been displaced through felling and land clearance (Estler et al, 1974; Grant, 1967; Clunie, 1993). Almost all teatree communities are transitional, and Clunie (Ibid) considered that the teatree communities on Great Barrier Island were the most important and by far the most extensive of the seral communities regenerating to species rich native forests . Manuka and kanuka communities are also considered to have other significant roles in protecting and sustaining the natural environment. Teatree stands are considered to have substantial intrinsic value as a major reservoir of natural biodiversity on the islands of the Hauraki Gulf and are home to a diverse range of native plants and animals, many of which are considered to be of international significance (Clunie, Ibid). Clunie also repons that there is a much greater diversity of teatree stands on Great Barrier Island than on the inner islands of the Hauraki Gulf, or on Waiheke Island. Teatree stands on steep slopes are considered to serve an important function in soil conservation, and well established stands of vegetation provide continuous protection of water quality in streams, by regulating runoff and dispersing and filtering erosion products (Clunie, Ibid). 4 1.1.3 TEATREE CLEARANCE RESTRICTIONS. Auckland City (formerly the Auckland City Council) is the local-body authority which has territorial jurisdiction over the resources and communities of Great Barrier Island. Under the Resource Management Act 1991, Auckland City has both a mandate and a responsibility to give effect to, and promote, the sustainable management of the natural and physical resources on Great Barrier Island. (Resource Management Act, 1991; Auckland City, 1992). Sustainable management is defined in the act as: "managing the use, development, and protection of natural and physical resources in a way, or at a rate which enables communities to provide for their social, economic and cultural well being, and for their safety and well-being, while: a) sustaining the potential of natural and physical resources (excluding minerals) to meet the foreseeable needs of future generations; and b) safeguarding the life-supporting capacity of air, water, soil and ecosystems; and c) avoiding, remedying or mitigating any adverse effects of activities on the environment" (Resource Management Act, 1991 ). The Resource Management Act also requires Auckland City to "recognise and provide for matters of natural imponance" (section 6), of which "the protection of areas of significant indigenous vegetation and significant habitats of indigenous fauna" (6c) is one. The district plan (Hauraki Gulf Islands Section) is the main policy tool by which Auckland City implements and gives effect to the sustainable resource management principles of the Resource Management Act on Great Barrier Island. The district plan presents the rationale for the council's adopted resource management strategies on the island, which are expressed in rules, regulations and restrictions governing the development and use of the island's key resources as perceived by Auckland City. In the district plan Great Barrier Island is separated 5 into 16 strategic management areas, and for each area the key resource issues are identified, and provisions made via policy instruments to ensure their sustainable management and protection. As the harvesting and clearance of teatree for use as a household fuel has a large potential to detrimentally impact the "life-supporting capacity of soils and ecosystems", and the "protection of areas of significant indigenous vegetation", Auckland City's 1992 district plan for the Hauraki Gulf Islands introduced policies to promote the revegetation of Great Barrier Island through introducing restrictions on the removal of native vegetation (Auckland City, 1992). In particular the district plan introduced the following restrictions governing the clearance of teatree from private land: - a ban on the clearance of any native vegetation above 3 metres in height, with the exception of teatree where the height restriction is 6 metres in recognition of the widespread use of teatree as a fuel; - a restriction on the maximum area of any single lot which is able to be cleared of native vegetation (Auckland City, 1992). The district plan divided the entire land area of Great Barrier Island into a number of land classes, each determined by the character, use and cover of the land area. The maximum area able to be cleared on any lot under the restrictions is dependent on the classification of the land on which the lot is situated. The clearance restrictions for the removal of indigenous vegetation as a permitted activity (permitted by households as of right) were set at three possible levels across all of the land classes: either not permitted, a maximum total clearance of 300 m2, or a maximum total clearance of 500 m2 (Auckland City, 1992). The district plan also provided for an increased level of clearance limits for the clearance of teatree as a discretionary activity where a resource consent had been granted. However, this is only permitted for the purposes of commercial firewood harvesting (section 6Fl. l.3). 6 The maximum clearance areas also took account of the area of previously cleared land existing on a section, and were based on a "reasonable minimum area within which a standard dwelling could be located inclusive of an area for an accessway" (Pers Comm: Auckland City, 1994). Therefore, on many sections the area which could be cleared as of right is sufficient only to enable a house to be built. It is considered by Auckland City that the vast majority of sections on the island fell into land classes 8 (Regenerating slopes: - 30% of total land area) and 10 (Forest and bush areas: 45% of land) (Ibid). Appendix I presents the complete list of land classes for Great Barrier Island and their associated clearance restrictions as a permitted activity. 1.2 THESIS OBJECTIVES AND APPROACH. 1.2.1 OBJECTIVES The widespread use of teatree as a fuel source in households, combined with the restrictions imposed on the clearance of native vegetation and teatree has resulted in a resource-use conflict on Great Barrier Island. Under the restrictions, many households may be placed in the position of having to modify or change the energy sources and fuels which they use in order to comply with the district plan requirements, possibly at considerable additional expense to the household. In order to provide an alternative to the harvesting of native teatree on Great Barrier, Auckland City has been considering implementing a policy of encouraging households to provide for their heat energy requirements by growing their own sustainable fuelwood plots utilising exotic hardwoods, particularly eucalypts, by distributing information on the costs and benefits of household's planting their own eucalyptus fuelwood crops (Pers comm: Auckland City 1994). The objective of this thesis is to address this resource use issue by examining and quantifying the impact of the restrictions upon Great Barrier Island households, determine the optimal energy investments for households under the restrictions, 7 and to examine alternative policies to the current restrictions which are available to Auckland City to lowering the rate of teatree clearance toward a socially optimal level and minimise the environmental and ecological effects of teatree clearance. Specifically, the main objectives of the study are fourfold: i) to determine which energy project investment will be optimal for Great Barrier Island households under the teatree clearance restrictions given their current household resources, energy investments, and energy demands; ii) to quantify the effects that compliance with the restrictions will have o households in terms of additional energy costs incurred where the household's use of teatree for fuelwood is restricted1 ; iii) to assess the overall effectiveness of the council's current policies, the quantitative levels of the restrictions, and the council's plan to promote eucalyptus fuelwood production regimes on the island; and iv) to evaluate the economic competitiveness of alternative domestic energy systems and fuels. 1.2.2 OUTLINE OF STUDY. A number of energy investments are compared in this study to determine which would be the least-cost energy investment for households both in the absence of the teatree clearance restrictions and under compliance with the restrictions. Each energy type was selected on the basis of it's appropriateness for use as an energy investment in remote area households. The energy investments selected for comparison in the study are: 1 It is assumed that the main value of teatree to the household is as a fuel. 8 - Eucalyptus biomass fuelwood crops; - Teatree biomass fuelwood crops; - Purchased teatree fuelwood; - Liquid Petroleum Gas (LPG); - Diesel generated electricity; - Petrol generated electricity; - Wind and solar generated electricity; - Solar radiation (waterheating only). A review of the theory and the literature on energy project investment, domestic heat energy economics, and biomass energy crop production economics is presented in Chapter 2, and it's relevance and contribution to the present study are highlighted. The cost of each energy investment is modelled using a net present cost criteria applied to a series of energy expenditure models which incorporated capital, maintenance and fuel costs as well as appliance efficiencies. The development of each of the expenditure models and the assumptions made in their use and analysis are presented in chapter 3. Biomass growth functions for eucalyptus and teatree wood are derived for use in the fuelwood energy expenditure models, and the collection and analysis of biomass growth data and the development of the growth functions for both species are presented in chapter 4. In recognition of the fact that the least-cost investment for a household will depend upon the household's current energy investment and resources, a postal­ administered questionnaire was designed and implemented to collect data on household resources and the average annual duration of residence of Great Barrier Island households. From the questionnaire results a series of model households are developed which can be considered to be typical island households in respect of - 9 their energy appliance ownership characteristics. The development, implementation and the results of the postal questionnaire and the formulation and characteristics of each of the model households are presented in chapter 5. The questionnaire results, biomass growth functions, and additional data collected . on household heat energy requirements are then used to derive the values of the variables used in the energy expenditure models. The calculation of the expenditure model variable values, together with the results of each of the models are presented in chapter 6. Each of the model Great Barrier Island households are then analyred using both the results of the energy expenditure models and the data on the household's land and appliance ownership characteristics. The least-cost investment for each model household by heatload is determined both in the absence of the teatree clearance restrictions and under compliance with the restrictions. Chapter 7 presents the analysis and the least-cost investments for each of the model households. The financial effects of the clearance restrictions upon the model households are calculated and analyred in chapter 8, and alternative policy options available to Auckland City are explored. The results of the study are summarised in chapter 9, and conclusions are made on the effects of teatree restrictions on households, on the current clearance restriction policies and eucalyptus proposals, and on the economics of alternative domestic heat energy systems. 10