The Forest Owners Association says the Government may need to incentivise all of the environmental benefits derived from forests if it wants to encourage more planting.

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The Government is reviewing the Permanent Forest Sink Initiative to increase the uptake of the scheme in which only 16 thousand hectares have been registered since 2006.

The association's chief executive David Rhodes said while forest owners could earn emissions credits for carbon storing, incentives for other benefits may be necessary.

"So then you start to look at biodiversity, water quality, erosion control, there are a number of environmental benefits that come with these forests, and I think that's one one the questions - have these things been adequately recognised as well? Maybe there should be more incentive to encourage people to provide them."

Mr Rhodes said the national forestry estate had been reduced over the last decade as owners pursue more lucrative land uses like dairying.