New Zealand Farm Forestry Association president Patrick Milne said several large-scale dairy farmers were already partnering with hill country farmers to grow trees to offset their dairy farm emissions, something he said other livestock farmers should consider doing.
"It is at a low level, but it will increase as more and more people trade credits and the next door neighbours look over the fence and see what is happening," Mr Milne said.
"It could turn into a flood as the price of carbon increases."
The livestock farming sector should view forestry as a way to buy them time to find other ways of reducing their emissions.
Landcare Research has estimated at least one million hectares of land now in pastoral farming was not suited to growing pasture, due to erosion, but was suited to some form of afforestation.
"The figure that New Zealand agriculture needs to consider is that this million hectares could store enough carbon to offset 15 to 30 years of total agricultural emissions," he said.
"If they took that opportunity to work together with everybody, they would get 20 years to sort it out," he said.
Few animals would be displaced but Mr Milne said the ETS would change the farming landscape forever.
"The ETS will add a completely new dimension to forestry, and one we haven't all got our heads around yet."
Forest owners viewed the legislation as not perfect, but the emissions trading scheme was based on sound principles, that trees sequester carbon from the air while also benefiting the environment and the economy.
He said there was already a noticeable recovery in the number of trees being planted after eight years of static or low planting rates, and he expected that to increase as more New Zealand Units (NZU) were traded.
Growing trees to sequester carbon, or carbon farming, would change both the environmental and forestry landscape.
Mr Milne said carbon farming would increasingly provide competition for farm land carrying three or four stock units per hectare, but the type of trees grown was likely to change from pinus radiata to longer growing species on sites where they can be grown - Douglas fir in the south of the South Island and redwoods in the North Island.
Once post-1989 forests are harvested, owners have to repay the value of carbon they have sequestered, so owners were opting for large species that sequestered vast amounts of carbon for a long period.
Douglas fir can grow for 100 years before having to be milled, and Mr Milne said the longer they were left, the better the timber.
Redwoods can grow for 400 years.
Forest owners also needed to change how they viewed their crop, and not just look at plantations as a carbon farm, but remember trees retained production values.
There were risks with carbon farming, and Mr Milne said one of those was the uncertainty about the shape of future legislation, with the Labour Party threatening to amend the Government's ETS legislation passed last month.
He called for greater certainty from politicians, saying investors could not make long-term decisions.
Carbon credits or NZUs were being traded by owners of forests planted since 1989 but next year owners of forests planted before 1990 would be issued with carbon credits, as partial compensation for restrictions which mean they cannot change the land use.
Mr Milne urged those forest owners to get some advice before they started trading, as they needed to register their role.