Three experts have been tasked to advise the state government on what a future timber industry and the 22,000 jobs dependent on it could look like.
It comes as NSW establishes the Great Koala National Park across an area larger than London while continuing to supply timber for housing and industries.
Calls have been growing to exit native forest logging after Victoria and Western Australia did so this year.
Concern has also been raised for vulnerable native species including the greater glider.
The native forest logging or hardwood division of Forestry Corporation NSW has made losses for three successive years and was in July fined $360,000 for destroying hollow-bearing trees.
Concerns have been repeatedly raised for endangered forest species like the greater glider. (Mick Tsikas/AAP PHOTOS)
Ending native forest logging would also help Australia's climate goals much more than planting trees due to the time taken to replace old-growth forests' carbon-storage potential, says forest governance expert Dr Kate Dooley.
Environment-focused Forest Alliance last week called on the Minns government to work towards halting native forest logging by mid-2027.
"Our forests simply cannot afford for logging to continue past this term of government," Greens MP Sue Higginson said.
Through public consultation, the Independent Forestry Panel will examine the future of softwood plantations and private native forests.
Farms generate about 30 per cent of NSW's high quality saw logs, generating about $482 million annually.
"The families, businesses and communities that make up this industry will be considered for the action plan," Regional NSW Minister Tara Moriarty said in a statement.
"Their knowledge and experience will be essential for understanding the issues and finding the solutions."
Environmental and cultural values of forests, including threatened species as well as the opportunities to support carbon and biodiversity markets will be probed.
"Whether it's hardwood, softwood or private native forest our forests and native species ... have faced challenges including bushfires, floods and the ongoing risks due to climate change," Environment Minister Penny Sharpe said.
The panel will be chaired by Peter Duncan, formerly a boss of the NSW road authority, commissioner on the NSW independent planning commission and infrastructure advisor to Victorian Treasurer Tim Pallas.
Former NSW chief scientist Mary O'Kane and former Labor MP and forestry industry advocate Mick Veitch are fellow members.
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