Abstract
This study sought to understand the carbon sequestration potential of soils within Wilsons Inlet Catchment (WIC), Western Australia and the implications for engaging in a soil carbon project through the Clean Energy Regulator’s Emission Reduction Fund. Through undertaking a literature review focused on the impact of soil type, climate and management practice on soil carbon sequestration, it was found that sand dominant soils of the WIC faced constraints in their attainable carbon capacity but favourable climatic conditions and focused management practices, could make soil carbon projects a feasible opportunity.
Through the lens of two Case Studies, reflecting a typical agricultural enterprise within WIC, freely available and user-friendly tools made available through the Clean Energy Regulator and CSIRO were utilised to understand soil carbon project opportunities and activities (LOOC-C), together with opportunities for earning Australian Carbon Credit Units.
A detailed analysis of the income and costs associated with business-as-usual operations of the enterprise, the project activities associated with each project alternative under an ERF soil carbon project, together with available management options, informed a cash flow analysis. Cost-Benefit Analysis was a tool adopted to analyse the costs and comparative benefits of all alternative project options, to identify an ideal soil carbon project alternative for an enterprise within WIC.
The results of the CBA found that soil carbon projects for the case studies within the WIC, currently do not offer economic incentives that are more attractive than current enterprise activities when Benefit-Cost Ratio is utilised as a tool for prioritisation. All soil carbon project alternatives resulted in a BCR greater than 1, indicating that the projects are all economically viable and justified, yet the largest net benefit to each enterprise, having considered all project alternatives, was to pursue the highest BCR ranking and not participate in a soil carbon project through the ERF.
Soil carbon projects provide a mechanism to incentivise farmers to play an important role in achieving carbon neutrality targets, but also increase soil health and improve agricultural productivity (through associated co-benefits). Land management strategies that focus on soil carbon sequestration provide the potential for a revenue stream in the form of carbon credits, but widespread adoption requires farmers to have access to readily available and transparent information regarding benefits, costs and risks to sequester carbon at a rate that makes it financially feasible to engage in a soil carbon project.
At this point, the carbon credit market may become a more attractive option to actively become a supplier in, but complexity together with expensive compliance costs for famers means that current incentives are potentially too weak to entice engagement in soil carbon projects.
Through the lens of two Case Studies, reflecting a typical agricultural enterprise within WIC, freely available and user-friendly tools made available through the Clean Energy Regulator and CSIRO were utilised to understand soil carbon project opportunities and activities (LOOC-C), together with opportunities for earning Australian Carbon Credit Units.
A detailed analysis of the income and costs associated with business-as-usual operations of the enterprise, the project activities associated with each project alternative under an ERF soil carbon project, together with available management options, informed a cash flow analysis. Cost-Benefit Analysis was a tool adopted to analyse the costs and comparative benefits of all alternative project options, to identify an ideal soil carbon project alternative for an enterprise within WIC.
The results of the CBA found that soil carbon projects for the case studies within the WIC, currently do not offer economic incentives that are more attractive than current enterprise activities when Benefit-Cost Ratio is utilised as a tool for prioritisation. All soil carbon project alternatives resulted in a BCR greater than 1, indicating that the projects are all economically viable and justified, yet the largest net benefit to each enterprise, having considered all project alternatives, was to pursue the highest BCR ranking and not participate in a soil carbon project through the ERF.
Soil carbon projects provide a mechanism to incentivise farmers to play an important role in achieving carbon neutrality targets, but also increase soil health and improve agricultural productivity (through associated co-benefits). Land management strategies that focus on soil carbon sequestration provide the potential for a revenue stream in the form of carbon credits, but widespread adoption requires farmers to have access to readily available and transparent information regarding benefits, costs and risks to sequester carbon at a rate that makes it financially feasible to engage in a soil carbon project.
At this point, the carbon credit market may become a more attractive option to actively become a supplier in, but complexity together with expensive compliance costs for famers means that current incentives are potentially too weak to entice engagement in soil carbon projects.
Original language | English |
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Pages | 2 |
Publication status | Published - 07 Feb 2023 |
Event | Australasian Agricultural and Resource Economics Annual Conference 2023: AARES 2023 - University of Canterbury, Christchurch, New Zealand Duration: 07 Feb 2023 → 10 Feb 2023 Conference number: 67th https://www.aares.org.au/index.php?com=com_content&itemid=158 https://www.aares.org.au/files/aares_conference_2023/AARES_CP_2023_02_01_wide_v2.pdf https://www.aares.org.au/files/aares_conference_2023/AARES_2023_Call_for_Contributed_Papers_Posters_FINAL.pdf (Call for papers) |
Conference
Conference | Australasian Agricultural and Resource Economics Annual Conference 2023 |
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Abbreviated title | Revitalising the food system |
Country/Territory | New Zealand |
City | Christchurch |
Period | 07/02/23 → 10/02/23 |
Other | The 2023 annual conference is being organised by the New Zealand Branch. We are returning to the usual in-person interactive format, but there will be opportunities to join the conference online for those not able to travel. We expect participants to join us from throughout the world at the fantastic new University of Canterbury Students Union building. Our focus will be on providing the best interactive experience possible, with opportunities to mingle and interact with other participants both in person and online. |
Internet address |