ABARES has published a report estimating that sequestration projects could generate profit of AUD9bn (USD6.03bn) to farmers annually by 2050.
In turn, this would generate AUD7bn (USD4.69bn) annually for the Australian economy.
In this scenario, agriculture revenue is set to grow by 39 per cent over the same period compared to 42 per cent if carbon sequestration projects are not implemented.
While the shift away from agriculture production would impact revenue, it would be offset by the overall growth of agriculture production.
The difference would amount to AUD2.8bn (USD1.88bn) – or 2.1 per cent – less in agricultural revenue per year, the report said.
“A growing agricultural sector and increased opportunities for farmers to diversify their incomes show there will be no threat to Australia’s food security,” assured ABARES Executive Director Dr Jared Greenville.
Impact on land and agriculture
The Australian Government has committed to achieving net zero greenhouse gas (GHG) emissions by 2050, a goal that requires the removal of up to 119 million tonnes of emissions.
The report estimated that around 18 million hectares of sequestration projects would be established by 2050, accounting for 4 per cent of agricultural land in Australia.
The report emphasised that agriculture will not be fully displaced. Around 59% of the land-use change would occur where farmers integrate agricultural production with carbon farming practices.
It also noted that the sequestration projects will be spread across the country, limiting the concentration of impact in any single region.
“The impacts on most regional economies are expected to be small, but there may be some places where we are likely to see more change in agricultural production than others,” said Greenville.
ABARES’ analysis estimated that 45 per cent of the area will be established in the pastoral zone, where lower land costs offset lower sequestration rates.
The remaining 55 per cent would occur in the wheat-sheep and high rainfall zones, which together are expected to account for 85 per cent of the total carbon sequestered.
Flexibility over government limits
The report warned that government interventions, such as capping the amount of land used for carbon projects could hinder participation and “significantly increase the costs of transitioning to net zero”.
With more restrictions, a regional limit was estimated to increase the cumulative cost of meeting net zero by at least AUD$1.8bn (USD1.21bn) by 2050.
Additionally, a farm limit was estimated to increase the cumulative cost by at least AUD$16bn (USD10.72bn), which would be borne by landholders.
Instead, the ABARES report encouraged a system where landowners would have flexibility to decide how they would prefer to utilise their land.
“Ensuring that agriculture and regions can continue to thrive and also benefit from land-based sequestration projects will require landholder choice and options for farmers to combine agriculture and carbon farming to help minimise the impact on regions,” said Greenville.
