Evaluating the potential financial contributions of carbon farming to grazing enterprises in Western NSW

Abstract

This article reports on modelling of the farm-level financial implications of changing land use from rangelands grazing to ‘carbon farming’ (vegetation-based carbon sequestration) in north-western New South Wales, Australia. Four model farm businesses were created by combining information from existing carbon projects funded under the Australian Government’s Emissions Reduction Fund (ERF), data from surveys of farm businesses in the study regions and biomass estimations from the pasture growth model, GRASP. Scenarios for each of the businesses were: baseline (current grazing system); clearing vegetation to increase carrying capacity; establishing a carbon project; and establishing a carbon project and reinvesting some of the additional income in exclusion fencing to increase carrying capacity on non-project areas. The carbon project scenarios were based on either of two approved carbon sequestration methodologies within the ERF: avoided deforestation; and human-induced regeneration. In comparing the financial outcomes of these scenarios across the modelled businesses, we found potential advantages for landholders in having projects where livestock carrying capacity was at medium to low levels for the study region and where woody vegetation biomass potential was medium to high for the region. The case for sequestration projects on land with higher carrying capacity and therefore higher opportunity cost was much less compelling. In most cases, reinvestment in exclusion fencing resulted in similar financial returns to just having a carbon project but farm business income increased in later years.