The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) recently released a groundbreaking report estimating that carbon sequestration projects could yield approximately AUD 9 billion (USD 6.03 billion) in annual profits for farmers by 2050.

This remarkable shift is projected to generate around AUD 7 billion (USD 4.69 billion) annually for the broader Australian economy.

The report indicates that, while agricultural revenue is expected to grow by 39 percent in a scenario integrating carbon sequestration, it would have seen an even greater rise of 42 percent without these projects.

The transition from traditional agricultural production to eco-friendly practices may temporarily impact revenue, resulting in an estimated annual loss of AUD 2.8 billion (USD 1.88 billion) or roughly 2.1 percent less in agricultural revenue per year.

“A growing agricultural sector and increased opportunities for farmers to diversify their incomes show there will be no threat to Australia’s food security,” stated ABARES Executive Director Dr. Jared Greenville.

Impact on Land and Agriculture

In alignment with global efforts to combat climate change, the Australian Government aims to achieve net-zero greenhouse gas emissions by 2050, necessitating the removal of up to 119 million tonnes of emissions.

The report predicts that approximately 18 million hectares of land will be designated for carbon sequestration projects by 2050, which accounts for about 4 percent of Australia’s agricultural land.

However, the transition will not completely displace agriculture; an estimated 59 percent of land-use changes will see farmers integrating agricultural practices with carbon farming.

Additionally, these projects will be dispersed across the country, thus preventing a concentrated impact on any particular region.

“The impacts on most regional economies are expected to be small, but there may be some areas where agricultural production may change more significantly,” remarked Greenville.

ABARES estimates that 45 percent of sequestration projects will take place in the pastoral zone, where lower land costs counteract reduced sequestration rates. The remaining 55 percent will occur in wheat-sheep and high rainfall zones, collectively expected to account for 85 percent of total carbon sequestered.

Flexibility Over Government Limits

The report warns that government measures, like capping land used for carbon projects, could hinder participation and significantly inflate costs associated with reaching net-zero emissions.

Implementing regional limits could increase the cumulative cost to achieve net-zero by at least AUD 1.8 billion (USD 1.21 billion) by 2050. A farm limit, in contrast, could escalate costs by a staggering AUD 16 billion (USD 10.72 billion), which would ultimately be borne by landholders.

Instead, the ABARES report promotes a model allowing landowners flexibility in land utilization.

“To ensure that agriculture and regions can continue to thrive, while benefiting from land-based sequestration projects, we must provide landholder choice and options for combining agriculture with carbon farming to mitigate impacts,” concluded Greenville.