Making the most of carbon farming

Carbon AND biodiversity benefits on agricultural land

Key messages:
  • Researchers evaluated policy mechanisms for supplying carbon and biodiversity co-benefits on Australian agricultural land
  • Uniform payments targeting carbon achieved significant carbon sequestration but negligible biodiversity co-benefits. Land-use regulation increased biodiversity co-benefits, but was inefficient in regards to carbon
  • Discriminatory payments with land-use competition were efficient and, with multifunctional targeting of both carbon and biodiversity co-benefits, increased the biodiversity co-benefits almost 100-fold

Establishing native trees on agricultural land can yield both carbon and biodiversity benefits. CSIRO and CEED researchers have examined what policy settings will deliver the greatest returns in both. (Photo by David Salt)

Establishing native trees on agricultural land can yield both carbon and biodiversity benefits. CSIRO and CEED researchers have examined what policy settings will deliver the greatest returns in both. (Photo by David Salt)

There’s been much discussion recently about carbon farming: paying farmers to plant trees on their farm to sequester carbon. This could also be a boon for biodiversity and the environment and provide an alternative source of income in marginal agricultural areas. However, studies in recent years suggest that focusing on carbon by itself is unlikely to give the most biodiversity bang for our buck.

To better achieve biodiversity benefits from carbon payments a mix of regulation, targeting, levies and incentive payments could be used. But what policy mix will deliver the best outcomes for both carbon and biodiversity? This was the question posed at a CEED/NERP workshop at the University of Western Australia and a group of CSIRO and CEED researchers have come up with some interesting results.

The researchers evaluated 14 policy options for supplying carbon and biodiversity through carbon farming in Australia. They found that payment design is paramount, with substantial gains made by putting it to auction, and paying farmers differing amounts depending on their expected costs.

“Without regulating plantings to ensure they are biodiversity friendly (ie, they include a diversity of species), it’s likely that monoculture plantations will dominate,” observes CSIRO’s Brett Bryan, the researcher who led the analysis. “But straight out regulation, while great for biodiversity, wouldn’t be so great for achieving carbon objectives.”

Interestingly, paying farmers a premium to adjust their plantings to increase the biodiversity benefit is not as efficient as applying a levy on carbon plantings; and using the funds raised to encourage plantings that will deliver greater biodiversity benefits elsewhere. But while a levy was better than a biodiversity premium, the researchers believe they have found an even better option.

“It turns out that the best type of policy would pay farmers to cover the costs of their plantings through auction, and target areas for both carbon and biodiversity outcomes,” explains Bryan. “Such a design has the best chance of cost-effectively and efficiently delivering both carbon and biodiversity outcomes, giving over 100 times the biodiversity benefits when compared with a simple, carbon-focussed policy.”

The analysis suggests a clear policy direction for carbon and biodiversity, but also for payments for ecosystem services more broadly, both in Australia and globally. However, the researchers are careful to point out that implementation of such policies needs care.

“The implementation of this approach needs to be informed by the local social, economic, and environmental context if the potential gains we have identified are to be realised,” says Bryan.

“And sustainably financing large payment schemes from a combination of government and industry sources will probably require additional, flexible policy mechanism design.

“Ultimately, the level of investment will depend on the levels of carbon sequestration and biodiversity conservation desired by society, and the costs it is willing to pay for them.”

More info: Brett Bryan


Bryan BA, RK Runting, T Capon, MP Perring, S Cunningham, ME Kragt, M Nolan, EA Law, A Renwick , S Eber, R Christian & KA Wilson (2016). Designer policy for carbon and biodiversity co-benefits under global change. Nature Climate Change 6: 301- 305.

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