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Agriculture’s carbon neutral challenge: The case of Western Australia

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  • Kingwell, Ross

Abstract

Agriculture is being encouraged to become carbon neutral, and agricultural land is being touted as a source of carbon sequestration. Yet making agricultural regions locally carbon neutral will involve an economic cost, with existing patterns of greenhouse gas emissions and spatial costs of abatement affecting that cost of achieving regional carbon neutrality. This study examines the economic cost of locally achieving carbon neutrality, using the illustration of Western Australia’s agricultural region. The cost to the region of achieving carbon neutrality via reforestation is estimated, as is the spatial allocation of farmland for sequestration. Social and political pressures that likely constrain how much farmland can be reforested are explicitly considered. Findings are subject to a sensitivity analysis and several caveats. The annual cost of regional carbon neutrality via proscribed regional reforestation, under current carbon offset prices, is estimated to range from AUD216 million to AUD250 million (i.e. under 3 per cent of the region’s gross value of agricultural production) which might suggest the challenge to be carbon neutral is within commercial reach. However, without other financial incentives, it likely involves farm business profits being reduced by around 15 per cent.

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  • Kingwell, Ross, 2021. "Agriculture’s carbon neutral challenge: The case of Western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(03), January.
    • Handle: RePEc:ags:aareaj:342962
    DOI: 10.22004/ag.econ.342962
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    References listed on IDEAS

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    1. Tiho Ancev, 2011. "Policy Considerations for Mandating Agriculture in a Greenhouse Gas Emissions Trading Scheme: Reply," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(4), pages 668-672.
    2. Bardsley, Peter, 1994. "The Collapse of the Australian Wool Reserve Price Scheme," Economic Journal, Royal Economic Society, vol. 104(426), pages 1087-1105, September.
    3. Tiho Ancev, 2011. "Policy Considerations for Mandating Agriculture in a Greenhouse Gas Emissions Trading Scheme," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(1), pages 99-115.
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