The financial implications of converting farmland to state-supported environmental plantings in the Darling Downs region, Queensland

Australia has one of the highest forest clearing rates in the world. Over the past 200 years, it has lost about 40% of total forest cover with consequent environmental problems such as soil and wind erosion, dryland salinity and biodiversity loss. The Australian Government has introduced a scheme to promote mixed species plantings for conservation and carbon sequestration benefits. This study first estimates the carbon sequestration amounts of these plantings using the Australian Government's Reforestation Modelling Tool and rules, and then compares the estimated returns with those from competing land uses in the Darling Downs region of Queensland, Australia. Costs and benefits data for all land uses were collected from different sources and discounted to produce net present values. With a standard discount rate, average carbon and commodity prices based on recent history and a low ($A1000/ha) direct seeding establishment cost, environmental plantings are more profitable than native pasture, grazing oats and forage sorghum land uses, but less profitable than grain sorghum and native pasture. Higher establishment costs would however favour the continuation of conventional agricultural activities, especially given the limited impact of revegetation schemes in Australia. A comparison of a policy of 25 years permanence (as in the Abbott Governments' Direct Action policy) with a policy of 100 years permanence, the 25 year permanence policy delivers 60% of the carbon sequestrated that would be sequestered over 100 years, but when cost components are included and compared with other land uses, it gives similar outcomes. Therefore, to be attractive to landholders, the restoration of native forests in agricultural areas, such as the Darling Downs, will likely require additional incentive payments (for environmental services and co-benefits) and reasonable contractual certainty.