Alternative Policies with Complementary Benefits: Targeting Greenhouse Emissions or Water Recharge on Farming Systems?

Policies introduced to address one environmental objective can often have the side-benefit of also addressing other environmental objectives. This analysis uses a whole farm bioeconomic model to explore the farm level implications, economic and environmental, of a policy initially designed to reduce greenhouse emissions. We model a regulatory policy which imposes an upper limit on farm greenhouse emissions but allows trees to be used as carbon sinks to offset emissions. The implementation of this policy causes a reduction in whole farm profit, but in addition to decreasing emissions it also decreases groundwater recharge from the farming system and therefore contributes to the prevention of dryland salinity. The analysis compares this approach with using a recharge restriction policy to achieve recharge and emissions reductions. The analysis finds that the position of trees in the landscape affects the extent to which groundwater recharge can be reduced for a given reduction in emissions and that there is a three-way trade-off between profit, emissions reduction and recharge.