Implications of retaining woody regrowth for carbon sequestration for an extensive grazing beef business: a bio-economic modelling case study

A bio-economic modelling framework (GRASP-ENTERPRISE) was used to assess the implications of retaining woody regrowth for carbon sequestration on a case study beef grazing property in northern Australia. Five carbon farming scenarios, ranging from 0% to 100% of the property regrowth retained for carbon sequestration, were simulated over a 20-year period (1993–2012). Dedicating regrowth on the property for carbon sequestration reduced pasture (up to 40%) and herd productivity (up to 20%), and resulted in financial losses (up to 24% reduction in total gross margin). A net carbon income (income after grazing management expenses are removed) of $2–4 per t CO2-e was required to offset economic losses of retaining regrowth on a moderately productive (~8 ha adult equivalent–1) property where income was from the sale of weaners. A higher opportunity cost ($ t–1 CO2-e) of retaining woody regrowth is likely for feeder steer or finishing operations, with improved cattle prices, and where the substantial transaction and reporting costs are included. Although uncertainty remains around the price received for carbon farming activities, this study demonstrated that a conservatively stocked breeding operation can achieve positive production, environmental and economic outcomes, including net carbon stock. This study was based on a beef enterprise in central Queensland’s grazing lands, however, the approach and learnings are expected to be applicable across northern Australia where regrowth is present.

Bioeconomic modelling of woody regrowth carbon offset options in productive grazing systems

Agricultural land has been identified as a potential source of greenhouse gas emissions offsets through biosequestration in vegetation and soil. In the extensive grazing land of Australia, landholders may participate in the Australian Government’s Emissions Reduction Fund and create offsets by reducing woody vegetation clearing and allowing native woody plant regrowth to grow. This study used bioeconomic modelling to evaluate the trade-offs between an existing central Queensland grazing operation, which has been using repeated tree clearing to maintain pasture growth, and an alternative carbon and grazing enterprise in which tree clearing is reduced and the additional carbon sequestered in trees is sold. The results showed that ceasing clearing in favour of producing offsets produces a higher net present value over 20 years than the existing cattle enterprise at carbon prices, which are close to current (2015) market levels (~$13 t–1 CO2-e). However, by modifying key variables, relative profitability did change. Sensitivity analysis evaluated key variables, which determine the relative profitability of carbon and cattle. In order of importance these were: the carbon price, the gross margin of cattle production, the severity of the tree–grass relationship, the area of regrowth retained, the age of regrowth at the start of the project, and to a lesser extent the cost of carbon project administration, compliance and monitoring. Based on the analysis, retaining regrowth to generate carbon income may be worthwhile for cattle producers in Australia, but careful consideration needs to be given to the opportunity cost of reduced cattle income.