Real estate issues associated with the implementation of a carbon trading framework : a rural landholders perspective

The issue of carbon sequestration rights has become topical following the United Nations Convention on Climate Change and the subsequent Kyoto Protocol which identified emissions trading as one of the mechanisms to reduce greenhouse gas emissions. The Australian Government has responded by initiating the Garnaut Climate Change Review which in its final report, proposed that an emissions trading scheme be introduced and set out some of the desirable features of such a trading scheme. This proposal has been the subject of much debate and at this stage there still seems to be little clarity surrounding the topic of emissions trading in Australia. The treatment of rights to carbon sequestered in vegetation is also an issue when reconciled with the system of land tenure and ownership in many jurisdictions. These carbon property rights are treated differently in different Australian and international jurisdictions ranging from recognition of their new and unique nature to fitting them within a more established common law framework, e.g.a profit a prendre. This paper identifies the treatment of these sequestered carbon rights within the wider property rights framework in Australia and considers issues that this treatment may inflict on land holders when there is a fracturing of ownership between the rights of the carbon in vegetation and the ownership of the land.

Collective land system in China: Congenital flaw or acquired irrational weakness?

With the level of urbanization in China now exceeding 50%, its collective rural land system is under increasing pressure, creating conditions in which there is increasing conflict between the efficient use of land for agricultural purposes and its retention as security for the rural population. This paper first examines the fundamental nature of China's collective land system by analyzing the collectivization history of China, then provides a comprehensive appraisal of the strengths and weaknesses of the collective land system's role in history and the challenges it faces in modern times. The main changes needed for the current collective system are identified as (1) the establishment of a new transfer mechanism for potential collective construction land, (2) the completion of land rights verification and consolidation work, and (3) the endowment of villagers with more rights to enjoy the distribution of land incremental value. The paper's main contribution is to question the relevance of collective rural land system in contemporary China, where a shift is now taking place from one of pure economic development to one involving more social concerns, and propose potential viable amendments to integrate the need for both perspectives.

Role of farm real estate in a globally diversified asset portfolio

Purpose - The paper examines the benefits of further diversifying a global portfolio of financial assets with New Zealand farm real estate (FRE). ---------- Design/methodology/approach - We compare efficient sets generated with and without farm real estate using portfolio theory. ---------- Findings - The results show that given the predominantly negative correlation between FRE and financial assets, the risk-return tradeoffs of portfolios of financial assets can be improved significantly. The diversification benefits measured in terms of risk reduction, return enhancement, and improvement in the Sharpe performance ratios are robust under a number of FRE risk-return scenarios as well as under high and low inflationary periods. Using 5- and 10-year rolling periods we also find that FRE is a consistent part of risk efficient portfolios. Consistent with the results reported in Lee and Stevenson (2006) for UK real estate the risk reduction benefits of diversifying with FRE are larger than the risk enhancement benefits. ---------- Practical implication - The results suggest that FRE takes on a consistent role of risk-reducer rather than a return-enhancer in a globally diversified portfolio. FRE appears to deserve more serious consideration by investment practitioners that it has been accorded in the past. Originality/value – The study examines the role of direct real estate in a globally diversified portfolio of financial assets.

Performance evaluation of onsite sewage treatment : Evaluation of current research

Efficient management of domestic wastewater is a primary requirement for human well being. Failure to adequately address issues of wastewater collection, treatment and disposal can lead to adverse public health and environmental impacts. The increasing spread of urbanisation has led to the conversion of previously rural land into urban developments and the more intensive development of semi urban areas. However the provision of reticulated sewerage facilities has not kept pace with this expansion in urbanisation. This has resulted in a growing dependency on onsite sewage treatment. Though considered only as a temporary measure in the past, these systems are now considered as the most cost effective option and have become a permanent feature in some urban areas. This report is the first of a series of reports to be produced and is the outcome of a research project initiated by the Brisbane City Council. The primary objective of the research undertaken was to relate the treatment performance of onsite sewage treatment systems with soil conditions at site, with the emphasis being on septic tanks. This report consists of a ‘state of the art’ review of research undertaken in the arena of onsite sewage treatment. The evaluation of research brings together significant work undertaken locally and overseas. It focuses mainly on septic tanks in keeping with the primary objectives of the project. This report has acted as the springboard for the later field investigations and analysis undertaken as part of the project. Septic tanks still continue to be used widely due to their simplicity and low cost. Generally the treatment performance of septic tanks can be highly variable due to numerous factors, but a properly designed, operated and maintained septic tank can produce effluent of satisfactory quality. The reduction of hydraulic surges from washing machines and dishwashers, regular removal of accumulated septage and the elimination of harmful chemicals are some of the practices that can improve system performance considerably. The relative advantages of multi chamber over single chamber septic tanks is an issue that needs to be resolved in view of the conflicting research outcomes. In recent years, aerobic wastewater treatment systems (AWTS) have been gaining in popularity. This can be mainly attributed to the desire to avoid subsurface effluent disposal, which is the main cause of septic tank failure. The use of aerobic processes for treatment of wastewater and the disinfection of effluent prior to disposal is capable of producing effluent of a quality suitable for surface disposal. However the field performance of these has been disappointing. A significant number of these systems do not perform to stipulated standards and quality can be highly variable. This is primarily due to houseowner neglect or ignorance of correct operational and maintenance procedures. The other problems include greater susceptibility to shock loadings and sludge bulking. As identified in literature a number of design features can also contribute to this wide variation in quality. The other treatment processes in common use are the various types of filter systems. These include intermittent and recirculating sand filters. These systems too have their inherent advantages and disadvantages. Furthermore as in the case of aerobic systems, their performance is very much dependent on individual houseowner operation and maintenance practices. In recent years the use of biofilters has attracted research interest and particularly the use of peat. High removal rates of various wastewater pollutants have been reported in research literature. Despite these satisfactory results, leachate from peat has been reported in various studies. This is an issue that needs further investigations and as such biofilters can still be considered to be in the experimental stage. The use of other filter media such as absorbent plastic and bark has also been reported in literature. The safe and hygienic disposal of treated effluent is a matter of concern in the case of onsite sewage treatment. Subsurface disposal is the most common and the only option in the case of septic tank treatment. Soil is an excellent treatment medium if suitable conditions are present. The processes of sorption, filtration and oxidation can remove the various wastewater pollutants. The subsurface characteristics of the disposal area are among the most important parameters governing process performance. Therefore it is important that the soil and topographic conditions are taken into consideration in the design of the soil absorption system. Seepage trenches and beds are the common systems in use. Seepage pits or chambers can be used where subsurface conditions warrant, whilst above grade mounds have been recommended for a variety of difficult site conditions. All these systems have their inherent advantages and disadvantages and the preferable soil absorption system should be selected based on site characteristics. The use of gravel as in-fill for beds and trenches is open to question. It does not contribute to effluent treatment and has been shown to reduce the effective infiltrative surface area. This is due to physical obstruction and the migration of fines entrained in the gravel, into the soil matrix. The surface application of effluent is coming into increasing use with the advent of aerobic treatment systems. This has the advantage that treatment is undertaken on the upper soil horizons, which is chemically and biologically the most effective in effluent renovation. Numerous research studies have demonstrated the feasibility of this practice. However the overriding criteria is the quality of the effluent. It has to be of exceptionally good quality in order to ensure that there are no resulting public health impacts due to aerosol drift. This essentially is the main issue of concern, due to the unreliability of the effluent quality from aerobic systems. Secondly, it has also been found that most householders do not take adequate care in the operation of spray irrigation systems or in the maintenance of the irrigation area. Under these circumstances surface disposal of effluent should be approached with caution and would require appropriate householder education and stringent compliance requirements. However despite all this, the efficiency with which the process is undertaken will ultimately rest with the individual householder and this is where most concern rests. Greywater too should require similar considerations. Surface irrigation of greywater is currently being permitted in a number of local authority jurisdictions in Queensland. Considering the fact that greywater constitutes the largest fraction of the total wastewater generated in a household, it could be considered to be a potential resource. Unfortunately in most circumstances the only pretreatment that is required to be undertaken prior to reuse is the removal of oil and grease. This is an issue of concern as greywater can considered to be a weak to medium sewage as it contains primary pollutants such as BOD material and nutrients and may also include microbial contamination. Therefore its use for surface irrigation can pose a potential health risk. This is further compounded by the fact that most householders are unaware of the potential adverse impacts of indiscriminate greywater reuse. As in the case of blackwater effluent reuse, there have been suggestions that greywater should also be subjected to stringent guidelines. Under these circumstances the surface application of any wastewater requires careful consideration. The other option available for the disposal effluent is the use of evaporation systems. The use of evapotranspiration systems has been covered in this report. Research has shown that these systems are susceptible to a number of factors and in particular to climatic conditions. As such their applicability is location specific. Also the design of systems based solely on evapotranspiration is questionable. In order to ensure more reliability, the systems should be designed to include soil absorption. The successful use of these systems for intermittent usage has been noted in literature. Taking into consideration the issues discussed above, subsurface disposal of effluent is the safest under most conditions. This is provided the facility has been designed to accommodate site conditions. The main problem associated with subsurface disposal is the formation of a clogging mat on the infiltrative surfaces. Due to the formation of the clogging mat, the capacity of the soil to handle effluent is no longer governed by the soil’s hydraulic conductivity as measured by the percolation test, but rather by the infiltration rate through the clogged zone. The characteristics of the clogging mat have been shown to be influenced by various soil and effluent characteristics. Secondly, the mechanisms of clogging mat formation have been found to be influenced by various physical, chemical and biological processes. Biological clogging is the most common process taking place and occurs due to bacterial growth or its by-products reducing the soil pore diameters. Biological clogging is generally associated with anaerobic conditions. The formation of the clogging mat provides significant benefits. It acts as an efficient filter for the removal of microorganisms. Also as the clogging mat increases the hydraulic impedance to flow, unsaturated flow conditions will occur below the mat. This permits greater contact between effluent and soil particles thereby enhancing the purification process. This is particularly important in the case of highly permeable soils. However the adverse impacts of the clogging mat formation cannot be ignored as they can lead to significant reduction in the infiltration rate. This in fact is the most common cause of soil absorption systems failure. As the formation of the clogging mat is inevitable, it is important to ensure that it does not impede effluent infiltration beyond tolerable limits. Various strategies have been investigated to either control clogging mat formation or to remediate its severity. Intermittent dosing of effluent is one such strategy that has attracted considerable attention. Research conclusions with regard to short duration time intervals are contradictory. It has been claimed that the intermittent rest periods would result in the aerobic decomposition of the clogging mat leading to a subsequent increase in the infiltration rate. Contrary to this, it has also been claimed that short duration rest periods are insufficient to completely decompose the clogging mat, and the intermediate by-products that form as a result of aerobic processes would in fact lead to even more severe clogging. It has been further recommended that the rest periods should be much longer and should be in the range of about six months. This entails the provision of a second and alternating seepage bed. The other concepts that have been investigated are the design of the bed to meet the equilibrium infiltration rate that would eventuate after clogging mat formation; improved geometry such as the use of seepage trenches instead of beds; serial instead of parallel effluent distribution and low pressure dosing of effluent. The use of physical measures such as oxidation with hydrogen peroxide and replacement of the infiltration surface have been shown to be only of short-term benefit. Another issue of importance is the degree of pretreatment that should be provided to the effluent prior to subsurface application and the influence exerted by pollutant loadings on the clogging mat formation. Laboratory studies have shown that the total mass loadings of BOD and suspended solids are important factors in the formation of the clogging mat. It has also been found that the nature of the suspended solids is also an important factor. The finer particles from extended aeration systems when compared to those from septic tanks will penetrate deeper into the soil and hence will ultimately cause a more dense clogging mat. However the importance of improved pretreatment in clogging mat formation may need to be qualified in view of other research studies. It has also shown that effluent quality may be a factor in the case of highly permeable soils but this may not be the case with fine structured soils. The ultimate test of onsite sewage treatment system efficiency rests with the final disposal of effluent. The implication of system failure as evidenced from the surface ponding of effluent or the seepage of contaminants into the groundwater can be very serious as it can lead to environmental and public health impacts. Significant microbial contamination of surface and groundwater has been attributed to septic tank effluent. There are a number of documented instances of septic tank related waterborne disease outbreaks affecting large numbers of people. In a recent incident, the local authority was found liable for an outbreak of viral hepatitis A and not the individual septic tank owners as no action had been taken to remedy septic tank failure. This illustrates the responsibility placed on local authorities in terms of ensuring the proper operation of onsite sewage treatment systems. Even a properly functioning soil absorption system is only capable of removing phosphorus and microorganisms. The nitrogen remaining after plant uptake will not be retained in the soil column, but will instead gradually seep into the groundwater as nitrate. Conditions for nitrogen removal by denitrification are not generally present in a soil absorption bed. Dilution by groundwater is the only treatment available for reducing the nitrogen concentration to specified levels. Therefore based on subsurface conditions, this essentially entails a maximum allowable concentration of septic tanks in a given area. Unfortunately nitrogen is not the only wastewater pollutant of concern. Relatively long survival times and travel distances have been noted for microorganisms originating from soil absorption systems. This is likely to happen if saturated conditions persist under the soil absorption bed or due to surface runoff of effluent as a result of system failure. Soils have a finite capacity for the removal of phosphorus. Once this capacity is exceeded, phosphorus too will seep into the groundwater. The relatively high mobility of phosphorus in sandy soils have been noted in the literature. These issues have serious implications in the design and siting of soil absorption systems. It is not only important to ensure that the system design is based on subsurface conditions but also the density of these systems in given areas is a critical issue. This essentially involves the adoption of a land capability approach to determine the limitations of an individual site for onsite sewage disposal. The most limiting factor at a particular site would determine the overall capability classification for that site which would also dictate the type of effluent disposal method to be adopted.

Assessment of the application of contingent valuation theory to bio-sequestered carbon

The issue of carbon sequestration rights has become topical following the United Nations Convention on Climate Change (United Nations 1992 at page 1414) and the subsequent Kyoto Protocol (United Nations Climate Change Secretariat 1998) which identified emissions trading as one of the mechanisms to reduce greenhouse gas emissions. Australian states have responded by creating a legal framework for the recognition of rights to bio-sequestered carbon. There is a lack of uniformity in the approach of each state to the recognition of these rights, which vary from the creation of new and novel interests in land to the adoption of more traditional rights such as a profit a prendre. Rights to bio-sequestered carbon are likely to have an impact on the utility, marketability, value and financing of rural land holdings. Despite the creation of the legal framework for recognition of rights to sequestrated carbon, there has been a delay in the introduction of a formalised carbon trading scheme in Australia. In the absence of an established carbon market, this paper addresses the applicability of contingent valuation theory to assess the value of bio-sequestered carbon rights to a rural land holder. Limitations and potential controversies associated with this application of contingent valuation theory are also addressed in this paper.

Public preferences for biodiversity conservation and climate-change mitigation: A choice experiment using ecosystem services indicators

Potential conflicts exist between biodiversity conservation and climate-change mitigation as trade-offs in multiple-use land management. This study aims to evaluate public preferences for biodiversity conservation and climate-change mitigation policy considering respondents’ uncertainty on their choice. We conducted a choice experiment using land-use scenarios in the rural Kushiro watershed in northern Japan. The results showed that the public strongly wish to avoid the extinction of endangered species in preference to climate-change mitigation in the form of carbon sequestration by increasing the area of managed forest. Knowledge of the site and the respondents’ awareness of the personal benefits associated with supporting and regulating services had a positive effect on their preference for conservation plans. Thus, decision-makers should be careful about how they provide ecological information for informed choices concerning ecosystem services tradeoffs. Suggesting targets with explicit indicators will affect public preferences, as well as the willingness of the public to pay for such measures. Furthermore, the elicited-choice probabilities approach is useful for revealing the distribution of relative preferences for incomplete scenarios, thus verifying the effectiveness of indicators introduced in the experiment.