Productivity tradeoffs and synergies for grazing lands in central Queensland to generate carbon offsets

This paper reports research seeking to understand the economic implications for central Queensland graziers of participating in a carbon trading scheme and to measure the likely participation of graziers in an emissions trading scheme under various market design scenarios. An initial desktop study was undertaken to compare an enterprise which produced only cattle to one which produced cattle and sequestered carbon. The findings from this analysis were used to inform the design of an experimental auction to test alternative carbon trading scenarios. An experimental workshop was conducted at seven locations across central Queensland with a range of beef producers, extension officers and consultants. Participants were presented with a scenario in which they had the choice of maintaining current management practices against altering management practices to reduce beef production and enter into a carbon sequestration contract (CSC). They were asked at what price they would enter into a CSC and how that price and likelihood of participating would change under a range of alternative contract conditions. The results of the experimental auctions found significantly higher than breakeven prices for carbon would be required before landholders would offer land as a carbon offset. Participation rates were influenced by price and also the carbon contract rules. Five rule changes were trialled and all were found to have a significant impact on reducing participation and increasing required payment levels.