© 2019 Australian Soil Management

  • Facebook - White Circle
  • Twitter - White Circle

WHAT IS THE ECONOMIC VALUE OF SOIL ORGANIC CARBON AND HOW CAN YOU INCREASE IT?

July 3, 2019

The economic value of a commodity is a measure of the benefit people derive from it (in this case soil organic carbon) and the value is generally measured by the maximum amount that someone is willing to pay for it. Based on this economic assumption alone, the price of soil organic carbon is around $30 a tonne in Europe. Predictions are that they are likely to pay $60 a tonne within a few years’ time. However, at the moment in Australia the cost is only around $14 a tonne with indications that it will head towards $22/25 a tonne within six years. This predicted increase in price is related to expected demand. Australian governments (federal, state & territory) are all increasing their emissions reduction targets as well as other countries – this directly increases the demand for soil carbon credits as they directly relate to carbon dioxide being taken out of the atmosphere. At the same time, the business and investment communities world-wide and in Australia are demanding Increases in emissions reduction targets.

 

What does this mean for Australian farmers and how do we all benefit from it?

At the moment there are only a few dozen farmers who believe that they can increase their soil organic carbon levels and have registered their farm as a soil carbon project. This means that they can sell their increased soil organic carbon as a commodity like any other agricultural commodity such as wheat. In Australia, farmers can enter into a contract with the Federal Government, through the Clean Energy Regulator, to sell their increased soil carbon (credits) at an agreed price. They could also, bypass the government, and sell their carbon to some of the large emitters – this is the secondary market. These farmers are already ahead of the game, but more will follow. If 10% of Australian farms (8 million hectares) were each able to raise their soil organic carbon by only 1% - this would mean that these farms will have removed more than 1.3 billion tonnes of carbon dioxide from the atmosphere and stored it as soil organic carbon in their paddocks.

 

If Australian farmers sold just 100 million credits each year for the next 10 years (1 tonne = 1 credit) to Europe, this would generate export income of $3 billion per year based on current prices. Such a move would boost Australia’s economy by exporting carbon credits that are surplus to our national commitments. So, Australia would gain additional export income, at the same time as reducing the nation’s overall emissions.

 

What would $3 billion a year for the next 10 years do for rural and regional Australia?

The reinvestment of this $3 billion into rural and regional Australia would assist in correcting the imbalance in economic opportunities between rural and urban communities. This disparity can be seen in unemployment rates (especially youth); rural health and the increasing need for decentralisation.

 

However, the most important aspect of this investment would be to help ‘future-proof’ Australian agriculture against the impacts of climate change including the fiscal impacts of climate change policies and adapting to a changed climate, including more extreme events.  Current Australian agricultural practices may not be sustainable in light of these changing environments, in which case we need to act before it is too late otherwise our food security is at risk.

 

So far, we have just considered the export value of soil organic carbon. However, the benefits of increased soil carbon are more varied. Some of the benefits from a 1% increase in soil organic carbon include:

  • Improved farmland water storage capacity by 144,000 litres per hectare;

  • Improves soil structure and aeration – prevents soil erosion;

  • Increases farm productivity and profitability by up to 30% 1;

  • Improves water quality and run-off for rivers and lakes (e.g. Great Barrier Reef & Murray-Darling Basin);

  • Increases in bio-diversity;

  • Reduces the amount of nitrous oxide emissions;

  • Remediation of soil salinity; and

  • Improves human and animal health by increasing nutrient density in food.

Australian governments are now starting to recognise some of these values. For example, the Queensland government has allocated funding for farmers who are improving their soils and the Federal Government has announced that will allocate funds for measures to boost biodiversity.

 

How can you increase your soil organic carbon?

In a nutshell, hard work and investment are required to enhance soil carbon.  Farmers and land managers who are successfully increasing soil carbon are increasing their bio-diversity above and below the ground by adding cover crops, pasture crops, using soil amendments such as good quality compost, changing their grazing practices as well as their farming equipment. 

 

The process begins with organic matter (OM) and plants:

  • Plants use carbon dioxide and water to capture sunlight energy (photosynthesis);

  • Energy is stored by the plants in chains of carbon atoms we call sugars, starches, fats, oils and proteins;

  • Plants excrete some of this carbon through their roots into the soil which is the key to building and increasing the soil organic carbon.

Some of the current Australian agricultural management practices will need to be tweaked to assist plants in producing more soil organic carbon. For example, we need to maintain 100% ground cover, 100% of the time so ways to avoid fallow periods in cropping cycles need to be considered. There is also a role for composting in broad-acre farming to boost soil carbon but it is still largely misunderstood with more work to be done in this area.  

 

 

Soil Carbon – What it’s Worth to Your Farm?

ASM is a world renowned company specialising in building soil carbon in agriculture. Our research results have demonstrated unprecedented increases in soil carbon throughout Eastern Australia. We work with farmers in all aspects of agriculture, as well as land managers, to develop tailor-made carbon projects that maximise the returns to each farmer. To find out more about the value of soil carbon on your farm, contact Norman Marshall, Director on mob. 0414 287 326 or norman.marshall@australiansoil.com.au

 

 

 

1. ASM Cases studies (www.australiansoil.com.au) and

Ogilvy, S., et al. (2018) Report: Graziers with better profitability, biodiversity and wellbeing. Canberra, Australia

Monast, M., et al (2018). Farm finance and conservation: How stewardship generates value for farmers, lenders, insurers and landholders. Environmental Defence Fund and K.Coe Isom, USA.

McMahon, P. (2016). The investment case for ecological farming. White Paper. SLM Partners, London, UK.

 

Please reload

FEATURED POSTS

WHAT IS GOING ON WITH OUR SOILS?

March 15, 2017

1/3
Please reload

RECENT POSTS

August 31, 2017

August 4, 2016

Please reload

Archive
Please reload