Grazing enterprises occur on 56% of Australia’s landmass and constitute an important source of greenhouse gas (GHG) emissions and sinks; the latter being associated with carbon (C) storage in grasslands and forests managed by the landholders. While the maintenance of vegetation C and soil organic carbon (SOC) is critical for the long-term productivity of grazing and agricultural lands, there is also potential for C sequestration strategies to provide an alternative income stream for landholders through engaging in environmental markets such as the Australian carbon credit unit (ACCU) Scheme. However, the implementation of strategies to sequester C on livestock grazing enterprises will likely have some impact on agricultural productivity and require investment of resources. Therefore, there is an urgent need for comprehensive, economic and financial analyses to better understand the trade-offs, opportunities for alternative income streams, and the most effective and efficient allocation of resources for landholders. The outcomes of such analyses should support adoption of suitable practices that facilitate attainment of net zero emission targets. The objectives of this scoping study were to firstly review the literature and identify opportunities for emissions reductions on extensive livestock production systems due to implementation of C sequestration strategies. The second objective was to conduct a bioeconomic case study for an agricultural enterprise in Queensland to assess the consequences of implementing a C sequestration strategy on C sequestration and net emissions, forage and animal production, and profitability and financial risk.
The literature review indicated that there has been a downward trend in the net GHG emissions attributed to Australian beef cattle and sheep over the recent decade, 2010/11-2019/20. A reduced CO2 efflux from private forests has had the major contribution to this decline. However, the key vegetation ACCU Scheme method which underpinned this reduction has now closed, following considerable scrutiny due to concerns over the additionality and permanence of the C sequestered, and alternative suitable methods are not yet available. Additionally, afforestation across grazing lands can only be considered an interim measure for reducing net property emissions. This is because forest C accumulation in Australia typically peaks within 5-10 years of establishment. Furthermore, trees are generally competitive with pasture and with extensive livestock production. Consequently, strategies that increase SOC storage in grasslands may offer more potential.
However, it was identified that there is poor confidence in predicting: 1) the maximum SOC storage capacity of different soils and dynamics of change towards the saturation level; 2) the permanency of sequestered SOC, and 3) the levels of GHG emissions associated with the C sequestration strategy. Predicting the potential for SOC sequestration remains a challenge due to the diversity in climate, soil and landscape characteristics across Australian landscapes as well as variation in land use history and livestock production systems. Furthermore, detecting any changes in SOC stocks due to management interventions can be difficult due to the dominant effects of climate and soil variables in Australian environments, particularly rangelands.
The scientific literature indicated strong context dependency and biophysical limits, in addition to economic and financial trade-offs, when implementing C sequestration strategies. The strategies that showed most potential to increase SOC stocks on extensive livestock properties while minimising negative impacts to agricultural productivity and business profit included: 1) converting from cropping to permanent pasture, or 2) sowing productive legumes in existing grass pastures. These latter activities may provide C market opportunities for landholders with the proviso that there are soil and climate constraints to the quantity of SOC that can be sequestered and maintained over time.
There are few published studies available to indicate how the full range of possible C sequestration strategies may affect net paddock and/or property emissions and business profit. An increase in net C sequestration on a project area will not necessarily result in reduced net emissions. Additionally, even when net emissions can be reduced, this may not result in a positive effect on business profit. A number of recent modelling studies of sheep and beef production systems in southern Australia reported that many strategies to reduce net property GHG emissions reduced farm income, even with assumed payments for C sequestration, methane reduction or biodiversity improvements, or when applying C taxes. Regardless, maintaining or increasing SOC is beneficial for agricultural productivity. However, for primary producers to adopt C farming practices on a broad scale, it will be necessary for the economic benefits to exceed the costs to their business. Additional analyses of net emissions and economic outcomes should therefore be conducted for promising C sequestration strategies, to enable landholders to better understand the trade-offs and opportunities for their extensive livestock businesses.
Our case study analysis assessed the impacts of converting cropland to grazed grass pasture in the Condamine region of southern Queensland as an example of a higher-productivity region of extensive livestock production in northern Australia.
Soil organic C in the 0-30 cm interval decreased in the cropping scenario by an average of 0.20 t C/ha.annum over 10 years with large increases in loss (emissions) during the long fallow period following harvest of the third crop in the rotation. However, there was an average increase in the grazed pasture scenario of 0.06 t C/ha.annum. The rate of SOC sequestration estimated for the grazed pasture scenario peaked in Year 4 and then declined over the subsequent 6 years. It was estimated that, at the low rate of C sequestration estimated for the conversion of a cropping paddock to grazed pasture in this study and the small project area of 238 ha, the total costs of an ACCU Scheme SOC sequestration project are likely to exceed the income.
Despite the C sequestration of 51.5 t CO2-e/annum in the grazed pasture scenario, cf. a loss of 180.6 t CO2-e/annum in the cropping scenario, the net emissions from the grazed pasture scenario were 10.3 times that of the cropping scenario, on average. The large net emissions from the grazed pasture scenario (2,975 t CO2-e/annum) were primarily due to the large Scope 3 emissions from purchased livestock (2,734 t CO2-e/annum) which constituted 91% of the total GHG emissions (not considering C sequestration). However, if Scope 3 emissions from purchased livestock are not included (as for property-bred livestock), the net emissions from the grazed pasture scenario (241 t CO2-e/annum) were less than that from the cropping paddock (288 t CO2-e/annum), due to the effects of C sequestration which counteracted the substantial contribution of enteric methane emissions.
The average of the crop rotation cycle of 4 years generated around 1.2 times the gross margin ($356/ha.annum) of the average annual gross margin for the grazed pasture over 10 years following establishment ($292/ha.annum).
Combined, the case study results indicate that, even although there was a C sequestration benefit under pasture, maintaining the paddock under the given cropping sequence in the short to medium term is more profitable and produces lower net emissions than converting it to a perennial grass pasture for livestock production using purchased livestock.
It is recommended that additional case studies are conducted to produce a library of such scenarios to provide guidance to producers in their decision making.
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