Making Money From Trees
This column is delivered in partnership with FarmLab and written by their Founder, Sam Duncan.
On the outskirts of Moree, a town renowned for its cotton farming, an atypical cotton grower made a unique commitment to environmental stewardship. Allocating a third of his farm to native bush alongside the river, he prioritized environmental consid- erations over economic gains. Aware of the social license bestowed upon him by the community, this farmer recognized the need to demonstrate his responsible actions through empirical data. To that end, he enlisted the assistance of the NSW Depart- ment of Primary Industries to assess water quality, flora diversity, and the population of native turtles in the waterways. Driving through the native areas of his property, I witnessed firsthand the positive impact of preserving the environment. Grey kangaroos bounded across the dirt tracks before us, while emus emerged from the scrub and dart- ed across the cotton fields beside us.
Regrettably, such practices remain uncommon across the vast expanse of cropping farms in Australia.This reality should come as no surprise given our checkered history with bio- diversity preservation. Queensland, for instance, boasts one of the world’s highest rates of forest clearance, with a staggering 418,000 hectares cleared in 2022. In the 2021 State of the Environment report commissioned by the Australian Federal Government, hab- itat loss and biodiversity decline emerged as one of the gravest threats over the next five years. The period from 2016 to 2021 witnessed an 8% rise in the number of native species either threatened or moved to a higher category of endangerment. One of the principal contributors to this decline was land clearing driven by agricultural activities.
The pressing question then becomes: How can we address biodiversity concerns and incentivize responsible land management? The challenge lies in the economic value of that land; as the value of crops significantly outweighs the value of maintaining land in its natural state. In response, the Australian federal government has recently taken a significant step by establishing a Nature Repair Market, designed to encourage and reward landowners for actively promoting biodiversity.
Can market incentives and heightened economic incentives genuinely lead to an increase in biodiversity and a reduction in land clearing? The complexity of environmental man- agement complicates the answer. For instance, identifying which parts of a farm to avoid clearing is a straightforward assessment. Most farms already designate unproductive ar- eas as untouched. However, the question arises when considering areas of land already in use for farming. The economic cost is always a key factor in cropping systems.
According to a report from the Grains Research and Development Corporation, the average gross profit per hectare of a cropping farm in Northern NSW was $178 in 2015 (after accounting for costs and inputs). Does this imply that a biodiversity credit must deliver a commensurate return? Not necessarily. It is crucial to recognize that average farms may experience varying yields across different parts of their land. Highly produc- tive areas could yield double or triple the average profit, while less productive sections may yield significantly lower returns. Moreover, the incentive program does not mandate that farmers allocate 100% of their land to biodiversity restoration. Agriculture remains a vital industry that must continue to operate effectively. Fortunately, biodiversity cred- its do not discriminate based on land quality, allowing farmers to strategically set aside unproductive or less profitable areas. To accomplish this, farmers can employ tools like FarmLab, which utilize yield and investment returns to determine the economic viability of converting specific parcels of land into native vegetation. Ultimately, the decision lies with the grower, who must weigh the economic costs and potential benefits.
As our journey through the Moree cotton farm concluded, I asked the farmer what he hoped to achieve by diligently measuring and documenting all this information. He replied candidly, “Frankly, I don’t know. But I firmly believe this data will prove invaluable in the future.’
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