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Could carbon farming be key to boosting land prices?

By Juliet Helmke
22 June 2022 | 1 minute read

Land valuers are increasingly being asked if carbon farming can add value to rural operations.

According to James Beveridge, Colliers’ associate director of agribusiness in the firm’s valuation and advisory service, more farmers are investigating whether they can generate additional income through Australian carbon credit units (ACCUs), thereby increasing the value of their properties.

ACCUs can be earned through implementing practices to improve the rate at which CO2 is removed from the atmosphere and stored in organic matter such as soil – a process known as carbon farming.

Since the practice first began to gain popularity in roughly 2016, Mr Beveridge noted debate has swirled around the associated science, testing methodology and worth of carbon farming in rural enterprises.

Significantly, Mr Beveridge said that answers to some of the questions surrounding carbon farming might be answered in the next six to 12 months, when roughly 18,000 hectares of grazing land are expected to be tested across central and southern Queensland and northern NSW.

With a large enough surface area and comprising lands that have been rigorously tested through drought, fire and flood, Mr Beveridge believes the outcome of these tests might prove game changing for farmers looking to improve their property value through proving the premium quality of their land.

“If we’re able to move past the scientific debate, there is a bigger windfall to be made in terms of value through better soil health and productivity,” he said.

A key metric, in his eyes, will be proving increases in carrying capacity and other productivity-related metrics correlated to the improved health of the land.

“While valuers tend to keep a comprehensive analysis on transaction volumes in their regions, grazing properties are usually analysed on a dollar-per-hectare basis and a dollar-per-adult equivalent (AE) or dry sheep equivalent (DSE) basis. A higher value can generally be calculated if the subject property can demonstrate a lift in the long-term-carrying-capacity (LTCC),” he explained.

“If you’re a property manager, we advise you to keep these records up to date or to instruct a valuation firm that specialises in rural property to conduct an assessment. Hard data is key,” Mr Beveridge advised.

He also noted that as a result of the extensive investigations into carbon farming currently being carried out, some land holders might stand to gain simply by being located in the right area.

“Recent commentary on this topic reveals that there may be some geographical areas in Australia that may be better suited to generating ACCUs and underpinning everything from succession planning to debt reduction and expansion,” he said.

The Clean Energy Regulator is currently working on releasing information relating to recent tests, and participants will soon know how their carbon farming systems are progressing.

Land valuers, too, are paying close attention to the new data that’s coming to the fore. “[It’s] giving us all some timely insight as to the additional income it can generate,” Mr Beveridge said. 

“It will then be up to the valuation and financial sectors to work out the added value of these projects. It is certainly exciting news after many years of waiting.”

Could carbon farming be key to boosting land prices?
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ABOUT THE AUTHOR


Juliet Helmke

Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.

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