Australia should be having an urgent discussion about the potential of carbon trading to change land use, a leading agricultural analyst says, or the nation could find itself seriously short of water and food-producing capacity.
Mick Keogh, executive director of the Australian Farm Institute, has dissected some Federal Treasury modelling on the potential for carbon trading to encourage "carbon forestry" on agricultural land, and found that the modelling poses more questions than it answers.
- Calls to cut emissions by 25pc by 2020
- This would result in 34m ha of farm land change to forests
- It would also require 60 million megalitres of water
When Treasury considered an upper-end scenario in which Australia aimed to reduce greenhouse gas emissions by 25pc by 2020, it found that about 34 million hectares of agricultural land would be converted to carbon sink forests as carbon squestration became more profitable than farming.
"To put this area of land in context, it is 30pc more than the total area of Australian farm land that is sown to crops each year," Mr Keogh said.
The implications of this potential change in land use is compounded by the fact that trees grow fastest—and sequester the most carbon—on good land with a high rainfall.
"The ABARE modelling identified that the farm land that would be converted into forests would not be areas of low-value land in drier areas of the nation, but would in fact be highly productive land in high rainfall regions—especially in north-east New South Wales and south-east Queensland.
"The reduction in farm output from this area would have a significant impact on food prices in Australia, as well as major socio-economic impacts on the regions in question."
Mr Keogh then considered how changing existing farmland to forest would affect available runoff. On available data, he calculated that 34m ha of trees would reduce runoff rainfall by 60 million megalitres of water per year.
"This is almost six times the total volume of water currently used for irrigation in Australia," Mr Keogh said.
"If even half of this occurred in the Murray-Darling Basin, it would mean that irrigation would need to be almost completely shut down.
"Alternatively, if this water had to be paid for by forestry developers, it would add an extra $30 billion to the cost of reducing emissions – a cost not considered in the Treasury modelling."
From Treasury's purely fiscal perspective, Mr Keogh said, carbon sink forestry has the potential to significantly reduce the cost of the Carbon Pollution Reduction Scheme to the Australian economy.
"Locking up carbon in trees is much less expensive than the assumed cost of directly reducing emissions from coal-fired electricity generators," he said.
"Issues like future global food security, rural and regional impacts, and even the ability of Australia to continue producing its own food or supplying water to towns and cities have been ignored in discussions about the CPRS, and are the dark underside of the glossy and optimistic conclusions that have been reached about its minimal potential costs."
And for those who don't think governments would allow this scenario to play out, he added some words of caution.
The States most likely to see an upsurge in carbon forestry are NSW and Queensland, "whose governments just happen to be Australia's biggest greenhouse emitters as a consequence of their ownership of coal-fired electricity generators, and which also harvest a flood of annual dividends from these generators and from the coal industry".
"Faced with the choice of either foregoing those dividends and cranking up electricity prices, or letting large areas of farm land be converted to carbon sink forests, it is a fairly safe bet which option these governments will take," Mr Keogh said.
If Australia follows the lead of United States president-elect Barack Obama, it will aim for emissions cuts of about 18pc by 2020.
However, there is speculation that cuts are more likely in the region of 5-15pc.
Under a scenario with 15pc emissions cuts by 2020, Treasury modelling indicated about 21 million hectares of agricultural land could be converted to carbon sink forestry.
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