Nature to the rescue: past drivers and future potential of the Australian land-based carbon offsets market

Greg Barber, Andrew Edwards and Kerstin K. Zander

Climate Policy, 2024, vol. 24, issue 5, 601-616

Abstract: Large quantities of ‘negative emissions’ will be required to meet the 1.5°C temperature target under the Paris agreement. As nations consider more ambitious emissions reductions goals, policy makers, carbon market participants and environmental advocates need to estimate the potential scale of nature-based climate solutions (NCS), against the opportunity cost of current land use. In this study we construct a simple linear regression model of the relationship between carbon abatement potential and agricultural profitability, the latter a proxy for opportunity cost, to describe the total set of options for NCS on the Australian continent. Sampling these same two variables at the sites of over 800 land-based offset projects accredited since 2015 shows how the market selected from these abatement options. The model demonstrates that offset projects, under a range of crediting methodologies, were typically selected where the ratio of abatement potential to opportunity cost is maximized. These results, produced from two readily available spatial variables, provide an empirically derived framework for those with an interest in the structure of the long-run supply curve for land-based carbon abatement. This modelling approach could be applied in any geographic region where similar spatial variables for agricultural profitability and abatement potential are available.We find a strong positive correlation between the quantity of abatement potential on a land parcel and its potential opportunity cost, the latter represented by agricultural profitability.The lowest cost abatement will be obtained by policies, including market mechanisms, that optimize these two factors rather than prioritizing one over the other.Policies that direct projects to ‘marginal’ agricultural land may lead to a more costly emissions reduction pathway.Our modelling approach is a key input to the development of a long-run supply curve for land-based abatement, essential to any strategy that relies heavily on negative emissions.Understanding the drivers of land-based abatement projects can help to predict the land use policy impacts of a higher offset requirement.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/14693062.2023.2239758 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:tcpoxx:v:24:y:2024:i:5:p:601-616

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/tcpo20

DOI: 10.1080/14693062.2023.2239758

Access Statistics for this article

Climate Policy is currently edited by Professor Michael Grubb

More articles in Climate Policy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().