Economic evaluation of Emissions reduction fund incentives

Presenter: Jeff Connor, Professor of Water Economics, School of Commerce, University of South Australia Business School

Title: Economic evaluation of Emissions reduction fund incentive for land use change, emissions offset and additional co-benefits

Abstract: One of the main mechanisms in Australia’s Commonwealth climate change policy is the Emissions Reduction Fund (ERF). It is an auction where prescribed actions that reduce or offset CO2 emissions can be offered in tender rounds and least cost per tonne CO2 offset offers are funded. Whilst activities across the economy such as building energy efficiency, land fill methane emissions reduction are possible, most credits issued through the ERF to date involved avoided deforestation (17 percent of registered credits) and assisted natural regeneration of native vegetation (64 percent of registered credits (Evans, 2018). Further credits were very concentrated in one part of northern New South Wales and southern Queensland where the removal of stock from low economic return, open forest/grazing land to acquire carbon credits was possible (Evans, 2018). Less than a fraction of one percent of credits came from South Australia intensive agriculture (i.e. areas cleared for broad acre cropping/grazing) representing approximately 10 million hectares (11 percent of South Australia’s area). Professor Connor will present an overview of a project undertaken in collaboration with the South Australian Government to assess carbon offset supply and co-benefit potential for more future South Australian participation in the ERF. The presentation is in three parts covering the three themes researched for the project. One part provided an informed scientific and economic basis to understand the spatially varying economics of supplying carbon abatement opportunities though land use change across South Australia’s intensive agricultural zone. Another component assessed the often discussed potential that value of co-benefits from carbon plantings in addition to supplying carbon offset markets can provide additional incentives to encourage wider adoption of environmentally and economically beneficial behavior. A final component assessed policy context and stakeholder perceptions to understand how details of implementation of the ERF that may be limiting potential for South Australian landholder participation..