Low Emission Farming Systems: A whole-farm analysis of the potential impacts of greenhouse policy

The Australian government is introducing a Carbon Pollution Reduction Scheme in 2010, as part of its climate change policy. After 2015 agriculture may be covered by this scheme. This paper examines how different broadacre farming systems may be affected by the policy settings of this scheme. Using the bio-economic farming systems model MIDAS (Model of an Integrated Dryland Agricultural System) the impacts of the Carbon Pollution Reduction Scheme on the profitability of different broadacre farming systems in the southwest of Australia are investigated. Results show a range of profit and enterprise impacts across the various farm types. In a scenario where agriculture is not covered by the scheme, reductions in profit range from 7 to 12 percent, attributable to more expensive ‘covered’ inputs such as fuel and fertiliser; and farmers reduce their use of expensive energy inputs such as chemicals and fertilisers. In a covered scenario profits decline by 15 to 25 percent of ‘business-as-usual’ profit and optimal farm plans involve a combination of reduced livestock numbers, the introduction of permanent woody perennial plantations on marginal lands and other changes to the farm enterprise mix to reduce emissions.