Australia has great reforestation and afforestation potential in terms of sequestration rates of carbon and it is also a low risk country (Berntez et al. 2007). Large areas of forests are already being established to meet the demand for voluntary offsets by investors aiming for carbon neutrality.
However, the cost per tonne of emissions that are offset varies greatly, depending on factors such as whether the land is being reforested with the aim of biodiversity conservation or whether monocultures are being grown simply for their value as carbon offsets. The estimated costs of forestry offsets are also greatly influenced by whether the opportunity costs of growing trees are taken into account.
In tropical northern Australia growing conditions are favorable and carbon sequestration rates are relatively high. Private landowners have the opportunity of changing land use from existing grazing or cropping activities to the establishment of forests to capture carbon credits.
In a study of options for private landholders, Hunt (2008) found that the cost of carbon emissions offset varied from a low of US$13.00 per tonne of CO2e offset for a pine tree monoculture where there were no opportunity costs, to a high of US$265 per tonne where cattle grazing is displaced by mixed native species reforestation.
The results illustrate the great variation in the cost of sequestered carbon, depending on opportunity costs and type of reforestation. In this particular case it would seem that at prices of around US$12 per tonne of CO2e, only reforestation in the form of monocultures might be profitable for landowners, the cost of reforestation of native forests being far higher than carbon credit payments.
possible constraints on the implementation of forestry projects. It is important to be mindful of these restraints in Chapter 7, which deals with domestic forest policy and potential in selected developing countries and in Chapter 8, which examines the promise of reducing deforestation and forest degradation in the tropics.
Forestry has played a very limited role so far in mitigating climate change. For forestry to reach its potential it is essential not only that global mechanisms are in place that enable the demand for offsets to be met, but also that global cuts in emissions are sufficiently deep to generate a price for carbon that makes carbon sequestration profitable.
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