Will a soil carbon project lower my land's value?
No, a soil carbon project with Carbon Sync is not expected to lower your land’s value. On the contrary, it has the potential to enhance it significantly. Carbon Sync’s projects are built around the principle of natural capital accounting, a holistic approach that evaluates and strengthens the environmental, economic, and social value of your land.
What is Natural Capital Accounting?
Natural capital accounting is a method of measuring and valuing the natural assets on your land—such as soil, water, biodiversity, and ecosystems—and understanding how these assets contribute to your farm’s overall productivity, profitability, and resilience. This approach goes beyond traditional financial accounting by incorporating the value of natural resources and ecosystem services into the management and valuation of your property.
Natural capital includes tangible assets like healthy soils, clean water, and robust biodiversity, as well as the ecosystem services they provide, such as water filtration, carbon sequestration, and pollination. By quantifying these assets and their contributions, natural capital accounting enables landowners to make informed decisions that optimise both the economic and environmental outcomes of their land management practices.
How Natural Capital Accounting is Implemented in a Carbon Sync Soil Carbon Project
In a Carbon Sync soil carbon farming project, natural capital accounting is integrated into every stage of the project, from initial planning to ongoing management and monitoring. Here’s how it works:
Baseline Assessment: The process begins with a comprehensive baseline assessment of your land’s natural capital. This involves measuring existing natural assets such as soil organic matter, vegetation cover, biodiversity levels, and water resources. Advanced tools like remote sensing, field surveys, and producer interviews are used to gather detailed data, similar to the methods employed in the "Farming for the Future Report." This baseline data serves as a reference point for tracking changes and improvements over time.
Valuation of Ecosystem Services: Once the natural capital assets are identified, the next step is to evaluate the ecosystem services they provide. For instance, healthy soils not only store carbon but also enhance water retention, reduce erosion, and support nutrient cycling. These services have economic value, as they contribute to reduced input costs (e.g., less need for irrigation or fertilisers) and increased productivity. By quantifying these benefits, natural capital accounting helps to demonstrate how improving these assets can lead to tangible financial gains. Carbon Sync uses Ecosystem Outcome Verification (EOV), which is an outcome-based monitoring system for ecosystems. Currently deployed on over 5 million acres globally, EOV evaluates both leading and lagging indicators to give you a holistic assessment of ecosystem function.
Project Design and Implementation: Based on the baseline assessment and valuation, a customised soil carbon project is designed to enhance your land’s natural capital. This might involve practices such as rotational grazing, cover cropping, or reforestation, which are specifically chosen to boost soil health, increase biodiversity, and sequester carbon. The project design is tailored to maximise both environmental and economic outcomes, ensuring that improvements in natural capital lead to increased productivity and profitability.
Ongoing Monitoring and Reporting: Natural capital accounting is not a one-time process; it involves continuous monitoring and reporting. Throughout the life of the soil carbon project, Carbon Sync regularly assesses changes in natural capital and the resulting impacts on your farm’s performance. This ongoing monitoring allows us to track improvements in soil carbon levels, biodiversity, and ecosystem services and to adjust management practices as needed to optimise outcomes.
Economic Analysis and Decision-Making Support: The data collected through natural capital accounting is used to conduct detailed economic analyses, helping you understand the financial benefits of the project. For example, as shown in the "Farming for the Future Report," higher levels of natural capital are correlated with increased EBIT and reduced input costs. By providing you with this information, Carbon Sync supports informed decision-making that aligns with both your financial goals and environmental sustainability.
Integration with Farm Valuation: One key objective of natural capital accounting is to integrate the value of natural capital into mainstream farm valuation practices. By demonstrating the economic benefits of enhanced natural capital, we help ensure that your land’s value reflects not just its current use but also its potential for sustainable and regenerative agriculture. This makes your property more attractive to future buyers and investors who prioritise long-term sustainability and resilience.
Farming for the Future
The "Farming for the Future Report," which is the largest dataset of its kind globally, provides robust evidence supporting the positive relationship between natural capital and farm performance. The report analysed data from 113 livestock farms across New South Wales, Victoria, Tasmania, and Western Australia, demonstrating that farms with higher levels of natural capital consistently experienced improved productivity, profitability, and resilience.
Key Findings from the Report
Natural Capital and Financial Performance: The report found that natural capital was positively correlated with financial performance across various metrics. For instance, farms with optimised levels of natural capital recorded higher Earnings Before Interest and Taxes (EBIT). The financial benefits were substantial, with increases in EBIT ranging from $20 to $175 per hectare per year, depending on the farm type and region. For example, farms in Western Australia experienced median EBIT gains of $70 per hectare per year.
Production Efficiency: Higher levels of natural capital were linked to greater production efficiency. This relationship was evident across multiple natural capital indices, supporting the concept of a 'double dividend zone,' where farms not only become more productive but also more profitable. The efficiency gains were partly due to the substitution of manufactured inputs with natural capital, such as enhanced soil health leading to a reduced need for fertilisers and improved water retention, reducing irrigation costs.
Reduced Input Costs: The report highlighted that farms with high natural capital also benefited from lower input costs, particularly in areas such as energy, fodder, animal health, and labour. This reduction in costs was attributed to the natural capital's ability to provide ecosystem services that replace or supplement traditional inputs. For instance, better soil structure and higher organic matter content reduce the need for chemical inputs and irrigation, while healthier ecosystems support livestock health, reducing veterinary costs.
Resilience to Climate and Market Shocks: Farms with higher natural capital levels showed greater resilience to both climate and market shocks. This resilience stems from natural capital’s role in enhancing ecosystem services, such as water retention and biodiversity, which buffer against adverse conditions. For example, improved soil structure from enhanced natural capital increases water infiltration and storage, which can help maintain productivity during droughts. Additionally, natural capital inputs are not subject to the same price volatility as manufactured inputs, providing financial stability in uncertain markets.
Benefit Pathways: The report identified various benefit pathways through which natural capital supports farm businesses. These pathways include not only direct improvements in productivity but also indirect benefits such as reduced input costs and enhanced ecosystem services. Each farm type in the study showed a positive association with natural capital across a range of scores, indicating that improvements in natural capital can lead to better livestock production efficiency and overall farm performance.
Trade-Off Zones and Opportunities: While the benefits of natural capital were clear, the report also identified specific 'trade-off zones' where certain natural capital improvements might have varying effects on productivity or profitability. For example, while increased ground cover typically benefits profitability, in some cases, excessive vegetation aggregation could reduce productivity by limiting usable grazing land. These findings suggest that tailored natural capital management strategies are crucial and that market incentives may be needed to optimise these trade-offs.
Carbon Sync's Commitment to Your Land's Value
At Carbon Sync, we integrate these insights into our soil carbon projects to maximise your land’s value. By enhancing your land’s natural capital, we help you unlock these productivity and profitability gains while also building resilience against future challenges.
Our approach to soil carbon farming is designed to deliver multiple benefits:
Increased Soil Health: Healthier soils sequester more carbon, retain more water, and support more productive crops and livestock.
Biodiversity Enhancement: Diverse ecosystems are more resilient and can provide essential services such as pollination and pest control, reducing reliance on external inputs.
Ecosystem Services: By improving your land’s natural capital, you enhance the ecosystem services it provides, such as water filtration, carbon sequestration, and habitat provision.
These improvements not only contribute to your farm's environmental sustainability but also make it more attractive to future buyers, who are increasingly valuing sustainable and regenerative agricultural practices.
In summary, a soil carbon project with Carbon Sync, underpinned by natural capital accounting, is a strategic investment in your land’s future. It ensures that your land’s full value is recognised, both economically and environmentally, and that you reap the financial benefits of sustainable land management. Supported by the extensive findings of the "Farming for the Future Report," this approach not only safeguards your land’s value but also enhances its productivity, profitability, and resilience, providing a win-win outcome for both you and the environment.
If you’re interested in further information about how a soil carbon farming project can enhance your farming legacy, sign up for Carbon Sync’s Newsletter, and we’ll keep you informed a few times each month.
