Carbon costs – drought, fire, flooding rain
Australia’s agricultural sector has been heavily affected by a range of extreme climatic events this past year. Many in the farming community have suffered from severe drought conditions from 2017 to 2019, coupled with devastating fires and flood, much of the country has endured confounding circumstances.
The drought conditions were driven by the driest year on record with the national rainfall calculated 40% below average at 277.6mm. This rainfall deficiency in conjunction with the warmest recorded temperatures and a build-up of fuel loads primed the landscape for the dangerous fire weather that resulted across much of eastern and southern Australia.
Since September last year over 12 million hectares of country has been affected by bushfires, with devastating consequences for both government managed land and private holdings. These private farmland holdings are generally smaller in scale, with many consisting of lifestyle assets located within the coastal region on the east coast.
The impacts from the fires are now starting to register in the agricultural sector with an estimated 80,000 head of livestock lost in fire affected areas across NSW, Victoria and South Australia. The additional impact is the significant loss of carbon, which latest estimates suggest will cost the government up to AU$1Bn in purchasing offsets to replace the national carbon stock.
Among various methods to address carbon abatement in Australia, one that is a potential leader in the race to store carbon, are agricultural practices that utilise regenerative methods, such as grazing management, no-till farming, biological stimulation and continuous plant production. These methods can have a resounding effect on building resilience to climate shock by effectively matching the capacity of land with healthy production outcomes.
It is becoming increasingly clear that agriculture is going to play a leading role in decarbonising our atmosphere by drawing down carbon and storing it in our soils.
As Australia enters a new decade, Impact Ag Partners is positioning itself to empower stakeholders to effectively broaden their capability to rise to challenges by embracing new technologies, integrating regenerative systems of practice, and instilling confidence to play a role in the future of farming in this country. Our data demonstrates we come into drought later than most and recover from drought earlier, removing the extreme volatility of financial performance
Asset selection when investing in Australia must include a full risk matrix including climate and fire risk. Many assets that provide strong cash yield and long-term capital growth are investible without high risk exposure whilst also having the capacity to draw down atmospheric CO2.