Comparing three land use systems for economic benefit in crops, cows or timber? Including carbon values in land use choices

Farm forestry is a very minor land use in the inland agricultural landscapes of Australia. The Australian Government intends to introduce a program to encourage landholders to trade the carbon sequestration value of plantations and this may change the relative profitability of plantations against other agricultural land uses. This research compares the returns from a timber and ‘carbon’ plantation, with those from grazing and a common crop rotation in the Kingaroy area of Queensland. Typical production patterns for all systems were developed from producer and expert knowledge and soil and vegetation sampling were used to estimate sequestration rates. The costs and benefits of all land use systems were converted into monetary terms and discounted to produce net present values. With a standard discount rate and average commodity prices based on recent history, cultivation is the most profitable option, followed by pasture and plantations. After the inclusion of carbon, plantations are the most profitable option, followed by pasture and cultivation.