Department of SEWPaC
Opportunities under the CFI Reforestation Methodology
South West Aboriginal Land and Sea Council
March 2012
The findings of this Report do not constitute business, legal or financial advice and the decision or otherwise
to enter the Carbon Farming Initiative remains the business decision of the project proponent.
This Report:
1.
has been prepared by GHD Pty Ltd (“GHD”) for the Department of Sustainability, Environment, Population
and Communities (SEWPaC);
2.
may only be used and relied on by SEWPaC;
3.
must not be copied to, used by, or relied on by any person other than SEWPaC without the prior written
consent of GHD and subject always to the next paragraph;
4.
may only be used for the purpose of a general feasibility analysis of opportunities to establish a reforestation
project (and must not be used for any other purpose).
If SEWPaC wishes to provide this Report to a third party recipient to use and rely upon, then GHD’s prior written
consent will be required. Before this Report is released to the third party recipient, the third party recipient will be
required to execute a GHD prepared deed poll under which the recipient agrees:

to acknowledge that the basis on which this Report may be relied upon is consistent with the principles in
this section of the Report; and

to the maximum extent permitted by law, GHD shall not have, and the recipient forever releases GHD from,
any liability to the recipient for loss or damage howsoever in connection with, arising from or in respect of
this Report whether such liability arises in contract, tort (including negligence).
To the maximum extent permitted by law, all implied warranties and conditions in relation to the services provided by
GHD and the Report are excluded unless they are expressly stated to apply in this Report.
The services undertaken by GHD in connection with preparing this Report:

were limited to those specifically detailed in Section One of this Report;

did not include GHD undertaking any site testing in relation to establishment success of seedlings, GHD
undertaking testing of the suitability for planting of all parts of all sites; GHD independently confirming cost
inputs identified by project participants.

GHD has prepared this Report on the basis of information provided by SEWPaC, Indigenous Organisations
and others (including local and State Government authorities), which GHD has not independently verified or
checked (“Unverified Information”) beyond the agreed scope of work.

GHD expressly disclaims responsibility in connection with the Unverified Information, including (but not
limited to) errors in, or omissions from, the Report, which were caused or contributed to by errors in, or
omissions from, the Unverified Information.
The opinions, conclusions and any recommendations in this Report are based on assumptions made by GHD when
undertaking services and preparing the Report (“Assumptions”), including (but not limited to):

many of the cost inputs identified are estimates and are expected to be confirmed once schemes become
further developed;

a positive net present value in relation to a potential project does not imply certainty that the scheme may be
a success as there are a range of general (Section 10) and site specific risk factors that may contribute to a
project’s success or failure.
GHD expressly disclaims responsibility for any error in, or omission from, this Report arising from or in connection
with any of the Assumptions being incorrect.
Subject to the paragraphs in this section of the Report, the opinions, conclusions and any recommendations in this
Report are based on conditions encountered and information reviewed at the time of preparation and may be relied
on until 30 June 2012, after which time, GHD expressly disclaims responsibility for any error in, or omission from, this
Report arising from or in connection with those opinions, conclusions and any recommendations.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | i
Table of contents
Executive summary ............................................................................................................. 1
1.
2.
3.
4.
5.
Context ...................................................................................................................... 5
1.1
The Carbon Farming Initiative ........................................................................ 5
1.2
Opportunities for Indigenous participation in the CFI ..................................... 5
Background ............................................................................................................... 6
2.1
About the Traditional Owners and their land .................................................. 6
2.2
Social/economic/environmental objectives ..................................................... 6
2.3
Case study contacts........................................................................................ 7
Analysis of eligibility for CFI reforestation project ..................................................... 8
3.1
Carbon sequestration rights ............................................................................ 8
3.2
Kyoto consistency ........................................................................................... 9
Site bio-physical features ........................................................................................ 10
4.1
Climate .......................................................................................................... 10
4.2
Geology and geomorphology ........................................................................ 10
4.3
Terrain and drainage..................................................................................... 10
4.4
Soils .............................................................................................................. 11
4.5
Existing vegetation types .............................................................................. 12
4.6
Established plantations in the vicinity ........................................................... 14
Site constraints ........................................................................................................ 16
5.1
Current land use/management ..................................................................... 16
5.2
Restrictions on land use................................................................................ 16
5.3
Threatened species ...................................................................................... 17
5.4
Access .......................................................................................................... 17
5.5
Fire ................................................................................................................ 17
5.6
Pest animals/weeds/pathogens .................................................................... 17
5.7
Cultural heritage ............................................................................................ 18
5.8
Other (social/cultural) .................................................................................... 18
6.
Resources and skills analysis ................................................................................. 19
7.
Proposed project ..................................................................................................... 20
8.
7.1
Proposed planting areas ............................................................................... 20
7.2
Suitable species and stocking rates ............................................................. 24
7.3
Site preparation ............................................................................................. 25
7.4
Propagation and planting .............................................................................. 26
7.5
Site maintenance .......................................................................................... 26
Carbon sequestration .............................................................................................. 27
8.1
Methodology ................................................................................................. 27
8.2
Sensitivity analysis ........................................................................................ 27
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | ii
9.
8.3
Representative scenario ............................................................................... 30
8.4
Carbon outcomes.......................................................................................... 31
Cost/benefit analysis ............................................................................................... 33
9.1
Costs ............................................................................................................. 33
9.2
Benefits ......................................................................................................... 35
10.
Risk analysis ........................................................................................................... 40
11.
Conclusion............................................................................................................... 44
12.
References .............................................................................................................. 47
Table index
Table 1 Comparison of NPV under different scenarios assuming a discount rate 7.5% .... 2
Table 2 Property details ...................................................................................................... 8
Table 3 Land tenure and encumbrances ............................................................................ 9
Table 4 Beverly WA climate statistics ............................................................................... 10
Table 5 Proposed planting areas ...................................................................................... 20
Table 6 Proposed stocking ................................................................................................ 25
Table 7 Scenarios modelled in RMT ................................................................................. 29
Table 8 Representative scenario modelled in RMT and RAC .......................................... 31
Table 9 Projected carbon abatement under Options 1 and 2 over 40 years .................... 31
Table 10 Range of reforestation project costs .................................................................. 34
Table 11 Project costs and assumptions .......................................................................... 34
Table 12 Net economic benefit under different carbon price scenarios ............................ 37
Table 13 Sensitivity analysis of NPV to discount rate ....................................................... 38
Table 14 Sensitivity analysis of NPV to establishment costs ............................................ 38
Table 15 Sensitivity analysis of NPV to up front transaction costs ................................... 39
Table 16 General reforestation project risk factors ........................................................... 41
Table 17 Estimation of potential insurance premiums (option 2) ...................................... 43
Table 18 Comparison of NPV under different scenarios assuming a discount rate of 7.5%44
Figure index
Figure 1 Cumulative cashflow Option 1 core policy scenario ............................................. 4
Figure 2 Cumulative cashflow Option 3 core policy scenario ............................................. 4
Figure 3 Soil map unit types .............................................................................................. 11
Figure 4 Patches of remnant vegetation ........................................................................... 13
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | iii
Figure 5 Greening Australia planting (2008), June 2011 .................................................. 14
Figure 6 Planting areas Option 1....................................................................................... 21
Figure 7 Planting areas Option 2....................................................................................... 22
Figure 8 Cropping area along creek line ........................................................................... 23
Figure 9 Proposed rip and mound seedling establishment ............................................... 23
Figure 10 Proposed hand plant seedling establishment ................................................... 24
Figure 11 Flowchart showing the steps followed and tools used to
calculate carbon abatements. ....................................................................... 28
Figure 12 Onsite carbon mass of 35 ha planting area under different
scenarios modelled in RMT .......................................................................... 30
Figure 13 Standing carbon stock onsite ............................................................................ 32
Figure 14 Project abatement over each reporting period minus the risk of reversal buffer32
Figure 15 Treasury modelling of future carbon price (2010 $/t CO 2-e) ............................. 36
Figure 16 Project structure options ................................................................................... 46
Appendices
Appendix A Existing FPC sandalwood plantation
Appendix B Greening Australia revegetation plan
Appendix C NPV analysis
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | iv
Executive summary
The Avondale Park property comprises 837 ha of land on the Great Southern Highway at Beverley WA. It
was purchased by the Indigenous Land Corporation in 2007 as part of its environmental land acquisition
programme, following an application by Yaraguia Enterprises Inc. Yaraguia would like to protect and
enhance the remnant vegetation on the property and rehabilitate the cleared farmland back to its natural
condition.
Part of the property (170 ha in total) is leased to the Forest Products Commission for a sandalwood
plantation and a further 52 ha has been revegetated by Greening Australia with a mixed species
environmental planting.
After an initial site visit, two options for a Carbon Farming Initiative (CFI) reforestation project were
agreed:
 Cover all the existing cleared areas of the property with trees; and
 Leave the more valuable land along the river flats as cropping and plant the remaining areas.
The first option is the most desirable to Yaraguia in the long term, but in the immediate future the second
option is probably more feasible. The feasibility of both options was analysed. For the first option, the
total planting area will be 507 ha, of which 165 ha will be hand planting on the steep/rocky areas and the
remainder rip and mound planting. For the second option the area of hand planting will be the same but
the area of rip and mound planting will be reduced to 193 ha, giving a total planting area of 358 ha. It was
assumed that every year 35 ha would be hand planted and 35 ha would be planted using rip and mound.
The Department of Climate Change and Energy Efficiency’s Reforestation Modelling Tool was used to
estimate the carbon stock accumulated over time for both options.
A spreadsheet was created to enable a cost benefit analysis of the two project options to be undertaken
over a 40 year period. Estimations were made of:
 the legal and administrative costs associated with setting up, planning and managing the project;
 the costs of planting and maintaining the trees; and
 when these costs would occur.
Direct benefits from the sale of carbon were calculated based on a five yearly verification and reporting
cycle. This means that at the end of each five year period, the project proponent will receive Australian
Carbon Credit Units for the amount of additional carbon abatement achieved in that period and will then
sell these credits at whatever carbon price is applicable at that time. Since the future carbon price will be
crucial in determining the possible revenue from the sale of credits, three different possible scenarios
were modelled:
 The first assumed that the initial carbon price for the CFI of $23/tonne CO2-e applies for the whole of
the 40 years;
 The other two are based on Treasury modelling updated in September 2011 (The Treasury, 2011):
– The core policy scenario assumes a nominal domestic starting price of $20/t CO2-e in 2012-13,
rising 5% per year, plus inflation, before moving to a flexible world price in 2015-16, projected to be
around A$29/t CO2-e.
– The high price scenario assumes a nominal domestic starting price of $30/t CO2-e in 2012-13, rising
5% per year, plus inflation, before moving to a flexible world price in 2015-16, projected to be around
A$61/t CO2-e.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 1
The net economic benefits of the proposed reforestation project were then calculated using an analysis of
the Net Present Value (NPV). NPV calculates the difference between the present value of the future
benefits from an investment and the amount of that investment. The present value of the expected
benefits is computed by discounting them at the required rate of return. The results of this analysis
assuming a discount rate of 7.5% is shown in the second column of Table 1.
Table 1 Comparison of NPV under different scenarios assuming a discount rate 7.5%
Carbon
Price
Scenario
Net Present Value
With All Costs
Without Up Front
Transaction Costs
Without Any
Establishment Costs
Option 1
Option 2
Option 1
Option 2
Option 1
Option 2
$23/tonne
$ -10,675
$ -2,001
$ 7,930
$ 16,604
$ 426,896
$ 323,396
Core policy
$ 508,589
$ 359,818
$ 527,194
$ 378,423
$ 946,160
$ 685,215
High price
$ 1,594,700
$ 1,155,134
$ 1,613,304
$ 1,173,738
$ 2,032,271
$ 1,480,531
If it is assumed that the carbon price will remain steady at $23/tonne, then the NPV of both project options
over a 40 year period will be negative. Planting costs are estimated to be $78,000/yr for the initial years
and these will cease once the available area is planted. In the case of Option 1 this will be after 10 years
whereas for Option 2 it will be after six years, which explains the difference in NPV between the two
options.
Over the same 40 year period the additional amount of carbon sequestered each reporting period will
increase gradually, reaching a peak in the 2022-2027 reporting period, after which it will start to decline.
The major costs are therefore incurred during the initial years of the project, whereas returns become
significantly higher towards the middle of the 40 year period and then tail off again towards the end.
If it is assumed that the carbon price will increase steadily over 40 years in line with Treasury modelling,
then the NPV for both project options will be positive. Under both the core policy and high price scenarios,
the costs will remain the same as for the $23/tonne scenario, but the returns will increase significantly
over the initial 15 years of the project as greater amounts of carbon are sequestered and as the carbon
price increases. These returns will remain high towards the end of the 40 years as the carbon
sequestration rates decline but the price per tonne continues to increase.
A sensitivity analysis was undertaken to determine the impact on the NPV if either all the transaction
costs or all the establishment costs were funded other than through returns from the project. As shown in
Table 1, removing all the transaction costs made very little difference to the NPV for either option under
any of the three carbon price scenarios. In all cases, the NPV would only increase by around $20,000 if
all transaction costs were removed. The NPV was however, found to be quite sensitive to the estimate of
establishment costs. The assumptions regarding establishment costs for this project mean that the costs
are relatively low (averaging $1,115/ha) but if these costs could be reduced even further, or long term
funding could be sourced through private, philanthropic or public sector investment to support these
costs, then this would significantly increase the NPV under all three pricing scenarios and even the
$23/tonne scenario would generate a positive NPV for both project options.
Figure 1 shows the cumulative cash flow over the 40 year period for the core policy carbon price scenario
for Option 1 and Figure 2 shows the same for Option 2. For both options the cashflow is negative until
about year 15 after which it becomes positive. Again, this is because most of the costs are incurred
during the project establishment phase whereas the returns won’t eventuate until the trees are
sequestering reasonable amounts of carbon. The peaks in the cashflow graphs are a result of the
assumption that all credits are sold at the end of each five year reporting period. Income is therefore only
generated every five years.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 2
Either of the proposed CFI reforestation project options would contribute towards the Noongar people
meeting their environmental objective of rehabilitating their land whilst helping to mitigate the impacts of
climate change. They would also potentially contribute towards meeting one of their social objectives by
providing employment opportunities associated with the establishment and ongoing management of tree
plantations. However, whether they would enable them to achieve their second social objective, namely
to enable economic proceeds to be used to support key Noongar community development and cultural
initiatives is far less certain, since this will be highly dependent on the future carbon price.
If the carbon price remains at $23/tonne then neither of the project options will return a positive NPV.
Unless alternative funding sources are found to cover the transaction and/or establishment costs of the
project and of other projects like it in SW Western Australia, then it is unlikely that the vision of SWALSC
to develop a large scale economic initiative based on carbon trading on Noongar held lands will be
realised. If the carbon price increases steadily over time in line with Treasury modelling, then the
realisation of that vision may be possible.
The success of a project may however be measured in other than monetary terms and the decision about
whether to proceed with either of the project options will therefore ultimately depend on the relative
importance placed on the achievement of the social, environmental and economic objectives.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 3
Figure 1 Cumulative cashflow Option 1 core policy scenario
Figure 2 Cumulative cashflow Option 3 core policy scenario
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 4
1. Context
1.1
The Carbon Farming Initiative
The Australian Government has adopted a plan for a clean energy future which includes the introduction
of a price for carbon. Under the Clean Energy Future legislative package, which passed the Senate in
November 2011, the country’s biggest polluters (around 500 businesses) will be required to pay for every
tonne of carbon pollution they emit into the atmosphere. This will create a financial incentive for those
businesses to reduce their carbon emissions.
The carbon pricing mechanism will start on 1 July 2012 and the price will be fixed for the first three years
(2012-13 to 2014-15) starting at $23/tonne CO2-e in 2012-13 and growing at 2.5% per year plus inflation
during this fixed period. On 1 July 2015, an emissions trading scheme will become operational and the
price for carbon will then be determined by the market (although a floor and ceiling price will be set for the
first three years).
Businesses which are not able to reduce their emissions enough to meet their obligations under the
scheme will be able to purchase credits created by farmers and land managers through greenhouse gas
abatement activities and use these to cancel out or “offset” some of their emissions. In the fixed price
period, a maximum of 5% of emissions will be able to be offset in this way, but once the emissions trading
scheme is operational, there will be no such limit. This will create the “demand” side for the proposed
carbon trading scheme.
The Carbon Farming Initiative (CFI) has been introduced to create the “supply” side of such a scheme
and will to provide certainty to both buyers and sellers about how credits are created in order to underpin
their market value. The CFI commenced on 8 December 2011, following the passing of the Carbon
Credits (Carbon Farming Initiative) Act, 2011.
1.2
Opportunities for Indigenous participation in the CFI
The CFI creates opportunities for saleable carbon credits to be generated in the land sector, thus
providing an incentive for investment in land sector abatement (emissions reductions and carbon
sequestration). The CFI will give farmers, forest growers and Indigenous landholders access to domestic
voluntary and international carbon markets.
Indigenous communities’ participation in carbon trading has the potential to address key land
management issues of interest to each community, and well as providing wider economic and social
opportunity. Potential benefits of participation in the carbon market include increased involvement in
decision making and management of commercial activities on Indigenous owned land, and maintenance
of traditional ecological knowledge, resources and habitat.
The Australian Government is therefore supporting Indigenous participation in emerging carbon markets
through the provision of $10 million of funding over five years under the Caring for our Country initiative.
Some of this funding has been allocated to supporting Indigenous involvement in the carbon market
through the establishment of reforestation projects on Indigenously held land. GHD has been contracted
by the Department of Sustainability, Environment, Water, Population and Communities to provide
technical advice and support to four Indigenous groups interested in investigating the feasibility of
establishing a CFI reforestation project on their land. This report presents the results of the feasibility
study for one of those potential reforestation projects.
The other reports are for:
 Jabalbina Yalanji Aboriginal Corporation (Wet Tropics Queensland);
 Gunditj Mirring Traditional Owners Aboriginal Corporation (SW Victoria); and
 Umpila Land Trust and Cape York Institute (Cape York, Queensland).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 5
2. Background
2.1
About the Traditional Owners and their land
The South West Aboriginal Land and Sea Council (SWALSC) is the native title representative body of the
Noongar people who are the Traditional Owners of the South West of Australia. In addition to facilitating
native title claims, SWALSC also works closely with the community on projects which will strengthen
Noongar culture, heritage and society.
The organisation is currently engaged in negotiating a major land settlement on behalf of all Noongar
Traditional Owners with both the state and federal Governments in which significant tracts of land will
come into Noongar ownership. Apart from the obvious settlement of native title claims, the aims of the
settlement are to generate sustainable land management and economic opportunities. SWALSC was
therefore keen for a feasibility study to be undertaken to investigate the potential for establishing carbon
sink plantations on Noongar lands. If such plantings prove to be feasible, then there is the potential for
SWALSC to establish a carbon trading enterprise on a broad scale across the south west on Noongar
held lands. In turn, this will provide the organisation with an opportunity to engage Noongar people on a
large scale in the establishment and management of plantations for carbon sequestration.
The Avondale Park property was selected by SWALSC as suitable for the feasibility case study. The
property comprises 837 ha of land on the Great Southern Highway at Beverley WA. It was purchased by
the Indigenous Land Corporation (ILC) in 2007 as part of its environmental land acquisition programme,
following an application by Yaraguia Enterprises Inc. The basis of Yaraguia’s application for ILC support
to purchase the property was that it would enable them to establish a family based cooperative and to
develop a viable and sustainable economic future for the McGuire/Yarran clan. The application proposed
that sustainable natural resource management activities would be established and managed on the
property as part of the vision to regenerate and enliven the land again. In collaboration with Greening
Australia, Yaraguia developed a program of conservation and revegetation activities that would see the
property regenerated back to its natural state (Greening Australia WA, 2008). These activities included
the protection and enhancement of remnant vegetation on the property and the rehabilitation of cleared
farmland on the property back to its natural condition
2.2
Social/economic/environmental objectives
In their Expression of Interest to participate in the feasibility planning process, SWALSC identified the
following objectives that they would be hoping to achieve by developing and implementing a carbon
project on Avondale Park.
2.2.1
Social objectives
There is potentially a high level of social outcome to be gained from this type of project, mainly through
additional employment opportunities relating to the establishment and ongoing management of tree
plantations. In addition, economic proceeds will be used to support key Noongar community development
and cultural initiatives.
2.2.2
Economic objectives
If the feasibility of projects such as this is proven, it is SWALSC’s plan to extend this process to other
Noongar held lands and to also use the process as a catalyst to secure further lands in the future. As
such, it is envisaged that the development of a large scale Noongar economic initiative can be pursued
which will seek to provide employment, contracting (both to Noongar landowners and to Noongar service
providers) and a variety of other economic opportunities.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 6
2.2.3
Environmental objectives
A critical part of this process is the environmental outcomes that can be achieved. Not only will this place
Noongar people in a prime position in relation to climate change, which is affecting our country in a real
sense, but it also allows for the rehabilitation of Noongar land on a broad scale. In an area of land with
large scale land clearing, this is a critical outcome area for Noongar people.
2.3
2.3.1
Case study contacts
Site contact
Glen Kelly
South West Aboriginal Land & Sea Council, Chief Executive Officer
08 9358 7401
glen.kelly@noongar.org.au
PO Box 585, Cannington, WA, 6987
Oral McGuire
Gundi Corporation, General Manager
0408 196 330
omcguire@bigpond.net.au
PO Box 5305, Canning Vale, WA, 6155
2.3.2
Other key site stakeholders
Other key stakeholders for the study site property include:
 Indigenous Land Corporation (ILC)
 Greening Australia WA
 Avon Catchment Council (ACC)
 Forestry Products Commission WA
 Indigenous Coordination Centre
 CY O’Connor TAFE
2.3.3
External stakeholder contacts
Department of Agriculture and Food
Phil Goulding
phillip.goulding@agric.wa.gov.au
Wheatbelt Natural Resource Management Inc.
Sally Rayner
srayner@wheatbeltnrm.org.au
www.wheatbeltnrm.org.au
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 7
3. Analysis of eligibility for CFI reforestation
project
3.1
Carbon sequestration rights
A carbon sequestration right is the exclusive legal right to obtain the benefit of sequestration of carbon
dioxide by trees. Only the entity which holds the carbon sequestration right over an area of land will be
able to obtain Australian Carbon Credit Units (ACCUs) or to trade any carbon sequestered as a result of
their project in the voluntary market.
Whether an entity holds the carbon sequestration rights will depend on the land tenure of the property.
The property details for Avondale Park are shown in Table 2.
Table 2 Property details
Item
Details
Property name
Avondale Park
Town/locality
Shire of Beverley
Street address
Great Southern Highway, Beverley WA
Full legal description
Freehold Farm
Lot numbers
Lots 200, 205, 29614 Plus easement
DP numbers
31475 and 54621
Area
837 Hectares (ha)
The ILC holds the title to the property and has a profit a prendre arrangement directly with the Forest
Products Commission for the sandalwood (Santalum spicatum) plantation. The remainder of the property
is leased to Yaraguia Enterprises Inc. This is currently a monthly lease but the ILC is seeking to renew it
for a one year term (to allow them to build a case for divestment of the property). The activities permitted
on the lease are conservation and land management activities, training activities, residential use, and
entering into licence agreements for agricultural purposes. If and when the property is granted to
Yaraguia, these would continue to be permitted uses.
Yaraguia currently has a licence agreement with neighbouring farmers who run a cropping and sheep
grazing enterprise over the majority of the productive areas of the property (excluding the sandalwood
plantation and the Greening Australia plantings). This is continuing as a weekly licence whilst the ILC
awaits a request from Yaraguia seeking their consent to renew it. It is expected that this would be for a
one-year term (Emma Yates ILC, Pers. Comm. 2011) Table 3 shows the results of a title search
undertaken for the property.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 8
Table 3 Land tenure and encumbrances
Land
Description
Land
Identifier/
Reference
Registered
Proprietor
Encumbrances
Nature of Tenure
Primary CSR
Holder
Lot 200,
Shire of
Beverley
Lot 200
DP 31475
Robert
Edwin de
Gruchy and
Dina
Campbell
BarrettLennard as
joint tenants
Easement burden created under the
section 27A of the Town Planning and
Development Act for easement (above
ground electric) to Western Power
Corporation.
Mortgage to ANZ registered 17/6/2002
Estate in fee simple
Registered
proprietor
Lot 205,
Shire of
Beverley
Lot 205
DP 54621
Indigenous
Land
Corporation
Easement burden created under the
section 27A of the Town Planning and
Development Act for easement (above
ground electric) to Western Power
Corporation.
Profit a prendre certain rights and
interests to General Manager Forest
Products Commission for a period of
40 years from 1.1.2008 (portion only).
Estate in fee simple
Indigenous
Land
Corporation
Lot 29614,
Shire of
Beverley
Lot 29614
DP 31475
State of
Western
Australia
Reserve 48707 for the purpose of
public recreation registered 13/6/2006
Crown Land
Minister for
Lands
Lot 205 is where the proposed reforestation project would occur and plantings would be in areas
unaffected by the electricity easement or the profit a prendre to the Forest Products Commission.
Since the property is freehold land, the registered proprietor of that land (in this case the ILC) will be able
to develop carbon projects on that land and will hold the carbon sequestration rights. If the property is
divested to Yaraguia, then the carbon sequestration rights will rest with that organisation as the registered
proprietor.
3.2
Kyoto consistency
The CFI allows for both Kyoto-consistent and non Kyoto-consistent ACCUs to be issued, depending on
the nature of the project through which the ACCUs are generated. Kyoto-consistent and non Kyotoconsistent ACCUs are likely to be traded in different markets and at different prices. When determining
the feasibility of a proposed reforestation project, it will therefore be important to know whether the
property contains any land on which Kyoto-consistent reforestation activities can be undertaken.
In order for ACCUs from an existing or new forest to be Kyoto-consistent, that forest needs to meet the
following criteria:
 It was established by direct human-induced methods;
 It has trees with a potential height of at least two metres (m) and a potential crown cover of at least
20%;
 It occupies an area of land of 0.2 ha or more; and
 It is either:
– on land that as at 31 December 1989, was clear of forest; or
– the area occupied by the stand was lawfully cleared of trees between 1 January 1990 and 31
December 2008 and used for agriculture.
The National Carbon Accounting Toolbox, Data Viewer, was used to identify land use on Avondale
between 1989 and 2004 to determine whether any existing or proposed forest is/would be Kyotoconsistent.
The majority of Avondale was cleared of trees in 1989, with only scattered patches of forest/vegetation.
This appears to have stayed constant until 2004, with perhaps less vegetation and pasture over time.
Any reforestation activities on the Avondale property would therefore be Kyoto consistent.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 9
4. Site bio-physical features
4.1
Climate
The study site of Avondale Park is located in the Shire of Beverley along the Great Southern Highway
between York and Beverley, in the WA wheat belt. The climate statistics for the Beverley area are shown
in Table 4. The climate is characterised by hot, dry summers and cool, moderately wet winters. Average
annual rainfall at Beverley is 418.7 mm per year (BOM 2011a, DAFWA).
The maximum average temperature for January is 34.2oC and the minimum average temperature for
August is 5.0oC (BOM 2011a). An increase of around 0.15°C in mean annual temperature has occurred
between 1970-2010 (BOM 2011b). Frosts can occur within the region from July to October.
Conservative climate projections indicate that the temperature will continue to increase and that by 2070,
the region will be between 1.5oC and 2.0oC warmer and experience 2-5% less rainfall than the 1990
baseline (http://climatechangeinaustralia.com.au/).
Table 4 Beverly WA climate statistics
Beverly, WA
Mean
Mean annual maximum temperature (oC)
25.3
Mean annual minimum temperature (oC)
10.2
Annual rainfall (mm)
418.7
Source: BOM 2011a (http://www.bom.gov.au/climate/averages/tables/cw_010515.shtml)
4.2
Geology and geomorphology
The Western Australia Wheatbelt sits on the Yilgarn Craton which is a geologically stable mass of granite
and gneiss of Archaean origin. The Archaean granites result in outcrops throughout the wheatbelt, and
includes subgroups (i) Mafic, ultramafic and metasedimentary enclaves; (ii) Recrystallised granitoid
gneiss; and (iii) Young granite and adamellite. These sub-groups form the underlying basement geology,
and intrusions of dolerite, gabbro, diorite and quartz feldspars dykes are common (Murphy-White 2007).
A study by CSIRO found that dolerite dykes are usually associated with salinity seeps in the SW WA
landscape (Engel et al. 1987).
The geology of the region is generally characterised by colluvium over granitic rocks (State of Western
Australia 2009).
4.3
Terrain and drainage
The property is characterised by undulating terrain with some rock outcrops. The centre of the property is
hilly while the boundaries are relatively flat or undulating (State of Western Australia 2009).
The Avon River runs through the eastern boundary of the property and there are smaller drainage lines
running through the property. The property has contour banks which ensure good drainage to water
collection points, with several dams on the property, including a 180 million litre large dam in the centre
(State of Western Australia 2009, Yaraguia Enterprises Inc.2006).
The soil types present on the property have low risk of water logging, and provide good drainage overall.
See Section 4.4 for more details.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 10
4.4
4.4.1
Soils
Regional soil mapping
The Western Australian Department of Agriculture and Food (together with the National Landcare
Program, National Soil Conservation Program, and Natural Heritage Trust) completed a 15 year soil
mapping program over about 25 million ha in the south-west agricultural areas of Western Australia
(Natural Resource Management in Western Australia 2008).
The York/Beverley region is characterised by undulating terrain with rock outcrops and the geology is
generally colluvium over granitic rocks. The soils are within the Jelcobine System and are generally grey
sandy duplexes, yellow and brown sandy earths, brown and read loamy earths, red loamy duplexes, deep
sands and shallow sands (State of Western Australia 2009).
According to the soil mapping program, most of the property has a 0-2% salinity hazard, but areas closer
to the Avon River have a higher risk of 10-29% salinity hazard (State of Western Australia 2009). The
areas closer to the river are currently planted with Sandalwood, which have not been impacted by any
salinity to date (D McMillan Pers. Comm. 2011).
Figure 3 illustrates the soil map unit types found on the property, 256JcLV, 256JcR2 and 256JcYO.
Figure 3 Soil map unit types
Source: State of Western Australia 2009. http://spatial.agric.wa.gov.au/SLIP/framesetup.asp
256JcLV: This soil map unit is found on gravelly slopes and ridges where streams and rivers have
dissected the Darling Plateau. On the study site property this map unit is found on the most western
boundary. The map unit is mainly characterised by duplex sandy gravels, loamy gravels and deep sandy
gravels. Other soil types are found but in smaller proportions (State of Western Australia 2009).
This map unit (within the mapping area) has low salinity and is at low risk of salinity. Waterlogging is not
an issue in this map unit, but 90% of the map unit is at low to moderate risk of water and wind erosion.
90% of the map unit is also at low to high risk of phosphorus loss (State of Western Australia 2009).
256JcR2: This soil map unit is generally found on areas with steep rocky hills. On the study site property
this map unit is found through the centre of the property. The map unit is mainly characterised by grey
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 11
deep sandy duplex, bare rock, red deep loamy duplex and self mulching cracking clays. Other soil types
are found but in smaller proportions (State of Western Australia 2009).
This map unit (within the mapping area) has nil salinity and is at nil risk of salinity. Waterlogging is not an
issue in this map unit, but 97% of the map unit is at low to moderate risk of water erosion, 70% is at low to
high risk of wind erosion, and 97% is at low to high risk of phosphorus loss (State of Western Australia
2009).
256JcYO: This soil map unit is generally found on the Avon river valley. On the study site property this
map unit is found along the Avon River on the eastern boundary. The map unit is typified by the red soils
of the Avon valley. The map unit is mainly characterised by red deep sandy duplex, red deep loamy
duplex and grey deep sandy duplex. Other soil types are found but in smaller proportions (State of
Western Australia 2009).
This map unit (within the mapping area) has low salinity and is at partial risk of salinity. 98% of the map
unit is at nil to moderate risk of water logging, 92% of the map unit is at very low to moderate risk of water
erosion, 97% is at low to high risk of wind erosion, and 92% is at low to high risk of phosphorus loss
(State of Western Australia 2009).
4.4.2
Property soil mapping
According to the current Property Management Plan for Avondale, there is a range of soils on the study
site property but in general they are granite loam types. The soil types range from Avon soils around the
floodplains of the Avon river system, through to York soils found in the steep rocky hills on the property
(Yaraguia Enterprises Inc.2006).
The York soils are generally characterised by red loamy sand, brown/grey granitic loamy sands, and
re/brown dolerite clay loam. These soil types generally support vegetation such as the York Gum
(Eucalyptus loxophleba), Jam (Acacia acuminata), Sheoak (Allocasuarina huegeliana), Salmon Gum (E.
salmonophloia) and White Gum (E. wandoo) (Yaraguia Enterprises Inc.2006).
The Avon soils are generally characteristed by red/brown alluvial loam, grey alluvial clay and orange
alluvial loamy sand. These soils types generally support vegetation such as York Gum, Salmon Gum,
Flooded Gum (E. rudis) and Sheoak (Yaraguia Enterprises Inc.2006).
The property is not prone to drought, and does not show signs of salinity or soil erosion (Yaraguia
Enterprises Inc.2006).
4.5
Existing vegetation types
The study site property is predominantly cleared and used for grazing or cropping. However there are
some patches of native vegetation, as well as a newly established sandalwood plantation and a Greening
Australia environmental planting existing on the property. See section 4.5.2 for plantation details.
4.5.1
Current native vegetation
The remnant vegetation of the Avon catchment is dominated by forests of Marri and Jarrah and
woodlands of Wandoo and York Gum, however the area generally consists of small scattered vegetation
areas (Central Agricultural Region RCA Team 2005).
Figure 4 illustrates the patches of remnant native vegetation found on the study site property, sourced
from Natural Resource Management in WA (2008). The native vegetation profile is a single point of
access to a number of State Agency and natural resource management (NRM) regional group mapping
datasets that show native vegetation extent, condition and status. The extent of native vegetation was
mapped through air photography interpretation without any onground checking. The aerial photographs
were acquired between 1995 and 2005 (Natural Resource Management in WA 2008).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 12
Figure 4 Patches of remnant vegetation
Source: State of Western Australia 2009. http://spatial.agric.wa.gov.au/SLIP/framesetup.asp
The current native vegetation on the study site property is classified as a mixed low woodland mainly
consisting of Allocasuarina huegeliana and E. loxophleba (York Gum) (State of Western Australia 2009).
According to the Yaraguia Enterprises Inc. Property Management Plan completed in 2006, the natural
vegetation on the property consists of York Gum (E. loxophleba), Jam (Acacia acuminate), Sheoak,
Salmon Gum (E. salmonophloia), Flooded Gum (E. rudis) and White Gum (E. wandoo) (Yaraguia
Enterprises Inc.2006).
According to Greening Australia WA (2008), the above species are all found on the property, as well as
Hakea preissii, E. astringens, Gastrolobium spinosum, Melaleuca rhaphiophylla and E. accedens.
4.5.2
Established cultural/environmental plantings on the property
Greening Australia WA completed a revegetation plan for the Avondale property in 2008. Approximately
52 ha of the property were planted by Greening Australia in accordance with this plan in 2008 (Figure 5).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 13
Figure 5 Greening Australia planting (2008), June 2011
Despite dry weather, minimal weed control and high stocking rates the current Greening Australia
planting on the property has been growing well. More details about the Greening Australia planting can be
seen in Section 7.2 of this report.
4.6
4.6.1
Established plantations in the vicinity
Sandalwood plantation on Avondale property
A sandalwood (Santalum spicatum) plantation has already been established on the property through a
mutually beneficial agreement between Yaraguia and the Forestry Products Commission (Yaraguia
Enterprises Inc.2006). Sandalwood is a parasitic tree that requires a host plant. Several techniques can
be used to establish hosts and sandalwood plants. The most common method is to establish host plants
in winter using nursery raised seedlings, and direct seeding sandalwood nuts adjacent to the established
hosts in the following autumn (Avon Catchment Council 2006).
The Sandalwood plantation is on the eastern boundary along the Avon River (see Appendix A – FPC
plantation map). The plantation was established in 2008. The total area on which the sandalwood
plantings are located is 170 ha but only 101.5 ha are actually planted to trees. The area was initially
broad sprayed with Glyphosate and Metsulfuron methyl. It was then rip mounded with a small (Wilson)
mounder, with the depth of ripping being approximately 0.4m. It was first established during winter with
mixed Acacia host tree seedlings at a stocking of 1250 stems per ha, at 4m spacing (D McMillan Pers.
Comm. 2011). Due to the native habit and cultural value of the York Jam tree (Acacia acuminate), a mix
of acacias was chosen as the host species, which includes the York Jam (Yaraguia Enterprises
Inc.2006). Sandalwood seeding took place the following year in April 2009. The expected growth rate of
the sandalwood is about 0.2m3 MAI (D McMillan Pers. Comm. 2011).
Last winter was very harsh, with unusually high numbers of frost days. Some of the Sandalwood
seedlings were impacted and required re-seeding. More trees in the region were lost to frost than any
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 14
other cause last year. Further north (north of York), where both E. cladocalyx and E. camaldulensis (River
Red Gum) were planted, the E. camaldulensis had significantly higher survival rates than that of E.
cladocalyx (D McMillan Pers. Comm. 2011).
4.6.2
Plantations in the region
Plantations are very common in reasonable proximity to Avondale, with the closest FPC plantations
occurring 40 to 60 km north (around Northam), and 35km west. However Avondale sits in a productive
farming area, and plantations may not be of interest in the area (D McMillan Pers. Comm. 2011).
Other common plantation species used in the broader region include Corymbia maculata (Spotted Gum),
E. saligna (Sydney Blue Gum), E. cladocalyx (Sugar Gum) and E. tricarpa (Red ironbark – allied to E.
sideroxylon). Of these, C. maculata and E. cladocalyx (in particular) would be most suitable to the site (B
Hingston Pers. Comm. 2011). Mallee plantings such as E. loxophleba (York Gum), which is very resilient,
including to frost and insect attack are common in the region, as are Sandalwood plantations. Casuarina
obesa (Swamp She-oak) plantings grow well on saline sites (B Hingston Pers. Comm. 2011). Some
plantings of Pinus pinaster can be found in the area, but the species is not recommended for this site.
Measurements taken in 2001/2002 of plantations of E. cladocalyx planted near Northam in 1992 (shallow
loamy sands over clay – no active management or fertilizer), and Beverley in 1996, indicate that for the
plantings (unthinned) on the Northam site, an MAI of 6.6m 3/ha/year could be expected, and for the
plantings on the Beverley site, an MAI of 3.4m 3/ha/year could be expected for this species (Bob Hingston
2011).
More measurements of a plantation of E. wandoo planted near Beverley in in 1992 indicate that for a 10
year planting on that site, an MAI of 0.6m 3/ha/year could be expected (Bob Hingston Pers. Comm. 2011).
This species is native to the area, grows well there and also has other environmental values, however
compared to other species it is very slow growing.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 15
5. Site constraints
5.1
Current land use/management
The study site property is currently run as a farm, and includes a residence on the property. Land use
practices on the property include cropping (barley, wheat, oats, feed, hay or lupins depending on the type
of season), and sheep grazing (Yaraguia Enterprises Inc.2006).
There is also an established sandalwood plantation on the study site property that was established
through a mutually beneficial partnership with the Forestry Products Commission (SWALSC Case Study
Project EOI 2010, Yaraguia Enterprises Inc.2006), and a Greening Australia environmental planting.
5.2
Restrictions on land use
To ensure that they do not have any perverse or unintended impacts, offsets projects under the CFI will
need to comply with all Commonwealth, state and local government water, planning and environment
requirements. Project proponents will also be required to take account of regional NRM plans (Parliament
of the Commonwealth of Australia, 2011). Through the Regional NRM Planning for Climate Change Fund,
$44 million will be made available to regional NRM bodies to update their regional NRM plans to guide
the type of carbon farming project and where they should be located in the landscape. This funding has
only recently been announced, so existing regional NRM plans do not currently provide this level of
information. They do though provide a broad indication of areas where revegetation is considered a
priority.
The relevant regional NRM body for the Avondale Park property is Wheatbelt NRM (formerly the Avon
Catchment Council). The Avon NRM Strategy (Avon Catchment Council, 2005) provides an integrated
planning framework for NRM within the Avon River catchment. It identifies the extent of different
vegetation associations in 2005, compared to their pre-1750 extent. In the case of the York Gum,
Wandoo and Salmon Gum medium woodlands, the current extent is 4.62% of the extent of this vegetation
association pre-1750. This is considerably less than the target of 15% of the pre-1750 extent for all
vegetation types. Any revegetation of this vegetation association would therefore contribute towards
achievement of the target.
The Strategy also identifies components of a ‘preferred future’ which include “new primary industries
based on perennial vegetation (pastures, shrubs and trees) restoring catchment water balance, providing
ecosystem services, and contributing to regional energy generation and to global greenhouse gas
reduction”. In terms of future land use, the Strategy recognises that there are significant opportunities to
provide carbon trading off-sets through tree plantings within the Avon River Basin. The proposed planting
at Avondale Park would therefore be consistent with the Strategy’s vision for the future.
In WA, Local Government is the approval authority for plantations and farm forestry and requirements for
approval will vary depending on the zones identified in the local planning schemes (Western Australian
Planning Commission, 2003).
The South East Avon Voluntary Regional Organisation of Councils has developed a Tree Cropping Policy
(Shire of York, 2010) to facilitate the planning approval process for tree crop developments across
member local governments which includes Beverley. The policy defines a tree crop as “trees planted with
the intent of producing commercial products. Commercial products include all wood and non wood
products…. including products such as environmental services.” The policy therefore covers carbon
plantings.
In Beverley Shire, a development application will be required for all tree crop developments greater than
40 ha. The area around Avondale is a rich farming area, and there have been instances where opposition
from the local Shire to mass plantings has deterred planting on properties in the area.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 16
There is a requirement for shire approval of planting plans, and it is becoming more difficult to plant on
what is considered ‘good agricultural land’ unless at wide spaced belt type plantings (D McMillan Pers.
Comm. 2011).
5.3
Threatened species
There are no known significant, threatened or rare species of flora, fauna or community types on the
study site property (State of Western Australia 2009).
5.4
Access
There are no restrictions to access to the property, as it sits on the Great Southern Highway with good
access directly off the Highway. There is also currently a main dirt road through the centre of the property
(G Kelly Pers. Comm. 2011).
5.5
Fire
Fire hazards on the property include the topography, existing vegetation (although minimal) and the
current sandalwood plantation and Greening Australia environmental planting. The plan to plant as much
of the property as possible will also present a high fire hazard as the fuel loads will continue to increase
on the property over time (O McGuire Pers. Comm. 2011). Currently, much of the property is grazing land
with low fuel loads.
Oral McGuire has an extensive history with fire preparedness and suppression. The property has well
managed fire breaks in place as well as an access management plan. Oral has a good relationship with
local fire authorities in the region, and there are 28 dams on the property to provide water sources (O
McGuire Pers. Comm. 2011). The Greening Australia plantings have included some five m row spacings
throughout to provide suitable access throughout the planted area (Greening Australia 2008).
During a site visit in June 2011, it was noted the neighbouring property had been burnt recently, indicating
there are fires occurring in the region (whether they be prescribed burns or unplanned bushfires).
5.6
Pest animals/weeds/pathogens
Insects pests found in the area include the wingless grasshopper (Phaulacridium vittatum), Rutherglen
bug (Nysius vinitor) Lucern Flea, Red legged Earth Mite and spring beetles, and every seven to eight
years there may also be a locust plague, however these pests are not of great concern in the area. There
are no major pathogens of concern to tree plantings in the area (B Hingston Pers. Comm. 2011, Greening
Australia 2008, D McMillan Pers. Comm. 2011).
The 28 parrot is the biggest animal pest risk for plantings in the area, however for a strictly carbon
planting only, this can actually be of use as it encourages branching and bushy crowns. It is not desirable
however if a commercial return is desired (B Hingston Pers. Comm. 2011).
When planting species such as Causuarina obesa or C. maculata, browsing animals such as kangaroos,
rabbits and stock become a problem, but are generally not of great concern (B Hingston Pers. Comm
2011). The total removal of rabbits is probably not feasible, however their control is important. Control and
removal of these pests will help conserve the native flora and fauna of the site and improve the success
of the revegetation. It will also improve the ability of the remaining vegetation to regenerate (Greening
Australia 2008). Other animal pests include foxes and cats, but they do not impact on plantings.
There are some weeds and grasses prevalent throughout the wheatbelt that at times need to be
controlled (O McGuire Pers. Comm. 2011).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 17
5.7
Cultural heritage
There are several culturally significant sites throughout the property, including a significant ochre mound
site, marker trees and rock formations, burial sites, tools and implements (artefacts), caves and Ngamma
holes. Plans are under preparation to manage and maintain these places appropriately.
Trees are very much a part of the cultural significance of the property and are part of the plan of
managing and maintaining the cultural heritage of the site (O McGuire Pers. Comm. 2011). The species
found on the property are significant to the Indigenous spiritual and cultural heritage.
5.8
Other (social/cultural)
The area around Avondale is a rich farming area, with little interest shown towards plantations or
plantings on properties in the area. There could be local opposition towards mass plantings (D McMillan
Pers. Comm. 2011).
Oral McGuire has indicated the long term goal for the property is to revegetate the entire property for
cultural reasons. Currently the property is being managed under diverse land uses, including cropping,
grazing, sandalwood plantation and environmental plantings. Over time, the ultimate goal is to replace
these practices with the Noongar traditional practices, and trees are an integral part of that goal. It is
important, however, to make those practices as commercial as possible while maintaining the integrity
and dignity of the cultural significance and focus. Considerations for commercial returns from the
plantings may include carbon, bushfoods, medicines and tourism (art, dance, tours of traditional practice).
It will be important to plant species native to the area for cultural and spiritual reasons.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 18
6. Resources and skills analysis
In order to determine whether a carbon project will be feasible on the Avondale property, it is necessary
to identify whether the required resources and skills are available within Yaraguia to enable the project to
be established and managed. If they are not, then they will need to be obtained from other sources, which
will add to the project costs.
The establishment and management of a carbon project will require two distinct skill sets:
 The first are the practical skills associated with growing and planting the trees and the subsequent
management of those trees; and
 The second are the more specialised skills associated with managing a carbon project, including
carbon accounting, project management and reporting.
Some of the resources and skills required for growing, planting and managing the trees are already
available. Oral McGuire and his brother currently have skills in ripping and mounding and Oral is currently
in the process of acquiring seed collection skills with Wheatbelt NRM. There are skills on the property as
well as in the region for fencing, weed control and fire management. However there is a need for the
group to acquire additional technical skills to enable them to establish and manage plantings on the
property. A long term goal is to establish a training facility on the property, to ensure that eventually at
least some of the necessary land management skills can be provided locally.
The more specialised skills associated with managing a carbon project are unlikely to be sourced from
within the group, at least in the short term. There will be a need to document the planting as it progresses
and there may be a need for GIS capability in order to accurately record planted areas. There will also be
a need for carbon accounting, project management and reporting skills.
The intent of this feasibility study though was to test the potential feasibility of carbon plantings on
Noongar lands and if such plantings prove to be feasible, then there is the potential for SWALSC to
establish a carbon trading enterprise on a broad scale across the south west. If this is the case, then
SWALSC may be able to take on the role of carbon aggregator for the Noongar people and provide the
necessary carbon project management skills for all carbon projects on Noongar held land in SW WA.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 19
7. Proposed project
7.1
Proposed planting areas
Two possible planting options have been considered in this feasibility study:
Option 1 essentially covers all the existing cleared areas of the property with trees (see Figure 6);
whereas,
Option 2 leaves the valuable cropping land along the river flats as cropping land, planting the rest of the
property with trees (see Figure 7).
The feasibility of both these planting options has been examined in this report. According to Oral
McGuire, Option 2 is the most suitable option in the immediate future, however in the longer term
Option 1 would be more desirable. Figure 8 shows the area along the river flats that would be left as
cropping land under Option 2, whilst Figure 9 shows the area proposed for rip and mound seedling
establishment. Figure 10 shows the area identified as only suitable for hand planting.
The aim is to plant 50-100 ha per year. The total area of planting for each option is shown in Table 5.
Table 5 Proposed planting areas
Land use
Option 1 (ha)
Option 2 (ha)
Land leased to FPC for sandalwood plantation
170.90
170.90
Existing GA plantings
51.65
51.65
Proposed rip and mound planting
341.71
193.03
Proposed hand plant (rocky/steep/eroding)
164.80
164.80
Remain as cropping
Nil
142.33
Greening Australia WA has previously assessed the property and prepared a revegetation and remnant
vegetation restoration and protection plan (Greening Australia, 2008). This plan can be found in Appendix
B. GHD recommends that many elements of the proposed planting, including species selection, stocking
and site preparation, should align with the Greening Australia plan.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 20
Figure 6 Planting areas Option 1
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 21
Figure 7 Planting areas Option 2
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 22
Figure 8 Cropping area along creek line
Figure 9 Proposed rip and mound seedling establishment
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 23
Figure 10 Proposed hand plant seedling establishment
7.2
Suitable species and stocking rates
The aim is to replant the property with mixed species that are endemic to the area (Oral McGuire, pers
comm.). The Greening Australia WA remnant vegetation restoration and protection plan (Greening
Australia 2008) includes a suggested list of species to be planted. We propose to use the same or similar
species proposed by Greening Australia, which could include:
 Acacia acuminata
 Eucalyptus accedens
 Acacia lasiocalyx
 E. astringens
 Acacia lasiocarpa var sedifolia
 E. loxophleba ssp loxopleba
 Acacia lineolata ssp lineolata
 E. salmonophloia
 Acacia meisneri
 E. wandoo
 Acacia saligna
 Gastrolobium parviflorum
 Allocasuarina huegeliana
 Grevillea paniculata
 Atriplex semibaccata
 Hakea preissi
 Enchylaena tomentosa
 Kennedia prostrate
 Melaleuca acuminata
 Rhagodia dru
 Melaleuca affuncinata
 Rhagodia drummondii
The Greening Australia report (Appendix B) includes a full list of the proposed species and proportion
stocking.
Approximately 52 ha of the property were planted by Greening Australia in accordance with this plan in
2008. Despite dry weather, minimal weed control and high stocking rates the current Greening Australia
planting on the property has been growing well. Visual observation of the site in June 2011 revealed a
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 24
higher than expected survival and health of the trees in some of the planted areas, predominantly in
areas planted with mostly gums. Survival was estimated to be around 95% or more in these areas.
There were some areas with less survival and slower growth rates, but the species mix appeared to be
different in these areas. These areas were still growing reasonably well regardless.
The existing plantings were established at very high stocking rates because it was expected that survival
rates would be low. According to Greening Australia (2008) the stocking was at approximately 2000
stems per ha (rows 3 m apart with seedlings planted about 1.6 m apart along the rows). However when
observed in the field, the seedlings had been planted much closer together and we estimate that the
stocking rates may be as high as 3000-4000 stems per ha.
On the proposed rip and mound planting areas for the property, we propose that a similar stocking rate to
the Greening Australia’s target of 2000 plants per ha can be achieved (Table 6). However, on the
proposed hand planting areas (rocky outcrops), competition may be higher and survival is expected to be
lower. A lower initial stocking rate is proposed, between 700 and 1000 plants per ha.
Table 6 Proposed stocking
Proposed Planting Method
Proposed Stocking (Plants/ha)
Rip and mound
1500 - 2000
Hand plant
700 – 1000
Self-thinning is expected to occur as the plants grow and establish dominance. When the trees are
mature, stocking may reduced by half or more.
7.3
Site preparation
Two different site preparation methods are proposed - hand planting and ripping and mounding. The
areas associated with these two options can be seen in Section 7.1. Direct seeding is sometimes
considered risky in the site climate. Ripping to about 40 cm is usually the minimum site preparation done
in the area (in sandy soils), and water logged soils require mounding as well (B Hingston Pers. Comm.
2011).
Site preparation for the proposed rip and mound areas should be consistent with the Greening Australia
plantings. The Greening Australia planting site was prepared for planting in autumn, with planting
occurring after site preparation was completed in winter (Greening Australia 2008). The plantings were
established with seedlings (after ripping and mounding to a depth of 30 -40 cm). Rip lines follow the
contours to reduce the possibility of erosion.
There are some parts of the property that are too steep or rocky for ripping and mounding to be effective.
There are also areas of the property which are eroding, amongst existing scattered trees, amongst
granite sheeting or in drainage lines. These areas could all be hand planted directly into planting holes,
with no ripping or mounding site preparation required.
A detailed weed control program has been prepared and recommended by Greening Australia (2008). In
discussion with Oral McGuire, it was noted that the Greening Australia plantings established in 2008
received minimal weed control. Some weed control is recommended to ensure minimal competition for
plantings. At site preparation, winter weed control should be undertaken initially in mid to late May,
followed by further control in early to mid-June, about two weeks prior to planting (pre-planting weed
control is not an available option in the carbon modelling package used). If post planting inspections
reveal the need for more control, further weed control should be undertaken between mid-July to late
August (Greening Australia 2008).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 25
7.4
Propagation and planting
Current best practice is to use local provenance material in restoration and where material of a particular
species in not available locally then the nearest population should be targeted for collection for seed
material (Greening Australia 2008). The Noongar people are currently acquiring seed collection skills with
Wheatbelt NRM, and will need to ensure all persons involved in the collection of the material are licenced
to do so as per the Wildlife Conservation Act, 1950.
There is no local nursery to propagate the seed collected. Consideration may be given to building
propagation skills for the Noongar people and developing a nursery site on the property. However
Greening Australia has the ability to provide seedlings of the required species and have had the
experience to do so on the property.
7.5
Site maintenance
Site maintenance is important in order to ensure the best possible outcome for the plantings. This can
include weed control, fencing, fire management, pest control and replanting. The ability to maintain the
site after planting will depend on the available resources and labour to carry out the site maintenance at
all stages of the planting and into the future. This may include not only internal capability and experience,
but also specialist input required.
The Greening Australia (2008) planting plan describes the best possible weed control options that should
be undertaken in their Weed Management Action Plan on page 20 – 25. Ideally weed control should start
prior to planting and continue where required post planting.
Fencing is only required where livestock would be in the same area as the trees in order to exclude the
livestock from browsing. Access tracks and firebreaks need to be maintained into the future and the
existing property fire break and access management plan should be reviewed each fire season. Oral
McGuire has had extensive experience as a fire fighter and understands the risks involved.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 26
8. Carbon sequestration
8.1
Methodology
The Department of Climate Change and Energy Efficiency (DCCEE) CFI Draft Methodology for
Environmental Plantings (DCCEE, 2011) was followed to determine the amount of carbon which would be
sequestered by the plantings over time and what abatements could be achieved. ArcGIS version 10, the
CFI Reforestation Modelling Tool (RMT) and the CFI Reforestation Abatement Calculator (RAC) were
used. Figure 11 shows the tools used to calculate carbon abatements.
The total proposed planting area under Option 1 is approximately 507 ha, of which 165 ha is proposed for
hand planting and 342 ha is proposed for rip and mound planting. The total proposed planting area under
Option 2 is 358 ha with 165 ha proposed for hand planting and 193 ha for rip and mount planting.
It is assumed that 70 ha will be planted each year (35 hand planted and 35 rip and mound). Plantings in
the subsequent years are assumed to grow and accumulate carbon at the same rate. The RMT was used
to estimate the carbon stock accumulated over time. The RMT is a computer model that enables the user
to simulate a carbon planting at a specific location. It incorporates site specific climate and soil data and
enables users to input species, management regimes and disturbance events.
The static ‘model point’ location (Latitude -32.0709, Longitude 116.809) was chosen for input into the
RMT. This location is representative of the entire planting area and has the average rainfall,
evapotranspiration, maximum aboveground biomass and soil conditions.
The RMT estimates carbon stocks for individual Carbon Estimation Areas (CEA) and for the purposes of
this study the 70 ha annual planting area was considered the CEA.
A mixed species environmental planting was simulated using a non-harvested regime. Planting was
assumed to have occurred on the 1 July, 2012. The simulation was run over a 100 year period until the
1 July, 2112. The age of maximum biomass increment (G) and multiplier of site maximum above ground
biomass (r), required by the RMT, were left as the default values: G = 10 years; r = 1.
Before choosing a representative scenario a sensitivity analysis was conducted and is described below.
8.2
Sensitivity analysis
To assess the sensitivity of carbon sequestration to different planting rates, weeding regimes, fertiliser
application and pest/disease effects under the RMT, six different hand planting scenarios and two rip and
mound planting scenarios were run for a 35 ha area over 100 years. Different fertilisation and weeding
regimes were compared in hand planting scenarios 1 to 4. Two hand plant scenarios simulated the
effects of wild fire. Scenario 5 simulates a serious wild fire event, killing 50% of trees, while scenario 6
simulates a less serious wild fire event affecting but not killing 50% of trees. All scenarios are described in
Table 7.
The different scenarios were found to have little effect on onsite carbon mass over time, except for the
serious wild fire scenario (scenario 5). Table 7 shows the carbon mass in tonnes (tC) accumulated on the
35 ha site after 20 years, 40 years and 100 years. Twenty years after planting, rip and mound scenario 2,
with two weeding events, has the highest carbon stocks (1063 tC) while hand planting scenario 1, with no
site preparation or weeding, has the lowest stocks (951 tC) (except for scenario 5 with the serious wild
fire event (793 tC)). Scenario 6, with a less serious wild fire event, shows the vegetation recovers
relatively quickly so that after 20 years the carbon stocks are back within range of the non-fire affected
scenarios.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 27
Figure 11 Flowchart showing the steps followed and tools used to calculate carbon
abatements.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 28
There is less than 2% difference between all the scenarios (excluding the extreme wildfire event) after 40
years and 100 years. Scenario 5, with the severe fire event results in carbon stocks approximately 15%
lower than the other scenarios.
Figure 12 shows the carbon growth curves under each scenario. All, except scenario 5, follow very similar
growth curves. Please note that the growth curve of scenario 3 cannot be seen in Figure 12 as it is very
similar to that of scenario 4.
Table 7 Scenarios modelled in RMT
Scenario
Planting
Rate
Events
C mass
onsite (tC)
after 20
years
C mass
onsite (tC)
after 40
years
C mass
onsite (tC)
after 100
years
Hand
Planting
Scenario 1
Low stocking
- 800
stems/ha
None
951
1496
1944
Hand
Planting
Scenario 2
Low stocking
- 800
stems/ha
Weeding event one month after
planting
Follow up weeding event three
months after planting
1034
1528
1951
Hand
Planting
Scenario 3
Low stocking
- 800
stems/ha
Starter fertiliser application
Weeding event one month after
planting
Follow up weeding event three
months after planting
1053
1535
1952
Hand
Planting
Scenario 4
Low stocking
- 800
stems/ha
Starter fertiliser application
Weeding event one month after
planting
Follow up weeding event three
months after planting
Frost/pest/disease kill 5% four
months after planting
1052
1535
1952
Hand
Planting
Scenario 5
Low stocking
- 800
stems/ha
Starter fertiliser application
Weeding event one month after
planting
Follow up weeding event three
months after planting
Wild fire kills 50%, 10 years
after planting
793
1220
1627
Hand
Planting
Scenario 6
Low stocking
- 800
stems/ha
Starter fertiliser application
Weeding event one month after
planting
Follow up weeding event three
months after planting
Wild fire affects 50% (trees not
killed), 10 years after planting
1032
1521
1944
Rip and
Mound
Planting
Scenario 1
High stocking
- 1200
stems/ha
Chopper roll of site two weeks
before planting
987
1491
1914
Rip and
Mound
Planting
Scenario 2
High stocking
- 1200
stems/ha
Chopper roll of site two weeks
before planting
Weeding event one month after
planting
Follow up weeding event three
months after planting
1063
1521
1920
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 29
Figure 12 Onsite carbon mass of 35 ha planting area under different scenarios
modelled in RMT
2000
1800
1600
C mass Onsite (tC)
1400
Hand Plant Scenario 1
1200
Hand Plant Scenario 2
Hand Plant Scenario 3
1000
Hand Plant Scenario 4
800
Hand Plant Scenario 5
Hand Plant Scenario 6
600
Rip and Mound Scenario 1
400
Rip and Mound Scenario 2
200
31/05/2012
31/05/2017
31/05/2022
31/05/2027
31/05/2032
31/05/2037
31/05/2042
31/05/2047
31/05/2052
31/05/2057
31/05/2062
31/05/2067
31/05/2072
31/05/2077
31/05/2082
31/05/2087
31/05/2092
31/05/2097
31/05/2102
31/05/2107
31/05/2112
0
8.3
Representative scenario
To provide an indication of potential future carbon abatements it was necessary to make assumptions
with respect to planting rates, weeding and other events. A representative scenario was chosen for
evaluation in the Reforestation Abatement Calculator (RAC) and is described below (see Table 8). This
scenario has two weeding events after planting.
To determine the carbon mass on-site of the entire study area under Option 1 and 2 it was assumed that
each 35 ha plot grows and accumulates carbon at the same rate. The growth curves from the first year’s
plantings were therefore repeated a year later to reflect the subsequent year’s planting and so forth until
the entire site was planted. This means that in the first year 35 ha has been hand planted and 35 ha has
been rip and mound planted, a total of 70 ha. In the second year a total of 140 ha has been planted (70
ha hand planting and 70 ha rip and mound), the third year a total of 210 ha has been planted and so forth.
The carbon mass onsite for each of the 35 ha planted areas was cumulated (in Excel) to determine the
entire site’s carbon mass due to planting.
The cumulative carbon mass onsite was input into the RAC and the project abatements in carbon dioxide
equivalent (CO2–e tonnes) were calculated over 5 yearly reporting periods for 40 years (2012-2017;
2017-2022; 2022-2027 and so forth).
It was assumed the initial standing carbon stock in the first reporting period was zero, as recommended in
the DCCEE Draft Methodology (DCCEE, 2011). Fuel used during the reforestation project was not
included in the RAC. Fuel use is unlikely to be very high but its inclusion would reduce the amount of
credits generated.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 30
Table 8 Representative scenario modelled in RMT and RAC
Option 1
Option 2
Rip and Mound
Hand Planting
Rip and Mound
Hand Planting
Area (ha)
342
165
193
165
Planting Density
1200 stems/ha
800 stems/ha
1200 stems/ha
800 stems/ha
Planting Rate
35 ha/year for nine
years;
35 ha/year for four
years;
35 ha/year for five
years;
35 ha/year for four
years;
27 ha in year 10.
25 ha in year five.
18 ha in year six.
25 ha in year five.
Weeding event
one month after
planting
Weeding event
one month after
planting
Weeding event
one month after
planting
Weeding event
one month after
planting
Follow up weeding
event three
months after
planting
Follow up weeding
event three
months after
planting
Follow up weeding
event three
months after
planting
Follow up weeding
event three
months after
planting
Weeding
8.4
Carbon outcomes
The projected carbon abatements across the study area under Options 1 and 2 are presented in Table 9,
for each five year reporting period. Standing carbon stock is the tonnes of carbon on the site at the end of
each reporting period. The standing carbon stock is highest under Option 1 (101,000 tC) which is to be
expected as a larger area is planted. The standing carbon stock increases over the 40 year period under
both options (refer to Figure 13).
The project abatement is the amount of carbon accumulated since the previous reporting period,
converted into tonnes of carbon dioxide equivalent (CO2-e). A 5% risk of reversal buffer was subtracted
from the project abatement value as required by the Carbon Credits (Carbon Farming Initiative) Act, 2011
(Section 6.41). The project abatement is highest under Option 1, with the plantings projected to sequester
more than 73,000 t CO2-e after the 5% risk of reversal buffer is subtracted. Option 2 is projected to
sequester more than 52,500 t CO2-e over the same period. Figure 14 shows the carbon abatement
(t CO2-e) over time as calculated at the five yearly reporting intervals.
Table 9 Projected carbon abatement under Options 1 and 2 over 40 years
Reporting Period
Planted Area
(Ha)
Standing
Carbon Stock
(Tonnes C)
Project
Abatement
(Tonnes CO2-e)
Over Reporting
Period
Minus “Risk of
Reversal
Buffer” (5%)
(Tonnes CO2-e)
Op. 1
Op. 2
Op. 1
Op. 2
Op. 1
Op. 2
Op. 1
Op. 2
Jul 2012 – Jun 2017
Jun 2017 – May 2022
340
507
340
358
915
4384
915
3938
3356
12719
3356
11084
3188
12083
3188
10529
May 2022 – Apr 2027
507
358
8917
7165
16619
11833
15788
11241
Apr 2027 – Mar 2032
507
358
12745
9678
14039
9212
13337
8752
Mar 2032 – Feb 2036
507
358
15648
11572
10643
6945
10111
6597
Feb 2036 – Jan 2041
507
358
17854
13019
8089
5308
7685
5043
Jan 2041 – Dec 2046
507
358
19580
14160
6328
4182
6011
3972
Dec 2046 – Nov 2051
Total
507
507
358
358
20968
20968
15083
15083
5091
76884
3387
55306
4836
73040
3218
52541
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 31
Figure 13 Standing carbon stock onsite
Figure 14 Project abatement over each
reporting period minus the risk of reversal
buffer
It can be seen that the rate of carbon abatement continues to increase for 15 years after planting but then
starts to decline as tree growth stabilises and the change in amount of carbon sequestered from year to
year diminishes.
It is important to note that the carbon outcomes presented here represent a “best case scenario” as the
influence of fire, windthrow and pest effects are not included and fuel used in reforestation activities is not
taken into account.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 32
9. Cost/benefit analysis
9.1
9.1.1
Costs
General costs
There are a range of costs associated with setting up, planting and maintaining a reforestation project.
These can be categorised into the legal and administrative costs associated with setting up, planning and
managing the project and the costs of planting and maintaining the trees.
The legal and administrative costs are likely to vary depending on the scale and complexity of the project.
For example, if it is necessary to establish a new corporate structure in order to undertake the project,
then this may result in substantial legal fees. The scale of the legal fees for drawing up the contract for
selling the ACCUs will also vary depending on the complexity of the transaction. They are likely to be
higher if forward selling is required or if the buyer is seeking additional benefits such as tax deductions
that would require additional advice.
Initial and annual verification costs will vary depending on the scale of the planting, as will land survey
costs if a survey is required to define the CEA.
Planting and maintenance costs may also vary depending on the:
 site preparation required prior to planting - such as if ripping of the soils is required to broadcast seeds
or plant seedlings, spraying of weeds, if access is established, and if fencing is required to limit the
potential for browsing;
 planting or seed stock used for establishment – widely available forest plantation species will generally
be significantly cheaper than local endemic species where seeds have to be sourced and seedlings
may be more difficult to germinate, grow and establish.
 method of planting – by hand, using a machine, and if tree guards and mulch also has to be installed.
 ongoing maintenance – replanting costs if stands are impacted by fire, frost or wind, post planting
herbicide or pesticide, maintenance of firebreaks (either slashed or formed), fencing, and ongoing
access.
Additional factors will include the travel distances required to source machines and labour.
The majority of costs associated with a reforestation project are incurred within the first three years, with
costs in subsequent years largely stand maintenance and protection costs, and five yearly audit and
reporting costs. These costs are broadly grouped in Table 10.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 33
Table 10 Range of reforestation project costs
Cost Group
Description
Range of Cost Types
Setting up,
planning and
managing the
project
Legal, audit and
planning costs of
setting up,
registering and
maintaining a
scheme
Corporate structuring, initial accreditation, legal contracts,
initial verification costs, audit costs, registration of carbon
right, land purchase costs, land survey costs, legal contracts
(such as subcontractors, employment), insurance.
Site preparation
Costs associated
with preparing the
site for planting
Planning costs, site access track, stock fencing, wildlife
fencing, gates, pre-planting herbicide (multiple types),
bulldozer ripping, bulldozer mounding, spot preparation
(excavator), and the engagement, supervision and payment of
contractors.
Site establishment
Costs associated
with planting the
site
Seed collection and propagation, direct seeding, planting, or
assisted natural regeneration, transport of seedlings to site,
planting labour, tree guards (milk carton, plastic with stakes),
mulch (straw - weed mat), seedling costs – replant, planting
volunteer supervision and management, site planning and
contractor administration.
Site maintenance
and protection
Costs associated
with maintaining
the plantings
Weed control, fire prevention (slashing, access), insurance
premiums.
Keeping records
and quantifying
carbon
Ongoing costs
associated with
maintaining the
scheme
Periodic verification and audit of scheme in accordance with
scheme requirements. This includes monitoring and
documenting events that may result in tree mortality such as
low-high intensity fire in immature stands (<10 years) or
higher intensity bushfire.
Providing reports
Periodic reports
required for
submission to the
Regulator
Periodic preparation of statements and other scheme reports
9.1.2
Costs for this project
Costs identified in this section are based on the planned project activities detailed in Section 7. These
costs and the specific assumptions around them are identified in Table 11. Some of the costs, such as
the legal fees associated with corporate restructuring and the land survey costs associated with defining
the CEA will depend on how the project proponent decides to set up the project. They have therefore not
been included in the cost estimations.
As the CFI is rolled out where efficiencies can be built into compliance and reporting systems cost
savings may result. In addition local suppliers may be able to provide cheaper quotations than the prices
indicated. Activity items that can be completed by the property manager are also shown.
Table 11 Project costs and assumptions
Activity Item
Assumptions
Amount
Corporate
structuring
Where a new corporate entity is required to undertake the
project, that entity will need to be established in accordance with
the Corporations Law 2001 and registered with ASIC
Unknown
Registration of
Carbon Right
Initial registration of Carbon Sequestration Right with Land Titles
Office. Not necessary if recognised offset entity is the landowner
-
Land survey
costs
If required to define CEA (~$1,000/day)
Unknown
Legal contracts
for sale of
ACCUs
Estimate – legal fees will vary depending on the complexity of
the transaction. Where standard templates are developed for
‘spot sales’ of issued ACCUs, legal fees may be minimised
$15,000
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 34
Activity Item
Assumptions
Amount
Notification of
area adjustment
Notification of Administrator of new planting areas – adjustment
advice can be completed by farm manager
-
Initial verification
and report for
first reporting
period
Estimate – factored in single day site visit by experienced
auditor to coincide with report for first reporting period.
Completed at year five (required within 12 months to five years
of project declaration)
Costs are estimated for an external consultant – where
standardisation of systems and reporting can be improved this
cost may be able to be reduced
$5,000
Verification and
report for
subsequent
reporting period
Prepared on a five yearly basis (< five years)
Costs are estimated for an external consultant – where
standardisation of systems and reporting can be improved this
cost may be able to be reduced
$5,000
Rip and mound
(35 ha /yr)
Site preparation (rip/mound)
Rip and Mound Option 1 is 342 ha over 10 years
Rip and Mound Option 2 is 193 ha over six years
For both options 165 ha of hand planting over five years is
proposed
$150 /ha
Seedling cost
(rip and mound)
Seedling cost is estimated at $0.80 seedling.
Seedling stocking in rip and mound areas is 1200 stems/ha
Annually 35 ha of rip and mounded areas are planted
$0.80/seedling
$960/ha
$33,600/yr
Seedling cost
(hand planting)
Seedling cost is estimated at $0.80 seedling.
Seedling stocking in hand planting areas is 800 stems/ha
Annually up to 35 ha are hand planted
$0.80/seedling
$640/ha
$22,400/yr
Planting
Planting labour – 70 ha/yr total, and does not include
contingency for supplementary planting where newly established
areas fail and require follow up planting or where it is necessary
to re-establish fire, wind or pest damaged areas.
$120/ha
Weed control
Weed control
$120/ha
Annual
maintenance
No annual maintenance costs specifically for the activity are
identified. Ongoing routine maintenance work will occur outside
the project areas
-
Legal contracts
Preparation of employment contracts, supply contracts etc.
$5,000
Risk mitigation
No specific risk mitigation measures are identified. Premiums for
insuring against loss due to fire and/or wind are not included.
-
There is the potential for the project costs to be significantly higher than shown in Table 11. For example
no costs have been included for insurance against possible fire or wind damage, since it will be up to the
project proponent to determine whether the potential risk is sufficient to warrant the additional expense.
The estimated cost of taking out such insurance and the potential impact of this on the likely returns from
the project are discussed in Section 10.
It is also important to note that although the costs have only been modelled for the first 40 years, there
will be a requirement for the project proponent to continue to maintain the forest for 100 years, unless
they choose to opt out of the CFI and hand back any ACCUs received. There will therefore be additional
future costs associated with this ongoing maintenance.
9.2
Benefits
Direct benefits from the sale of carbon have been calculated based on a five yearly verification and ACCU
sale cycle. This means that at the end of each five year period, ACCUs are received for the amount of
additional carbon abatement achieved in that period and that these ACCUs are then sold at whatever
carbon price is applicable at that time. The assumptions surrounding the future carbon price will therefore
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 35
be crucial in determining the possible revenue from the sale of ACCUs. Three different scenarios have
therefore been modelled:
 The first assumes that the initial carbon price for the CFI of $23/tonne CO2-e applies for the whole of
the 40 years;
 The other two are based on Treasury modelling updated in September 2011 (The Treasury, 2011):
– The core policy scenario assumes a nominal domestic starting price of $20/t CO2-e in 2012-13,
rising 5% per year, plus inflation, before moving to a flexible world price in 2015-16, projected to be
around A$29/t CO2-e.
– The high price scenario assumes a nominal domestic starting price of $30/t CO2-e in 2012-13, rising
5% per year, plus inflation, before moving to a flexible world price in 2015-16, projected to be around
A$61/t CO2-e.
The projected carbon prices in 2010 dollars under each of the two Treasury scenarios are shown in
Figure 15. It should be noted that ACCUs are likely to trade at a similar but lower price than the carbon
price. This may be especially true in the early period as the carbon price and CFI projects establish
themselves. Any premiums received for co-benefits would help to offset this difference.
Figure 15 Treasury modelling of future carbon price (2010 $/t CO2-e)
As well as the revenue received from the sale of ACCUs, additional direct benefits may be derived from
other activities associated with the plantings, such as seed harvesting or honey production, but these are
outside the bounds of this feasibility study.
The study also did not cost or quantify any of the broader indirect benefits of establishing permanent
environmental plantings. Given the long term nature of the project, it will be important to take such
benefits into account in determining whether to proceed. Indirect benefits can include:
 Planting of species of high cultural value to the traditional owners;
 Improvements to local air quality through dust or pollutants being screened by vegetation (does not
including offsetting of emissions);
 Landscape aesthetics;
 Higher levels of soil moisture maintained through the windbreak effect of plantings reducing drying
wind effects and acting as shelter for stock;
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 36
 Reduced runoff and increased infiltration protecting soil resources and potentially salinity benefits; and
 Planting endemic species will enhance biodiversity by encouraging native fauna and additional
endemic regeneration.
9.2.1
Analysis of NPV
The net economic benefits of the proposed reforestation project have been calculated using an analysis
of the Net Present Value (NPV). The net economic benefits of the proposed reforestation project have
been calculated using an analysis of the NPV. NPV is one tool for testing the net economic benefits of a
project. It calculates the difference between the present value of the future benefits from an investment
and the amount of that investment. The present value of the expected benefits is computed by
discounting them at the required rate of return.
This method has the most power when it is used to compare different scenarios, for example comparing
the net economic benefit of different land use options over a given period. Such a comparison however is
beyond the scope of this feasibility study.
The methodology adopted follows the standard approach to calculating the NPV as set out in the
Commonwealth’s Handbook of Cost Benefit Analysis (Commonwealth of Australia, 2006).
The time frame for the analysis was taken to be 40 years with a discount rate of 7.5% used to convert the
streams of benefits and costs to present values (see Appendix C). The net economic benefit of the project
is then expressed as the NPV (the present value of the benefits minus the present value of the costs).
For both reforestation project options, the net economic benefit under each of the three different carbon
price scenarios is shown in Table 12. If the carbon price remains steady at $23/tonne over the 40 year
period then the NPV for both Option 1 and Option 2 will be negative which means that the costs of the
project will exceed the estimated benefits. On this basis the project will certainly not be feasible. However,
if the carbon price increases over the 40 years, in line with either of the Treasury carbon price scenarios,
then the NPV will be positive for both project options, with the NPV under the high price scenario
approximately three times the NPV under the core policy price scenario.
Table 12 Net economic benefit under different carbon price scenarios
Carbon Price Scenario
Net Present Value
Option 1
Option 2
$23 / tonne
$ -10,675
$ -2,001
Core policy
$ 508,589
$ 359,818
High price
$ 1,594,700
$ 1,155,134
It is interesting to note that with a steady carbon price of $23/tonne, Option 2, which involves planting less
trees than Option 1, has a slightly more favourable net economic benefit, whereas for both the Treasury
carbon price scenarios, this situation is reversed. This is because, with the smaller area of planting,
establishment costs for Option 2 are incurred only in the first six years, compared to the 10 years for
Option 1. If the carbon price increases substantially over time as the carbon sequestration rate increases
then this will enable these additional establishment costs to be recouped and the larger planting area will
be more profitable. This will not be the case if the carbon price remains constant throughout.
9.2.2
Sensitivity analysis
Given that the project costs and benefits used in deriving the net economic benefit of the proposed
project are estimates and therefore subject to a degree of uncertainty, a sensitivity analysis was carried
out to test the robustness of the results to changes in these estimates.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 37
Parameters adjusted in the sensitivity analysis were the discount rate, the establishment costs and the up
front transaction costs and these results are shown in Table 13, Table 14 and Table 15. The discount rate
is the percentage rate of compound interest at which future benefits and costs are adjusted to their
equivalent present day values. Most Australian governments recommend that a real discount rate of 6-8%
be adopted and a discount rate of 7.5% was therefore used for the NPV analysis. The sensitivity analysis
of NPV to changes in the discount rate shows that with a discount rate of 5%, both of the project options
would generate a positive NPV under all three price scenarios (Table 13). At a discount rate of 10%, both
project options would generate a negative NPV if the carbon price remained steady at $23/tonne, but a
positive NPV for the other two price scenarios. For the core policy and high price scenarios, the NPV at a
5% discount rate would be approximately twice that at 7.5% and at a 10% discount rate the NPV would
be approximately half that at 7.5%.
Table 13 Sensitivity analysis of NPV to discount rate
Carbon
Price
Scenario
Net Present Value
5% Discount Rate
7.5% Discount Rate
10% Discount Rate
Option 1
Option 2
Option 1
Option 2
Option 1
Option 2
$23/tonne
$ 149,536
$ 121,348
$ -10,675
$ -2,001
$ -99,476
$ -74,065
Core policy
$ 1,041,731
$ 734,574
$ 508,589
$ 359,818
$ 218,707
$ 151,021
High price
$ 2,778,399
$1,978,504
$ 1,594,700
$ 1,155,134
$ 934,032
$ 686,736
The sensitivity analysis of NPV to establishment costs shows that if all the establishment costs are
assumed to be funded through other means (for example through private, philanthropic or public
investment), then both project options would generate a greater NPV under all three price scenarios
(Table 14).
As previously mentioned, the establishment costs are greater for Option 1 than for Option 2 and are
incurred over a greater period of time. The removal of those costs would therefore result in a greater
increase in the NPV for Option 1 than for Option 2. For all three carbon price scenarios, if all the
establishment costs were removed, the NPV would increase by $437,500 for Option 1 and by $325,000
for Option 2.
Table 14 Sensitivity analysis of NPV to establishment costs
Carbon
Price
Scenario
Net Present Value
With Establishment Costs
Without Any Establishment Costs
Option 1
Option 2
Option 1
Option 2
$23/tonne
$ -10,675
$ -2,001
$426,896
$ 323,396
Core policy
$ 508,589
$ 359,818
$ 946,160
$ 685,215
High price
$ 1,594,700
$ 1,155,134
$ 2,032,271
$ 1,480,531
The sensitivity analysis of NPV to up-front transaction costs shows that if these costs are assumed to be
funded through other means (for example through the Indigenous Carbon Farming Fund), it would make
only a marginal difference to the NPV under any of the price scenarios (Table 15).
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 38
Table 15 Sensitivity analysis of NPV to up front transaction costs
Carbon
Price
Scenario
Net Present Value
With Up Front Transaction
Costs
Without Up Front Transaction Costs
Option 1
Option 2
Option 1
Option 2
$23/tonne
$ -10,675
$ -2,001
$ 7,930
$ 16,604
Core policy
$ 508,589
$ 359,818
$ 527,194
$ 378,423
High price
$ 1,594,700
$ 1,155,134
$ 1,613,304
$ 1,173,738
The up-front transaction costs included in the cost benefit analysis total $20,000, which includes:
 costs for drawing up a legal contract for the sale of ACCUs; and
 legal costs for drawing up subcontractor contracts and supply contracts.
These costs do not include: any land survey costs; costs for corporate restructuring (if necessary); costs
for registration of carbon rights; registry fees; or costs associated with the initial verification and reporting
of carbon stocks at year five as well as for subsequent verification and reports at five year intervals.
The up front transaction costs comprise a relatively small proportion of the overall project costs, so
removal of these costs would not be expected to make a significant difference to the NPV of the project.
The results of the sensitivity analysis indicate that the estimate of net economic benefit is particularly
sensitive to the estimate of future carbon price and the discount rate; quite sensitive to the estimate of
establishment costs, but not very sensitive to the estimate of up-front transaction costs.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 39
10. Risk analysis
There are a number of risk factors that will influence the success or failure of a CFI reforestation project
and these will need to be thoroughly assessed prior to committing to such a project. General risk factors
applicable to any CFI reforestation project are identified in Table 16 but there are also likely to be site
specific risk factors that will require detailed analysis at the project planning stage.
Any framework to assess risk must consider it in terms of the likelihood of a risk factor occurring, and the
consequence of what would happen if it did occur.
Table 16 identifies what the commercial impact of each of the risk factors listed would be, for example
whether the establishment costs would increase, whether the potential carbon yield (and hence likely
returns from the sale of ACCUs) would decrease or whether the proponent may no longer be able to
deliver on their contractual obligations to sequester carbon long term. The likelihood and potential
severity of the impact are also identified for each risk factor.
Identification of the likelihood and severity of potential risks before the project commences will allow
possible mitigation options to be properly considered and costed. It may be possible to mitigate some
risks at the project planning stage, for example through:
 selecting species which are not already at or near the limit of their geographic spread to reduce the risk
of future climate change impacts;
 selecting planting sites which are least exposed to potential wind events to reduce the risk of future
wind damage; or
 planting at lower stocking rates in areas susceptible to moisture deficiencies.
Other risks may be able to be mitigated by undertaking management actions once the trees have been
planted, for example slashing grass breaks when the seedlings are newly established to limit the potential
for grass fires.
However some of the other potential risks to a CFI reforestation project will be difficult to mitigate, such as
a large scale windstorm resulting in widespread windthrow of planted seedlings, or a high intensity fire in
a mature planting resulting in high mortality. Following a fire or other natural disturbance, there will be a
loss of income from the sale of ACCUs and there will also be an obligation under the CFI for project
proponents to take reasonable steps to ensure that carbon stores are re-established. In both cases, there
will be an economic implication. Where the risk of such an event cannot be mitigated the project
proponent will need to decide whether to:
 not go ahead with the project;
 accept the residual risk through the life of the project; or
 take out appropriate insurance to cover against potential future losses.
The decision made will depend on the likelihood of the risk occurring (and on the severity of impact
should it do so) as well as on the project proponent’s attitude to risk. As mentioned in Section 5.5, an
adjacent property has suffered recent bushfire damage so the likelihood of the CFI reforestation project
plantings being affected by fire at some stage over the next 40 years is probably fairly high. The severity
of the impact though will depend on when that fire eventuates.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 40
Table 16 General reforestation project risk factors
Risk Factor
Comment
Commercial Impact
Likelihood
Severity
Carbon price
Future carbon price is uncertain
Investment decision
Likely – as carbon sequestered will
be sold in a free market
Climate change
Potential impacts of climate change on tree
survival/growth rates
Carbon yield
Growth model for species
Environmental planting species for the proposed
planting area may have a low default carbon yield
Carbon yield
Landscape variability
Growth and planting success may be variable
across an establishment area due to variability in
soils, ground moisture, effects of aspect or
influences such as frost
Carbon yield
Seed supply
Availability of seed supply, collector or storage
option for the desired local species
Scale of planting
Propagation knowledge
Success of propagating local species easily, and
if it has been completed previously
Seedling cost
Propagation time
Time it takes to grow local seedlings
Seedling cost
Propagation efficiency
Establishment (planting)
techniques
The strike rate for local seeds to establish
Preparations required to make the planting site
suitable for successful seedling growth (such as
whether it needs to be ripped and/or mounded,
whether tree guards and mulch are required,
whether herbicide, fertiliser or nutrients are
required)
Stocking of seedlings to be planted for
acceptable longer term survival. Too high
stocking may result in stand mortality where
drought stress is an issue
Seedling cost
Establishment cost
Unlikely – the selection of local
species or ‘tested’ alternative species
should be able to accommodate local
climate variability, and this has far
greater ranges in rainfall and
temperature than climate change
induced effects
Likely - the default carbon yields in
the model are acknowledged as
conservative
Unlikely – while landscape variability
is a significant factor those areas
subject to effects such as frost or
inundation should be identified prior
to establishment
Likely – where local species from a
specific locality are sought there may
be issues with collection supply and
propagation of seedlings
Likely where ‘new’ or ‘untested’
species are being used for the first
time – may require specialist
techniques for collection and storage
Likely only where local species
selected have not been propagated
previously
See above
Insignificant – the property and
surrounding area has been the
subject of previous successful mixed
species tree planting projects
As with all projects tied to market
conditions impacts could be
significant – forward selling of ACCUs
may provide certainty but may also
exclude project owners from benefits
that may accrue from price rises
Insignificant to minor
Planting density -growth
Establishment cost
Unlikely – stocking rates specified are
based on the results of previous tree
planting projects
Insignificant
Minor – likely to result in single tree or
small areas of mortality only
Minor to moderate – may require
selection of alternative species
Minor – as a mixed planting is being
trialled it is likely that some of the
species selected have previously
been used in reforestation projects
See above
See above
Insignificant
Insignificant
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 41
Risk Factor
Comment
Commercial Impact
Likelihood
Severity
Drought
Short term drought may impact on seedlings,
while longer term hydrological drought may result
in widespread stand mortality in mature stands
Delivery risk
Minor – possibly some localised or
single tree mortality
Pests
Insect attack or psylids, as a secondary or
primary agent, may cause defoliation, crown
damage and stand mortality
Browsing at establishment or juvenile stages by
macropods, goats, pigs, domestic stock, koalas
and possums, may cause defoliation, crown
damage and stand mortality
May impact seedlings at establishment stage or
even mature plants where frosts are severe.
Particularly an issue at establishment if seedlings
have not been frost hardened
Delivery risk
Unlikely – severe drought can have
significant impact, however local
species will be used and previous
plantings have survived drought
periods
Unlikely but possible – psyllid attack
particularly on drought stressed
stands can result in significant tree
mortality – however may be
moderated by mixed species
plantings
Minor – may result in single tree or
partial stand mortality though in most
instances tree recovery will occur
Wind
Windthrow is a significant damaging agent for
planted forests
Delivery risk / replant cost
Fire
Juveniles killed by lower intensity fire (such as
grass fire) while mature stands may be killed by a
high intensity fire. Fire can also be used as a
protection agent to reduce fuels around newly
established stands and within mature stands.
Is there are labour source available over the life
of the project to implement site management
activities required for stand longevity (such as
funds for labour for weed control, fire
management)
Delivery risk / replant cost
Possible – may be an issue where
planting occurs in areas not known for
frost or when those frost events that
occur late in the season, when
seedlings have not been frost
hardened
Likely – windthrow is a significant risk
factor to plantings, particularly at
younger ages where the canopy area
exceeds the root structure making
them more susceptible
Likely – the potential for a large fire to
impact the project over the life of the
project is significant – they can and
will occur at the locality at some stage
Frost
Labour source
Delivery risk
Delivery risk
Unlikely – strong owner interest in
positive project outcomes
Minor
Minor –generally localised and single
tree
Where unmitigated the impacts can
be severe leading to complete
mortality however where mitigation
actions are applied (fuel reduction,
access, etc) risk may be reduced
Minor
* Adapted from: Chris Mitchell and Richard Harper presentation to ABARE conference 2011 “Status and prospects of
carbon sink forestry in Australia”
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 42
In order to determine what the likely costs would be to insure against the loss of carbon from a major fire
or wind event, Darryl Hawke from Insurance Facilitators and Bernie Mayers from Agricola were both
asked to provide estimates of the premium that would apply. In both cases, the figure would be calculated
by applying a standard percentage to the estimated value of the carbon to be insured. The premium is
calculated annually and will therefore increase as the value of the carbon increases over time. The project
proponent can opt to reduce the premium by accepting a higher level of excess but for the purposes of
this feasibility study the potential insurance premiums for each year were calculated assuming that the
total amount of standing carbon is insured.
For Option 2, the potential costs of insurance were calculated for the $23/tonne carbon price scenario as
follows:
 the total standing carbon (tonnes C) at the end of each five year reporting period was multiplied by 3.67
to give tonnes CO2-e;
 this figure was multiplied by 23 to give a total value to be insured; and
 the total value to be insured was then multiplied by 0.75% to give the insurance premium for that year.
For ease of calculation, this insurance premium was assumed to also apply for the subsequent four
years. The results are shown in Table 17.
Table 17 Estimation of potential insurance premiums (option 2)
Reporting Period
Standing
Carbon Stock
(Tonnes C)
Tonnes CO2-e
Value (Assuming
$23/tonne CO2-e)
Insurance
Premium ($/yr)
Jul 2012 – Jun 2017
915
3359
$77,250
$579
Jun 2017 – May 2022
3938
14452
$332,407
$2,493
May 2022 – Apr 2027
7165
26296
$604,808
$4,536
Apr 2027 – Mar 2032
9678
35516
$816,879
$6,127
Mar 2032 – Feb 2036
11572
42468
$976,753
$7,326
Feb 2036 – Jan 2041
13019
47780
$1,098,951
$8,242
Jan 2041 – Dec 2046
14160
51966
$1,195,213
$8,964
Dec 2046 – Nov 2051
15083
55356
$1,273,193
$9,549
When these insurance premiums were added as a cost item to the NPV spreadsheet the impact was to
reduce the NPV by $32,907, from -$2,001 to -$34,908. For the Core Policy and High Price scenarios, the
impact on the project’s NPV of including insurance costs is likely to be even greater, since the value of
the carbon to be insured would be higher, and hence so would the premiums to be paid.
As shown above, some of the potential risks to a CFI reforestation project can be mitigated at the
planning or establishment phases of the project and others can be insured against. However one of the
risks with the greatest potential to impact on the success of the project, namely the future price of carbon,
is outside the control of the project proponent and is also something that cannot be insured against.
The project proponent will have some flexibility because at the end of each reporting period they will be
able to make a decision about whether to sell the ACCUs they have received at the price on offer at the
time, or to hold onto them in the hope that they will be able to sell them in the future for a higher price. In
making such a decision though the potential implications for the project cashflow will need to be taken
into account.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 43
11. Conclusion
This report has examined the potential feasibility of establishing a CFI reforestation project on Avondale
Park. Two possible options for mixed species environmental plantings have been considered:
 Option 1 would essentially cover all the existing cleared areas of the property with trees (507ha);
whereas
 Option 2 would leave the valuable cropping land along the river flats for cropping, planting the rest of
the property with trees (358ha).
In both cases, the plantings would meet the criteria for inclusion in the CFI.
A planting similar to those proposed in this feasibility study has been previously undertaken on the
property, and this has demonstrated good survival and growth rates and hence reasonable carbon
sequestration potential. It would therefore certainly be physically possible to establish a reforestation
project on the property. However Beverley Shire may not approve a development application for
widespread tree planting. If this is the case, they may be more receptive to a planting plan which includes
widely spaced tree belts interspersed with farming land, but this will reduce the area planted and hence
the amount of carbon sequestered.
Some of the resources and skills required for growing, planting and managing the trees are already
available within Yaraguia. The more specialised skills associated with managing a carbon project are
unlikely to be sourced from within the group, at least in the short term but potentially these skills could be
provided by SWALSC if they take on the role of carbon aggregator for all Noongar held lands.
The potential feasibility of the project has been assessed on the basis of whether or not the costs of the
two project options converted to present values would exceed the estimated returns from the sale of
ACCUs. The results of this analysis for a number of different possible scenarios are presented in
Table 18. In each scenario, the costs and benefits have been calculated for 40 years and the discount
rate has been assumed to be 7.5%.
Table 18 Comparison of NPV under different scenarios assuming a discount rate of 7.5%
Carbon
Price
Scenario
Net Present Value
With All Costs
Without Up Front
Transaction Costs
Without Any
Establishment Costs
Option 1
Option 2
Option 1
Option 2
Option 1
Option 2
$23/tonne
$ -10,675
$ -2,001
$ 7,930
$ 16,604
$426,896
$ 323,396
Core policy
$ 508,589
$ 359,818
$ 527,194
$ 378,423
$ 946,160
$ 685,215
High price
$ 1,594,700
$ 1,155,134
$ 1,613,304
$ 1,173,738
$ 2,032,271
$ 1,480,531
As shown in Table 18, the estimate of NPV is particularly sensitive to the estimate of the future carbon
price and it is extremely difficult to predict what the carbon price will be over the next 40 years because
after the initial three years this will be determined by market forces.
If it is assumed that the carbon price will remain steady at $23/tonne, then the NPV of both project options
over a 40 year period will be negative. Under this scenario, the project is predicted to receive a return
from the sale of ACCUs of just under $1.7million (Option 1) and $1.2 million (Option 2), with total costs
over the same period of $665,000 (Option 1) and $465,000 (Option 2). Planting costs are estimated to be
$78,000/yr for the initial years and these will cease once the available area is planted. In the case of
Option 1 this will be after 10 years whereas for Option 2 it will be after six years, which explains the
difference in NPV between the two options.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 44
Over the same 40 year period the amount of additional carbon sequestered increases gradually, reaching
a peak in the 2022-2027 reporting period with nearly 16,000 tonnes (Option 1) and over 11,000 tonnes
(Option 2) of CO2-e sequestered and available to be sold. The amount of additional carbon sequestered
will then start to decrease and by the final reporting period (2046-2051) the amount of additional carbon
sequestered during the reporting period and available to be sold will have reduced to just under 5,000
tonnes (Option 1) and just over 3,000 tonnes (Option 2) of CO 2-e. The major costs are therefore incurred
during the initial years of the project, whereas returns become significantly higher towards the middle of
the 40 year period and then tail off again towards the end.
If it is assumed that the carbon price will increase steadily over 40 years in line with Treasury modelling,
then the NPV for both project options will be positive. Under both the core policy and high price scenarios,
the costs will remain the same as for the $23/tonne scenario, but the returns will increase significantly
over the initial 15 years of the project as greater amounts of carbon are sequestered and as the carbon
price increases. These returns will remain high towards the end of the 40 years as the carbon
sequestration rates decline but the price per tonne continues to increase.
An additional factor that may need to be taken into account when considering the feasibility of a carbon
project on Indigenous land is the potential willingness of buyers to pay a price premium for carbon credits
that will deliver Indigenous co-benefits. For example, in addition to delivering carbon benefits, a
reforestation project on Indigenous land might also provide increased opportunities for Indigenous people
to live and work ‘on country’; enable them to protect and manage culturally significant sites; and/or enable
the re-establishment of bush food or bush medicine trees.
An analysis of the demand and supply of an Indigenous carbon market in Australia (GHD, 2011),
revealed that there is a potential demand from buyers for credits that will also deliver these additional
benefits and that some would be willing to pay a premium of as much as $6/tonne. If the project could be
shown to meet the CFI criteria and requirements for Indigenous co-benefits (see Robinson et al 2011),
then it may be possible to receive a premium price for any ACCUs created as a result of the project,
which would increase the potential returns under all the carbon price scenarios.
It may also be possible for Yaraguia to access funding from the Indigenous Carbon Farming Fund to
cover some of the initial legal costs of setting up a CFI carbon project. The up front transaction costs
included in the cost benefit analysis totalled $20,000, but as shown in Table 18, even removing all these
costs made very little difference to the NPV under any of the three carbon price scenarios.
The NPV was however, found to be quite sensitive to the estimate of establishment costs. The
assumptions regarding establishment costs for this project mean that the costs are relatively low
(averaging $1,115/ha) but if these costs could be reduced even further, or long term funding could be
sourced through private, philanthropic or public sector investment to support these costs, then this would
significantly increase the NPV under all three pricing scenarios and even the $23/tonne scenario would
generate a positive NPV for both project options.
It should be noted though that if, on the basis of a particular set of assumptions, a potential CFI
reforestation project would generate a positive NPV this does not imply that such a project would be the
most economical use of that land. Nor does it imply with any certainty that such a project will be a
success. There is a wide range of both general and site specific risk factors that may contribute to a
project’s success or failure (see Section 10). Before any decision is made about whether to proceed with
a CFI reforestation project, a detailed analysis of these risk factors will need to be undertaken, and
potential mitigation measures fully costed.
Careful consideration will also need to be given to what will be the most appropriate project structure.
This feasibility study has been undertaken on the premise that Yaraguia will be the project proponent for
a future carbon project on their land, that they will retain the carbon sequestration rights (CSR) and that
they will accept all responsibility for establishing and managing that project (Option 1 in Figure 16). There
are however a number of different ways in which a CFI reforestation project could be set up. The
aggregation of a number of small projects into a single larger project for example, may enable the project
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 45
proponent to achieve economies of scale, particularly in relation to transaction costs. Under the CFI, a
project aggregator would need to purchase the CSR from individual landholders, such as Yaraguia, in
order to become the project proponent but in return would accept all the project obligations and risk
(Option 2 in Figure 16).
Figure 16 Project structure options
Alternatively, Yaraguia could choose to retain the CSR but outsource the project management to a
service provider for a fee. The service provider would then be responsible for obtaining the necessary
project approvals and reporting on the project, but Yaraguia would still receive the ACCUs and be
responsible for complying with scheme obligations (Option 3 in Figure 16). The decision about which
project structure would be best for a particular project will depend on the likely costs and benefits and the
landholder’s attitude to risk.
Either of the proposed CFI reforestation project options would contribute towards the Noongar people
meeting their environmental objective of rehabilitating their land whilst helping to mitigate the impacts of
climate change. They would also potentially contribute towards meeting one of their social objectives by
providing employment opportunities associated with the establishment and ongoing management of tree
plantations. However, whether they would enable them to achieve their second social objective, namely
to enable economic proceeds to be used to support key Noongar community development and cultural
initiatives is far less certain, since this will be highly dependent on the future carbon price.
If the carbon price remains at $23/tonne then neither of the project options will return a positive NPV.
Unless alternative funding sources are found to cover the transaction and/or establishment costs of the
project and of other projects like it in SW Western Australia, then it is unlikely that the vision of SWALSC
to develop a large scale economic initiative based on carbon trading on Noongar held lands will be
realised. If the carbon price increases steadily over time in line with Treasury modelling, then the
realisation of that vision may be possible.
The success of a project may however be measured in other than monetary terms and the decision about
whether to proceed with either of the project options will therefore ultimately depend on the relative
importance placed on the achievement of the social, environmental and economic objectives.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 46
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Submitted to Sue Salvin, GHD, 2010.
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Western Australian Planning Commission. 2003. Farm Forestry Policy, Planning Bulletin No. 56,
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Yaraguia Enterprises Inc. 2006. Property Management Plan: Avondale Park, Beverley, October 2006.
GHD | Department of SEWPaC - South West Aboriginal Land and Sea Council | 48
Appendix A
Existing FPC sandalwood plantation
Appendix B
Greening Australia revegetation plan
Appendix C
NPV analysis
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D Adshead
S Salvin
P de Mar
30/11/11
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D Adshead
S Salvin
P de Mar
20/12/11
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S Salvin
E Ray
E Ray
3/2/2012
4
S Salvin
E Ray
E Ray
12/3/2012
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