Opportunities under the CFI Reforestation Methodology Gunditj

Department of SEWPaC

Opportunities under the CFI Reforestation Methodology

Gunditj Mirring Traditional Owners Aboriginal Corporation

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 R eport (“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 9) and site specific risk factors that may contribute to a project’s success or failure.

GHD | Department of SEWPaC - Gunditj Mirring Traditional Owners Aboriginal Corporation | i

Table of contents

Executive summary.............................................................................................................. 1

1.

Context ...................................................................................................................... 4

1.1

The Carbon Farming Initiative ......................................................................... 4

1.2

Opportunities for Indigenous participation in the CFI ...................................... 4

2.

Background................................................................................................................ 5

2.1

About the Traditional Owners and their land ................................................... 5

2.2

Social/economic/environmental objectives ..................................................... 5

2.3

Case study contacts ........................................................................................ 7

3.

Site bio-physical features .......................................................................................... 8

3.1

Climate ............................................................................................................ 8

3.2

Geology and geomorphology .......................................................................... 8

3.3

Terrain and drainage ..................................................................................... 10

3.4

Soils ............................................................................................................... 10

3.5

Existing vegetation types............................................................................... 10

3.6

Established plantations in the vicinity ............................................................ 12

4.

Site constraints ........................................................................................................ 13

4.1

Current land use/management ...................................................................... 13

4.2

Restrictions on land use ................................................................................ 15

4.3

Threatened species ....................................................................................... 17

4.4

Access ........................................................................................................... 18

4.5

Fire ................................................................................................................ 18

4.6

Pest animals/weeds/pathogens .................................................................... 19

4.7

Cultural heritage ............................................................................................ 20

4.8

Other (social/cultural) .................................................................................... 20

4.9

Conclusion ..................................................................................................... 21

5.

Analysis of eligibility for CFI reforestation project.................................................... 22

5.1

Carbon sequestration rights .......................................................................... 22

5.2

Kyoto consistency ......................................................................................... 25

6.

Resources and skills analysis.................................................................................. 26

7.

Proposed project ..................................................................................................... 27

7.1

Proposed planting areas ............................................................................... 27

7.2

Suitable species and stocking rates .............................................................. 27

7.3

Site preparation ............................................................................................. 29

7.4

Propagation and planting .............................................................................. 29

7.5

Site maintenance ........................................................................................... 29

8.

Carbon sequestration .............................................................................................. 30

GHD | Department of SEWPaC - Gunditj Mirring Traditional Owners Aboriginal Corporation | ii

8.1

Methodology .................................................................................................. 30

8.2

Sensitivity analysis ........................................................................................ 32

8.3

Representative scenario................................................................................ 33

8.4

Carbon outcomes .......................................................................................... 34

9.

Cost/benefit analysis ............................................................................................... 35

9.1

Costs ............................................................................................................. 35

9.2

Benefits.......................................................................................................... 38

10.

Risk analysis ............................................................................................................ 42

11.

Conclusion ............................................................................................................... 46

12.

References .............................................................................................................. 49

Table index

Table 1 Comparison of NPV under different scenarios assuming a discount rate of 7.5% . 2

Table 2 Hamilton and Portland climate statistics ................................................................. 8

Table 3 Property land use/management............................................................................ 13

Table 4 Land use zoning ................................................................................................... 15

Table 5 Land tenure and encumbrances ........................................................................... 23

Table 6 Proposed planting areas ....................................................................................... 27

Table 7 Recommended species, Ecology Australia (2007) Page 85-90 ........................... 28

Table 8 Scenarios modelled in RMT.................................................................................. 32

Table 9 Projected carbon abatements over 40 years ........................................................ 34

Table 10 Range of reforestation project costs ................................................................... 35

Table 11 Project costs and assumptions ........................................................................... 36

Table 12 Net economic benefit under different carbon price scenarios ............................ 39

Table 13 Sensitivity analysis of NPV to discount rate ....................................................... 40

Table 14 Sensitivity analysis of NPV to establishment costs ............................................ 40

Table 15 Sensitivity analysis of NPV to up front transaction costs .................................... 41

Table 16 General reforestation project risk factors ............................................................ 43

Table 17 Estimation of potential insurance premiums ....................................................... 45

Table 18 Comparison of NPV under different scenarios assuming a discount rate of 7.5%

....................................................................................................................... 46

GHD | Department of SEWPaC - Gunditj Mirring Traditional Owners Aboriginal Corporation | iii

Figure index

Figure 1 Cumulative cash flow for core policy scenario ...................................................... 3

Figure 2 Location of Gunditj Mirring properties ................................................................... 6

Figure 3 Geology of the study site area. Source: DPI 2011a .............................................. 9

Figure 4 Planting on Tyrendarra IPA, June 2011 .............................................................. 11

Figure 5 Plantations of the study site area. Source: DPI 2011b ........................................ 12

Figure 6 Track on Allambie June 2011 .............................................................................. 18

Figure 7 Koala damage, Kurtonitj June 2011 .................................................................... 21

Figure 8 Flowchart showing the steps followed to calculate carbon abatements ............. 31

Figure 9 Onsite carbon mass of 25 ha planting area under different scenarios modelled in

RMT ............................................................................................................... 33

Figure 10 Treasury modelling of future carbon price (2010 $/t CO

2

-e) ............................. 38

Figure 11 Project structure options .................................................................................... 48

Appendices

Appendix A Property planting plans

Appendix B NPV analysis

GHD | Department of SEWPaC - Gunditj Mirring Traditional Owners Aboriginal Corporation | iv

Executive summary

The land comprises approximately 3,200 ha of stony woodlands and wetlands located on nine separate properties along the Budj Bim National Heritage Landscape in the far southwest of Victoria.

Approximately 20,000 native seedlings have been planted on the properties since 2001 and the Gunditj

Mirring Traditional Owners Aboriginal Corporation would like to extend these plantings to deliver carbon and other benefits (such as for cultural and spiritual reasons and biodiversity), as well as to provide other commercial returns from activities such as tourism, bush foods and medicines.

After an initial site visit, three of the nine properties were excluded from further consideration:

 Muldoons is already completely forested;

 Peters has access issues; and

 Tyrendarra comprises predominantly swampy areas and is of high cultural significance.

Planting plans were developed for the remaining six properties, giving a total proposed planting area of 843 hectares (ha). Much of the area is stony and hand planting of individual seedlings will therefore be required.

It was assumed that every year 25 ha of trees will be planted and at this rate it will take about 33 years to plant the entire site. The Department of Climate Change and Energy Efficiency’s Reforestation Modelling

Tool was used to estimate the carbon stock accumulated over time.

A spreadsheet was created to enable a cost benefit analysis of the project 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 CO

2

-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 CO

2

-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 CO

2

-e.

– The high price scenario assumes a nominal domestic starting price of $30/t CO

2

-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 CO

2

-e.

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.

GHD | Department of SEWPaC - Gunditj Mirring Traditional Owners Aboriginal Corporation | 1

Table 1 Comparison of NPV under different scenarios assuming a discount rate of

7.5%

Carbon Price Scenario

$23/tonne

Core policy

High price

Net Present Value

With All Costs

$ - 128,323

$ 1,007,988

$ 2,928,034

Without Up Front

Transaction Costs

$ - 109,719

$ 1,026,592

$ 2,946,638

Without

Establishment Costs

$ 565,525

$ 1,701,836

$ 3,621,882

If it is assumed that the carbon price will remain steady at $23/tonne, then the NPV of the project will be negative. This is because the planting is assumed to occur over 34 years, with planting costs of $57,000 per year, but over the same period, the total amount of carbon sequestered is gradually increasing. Costs are therefore relatively steady across the whole 40 year period, whereas the more significant returns will only occur towards the end of that period.

Figure 1 shows the cumulative cash flow over the 40 year period for the core policy carbon price scenario.

The cashflow is negative until about year 19 after which it becomes positive. This is because the establishment is predicted to occur over 34 years so establishment costs will continue to be incurred for that period of time. The returns from the sale of ACCUs w on’t occur until the trees are growing well. This means though that the trees that are planted in the later years will still be sequestering carbon at a high rate when the carbon price is also predicted to be high. The peaks in the cashflow graph 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.

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 the

third column of Table 1, removing all the transaction costs made very little difference to the NPV under any

of the three carbon price scenarios. The NPV remained negative for the $23/tonne scenario and positive for the other two scenarios and of the same order of magnitude as if the transaction costs were included.

Since the establishment costs are such a large part of the project costs, their removal (final column in

Table 1) would significantly increase the NPV under all three pricing scenarios and even the $23/tonne

scenario would generate a positive NPV.

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 financially successful. However, for the Gunditj Mirring Traditional Owners Corporation, the success of the project may be measured in other than monetary terms and the decision about whether to proceed will therefore ultimately depend on the relative importance placed on the achievement of the social, environmental and economic objectives.


Figure 1 Cumulative cash flow for core policy scenario


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 CO

2

-e in 2012-13 and growing at two and a half per cent (%) 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:

 South West Aboriginal Land and Sea Council (SW Western Australia);

 Jabalbina Yalanji Aboriginal Corporation (Wet Tropics, Queensland); and

 Umpila Land Trust and Cape York Institute (Cape York, Queensland).


2.

Background

2.1

About the Traditional Owners and their land

The Gunditj Mirring Traditional Owners Aboriginal Corporation is a Registered Native Title Body Corporate.

Their land comprises approximately 3,200 ha of stony woodlands and wetlands located on nine separate

properties along the Budj Bim National Heritage Landscape in the far southwest of Victoria (Figure 2). The

properties are:

 Lake Condah;

 Allambie;

 Vaughans;

 Muldoons;

 Lake Gorrie;

 Kurtonitj;

 Peters;

 Tyrendarra Indigenous Projected Area (IPA); and

 Condah Mission.

The area is one of considerable cultural and natural significance. The Vaughans, Muldoons, Allambie and

Condah Mission properties were all acquired by the State Government in the 1980s because of their cultural significance. The Lake Condah property was acquired by the State Government in order to protect its significant natural values and returned to the traditional owners in 2008.

The community is interested in participating in a carbon market by offering the carbon available from forests and vegetation on their community-owned properties. The community, through the Budj Bim

Rangers and Land Management Program, has revegetated with approximately 20,000 native seedlings since 2001. They would now like to investigate the potential and feasibility of preparing, establishing and maintaining a carbon product.

2.2

Social/economic/environmental objectives

In their Expression of Interest to participate in the feasibility planning process, the Gunditj Mirring

Traditional Owners Aboriginal Corporation identified the following objectives that it would be hoping to achieve by developing and implementing a carbon project.


Figure 2 Location of Gunditj Mirring properties


2.2.1

Social objectives

 Capacity development and participation of Gunditjmara Traditional Owners (and native title holders) and the wider Aboriginal and Torres Strait Islander community living in the far southwest of Victoria in a carbon-based commercial business.

 Provision of enterprise and employment opportunities for Gunditjmara, Aboriginal and Torres Strait

Islander peoples in the far southwest of Victoria.

 Contribution towards ‘Closing the Gap targets 1 .

2.2.2

Economic objective

Achieving an optimised revenue and a profit from the carbon market to sustain our ‘caring for country’ obligations as Gunditjmara people.

2.2.3

Environmental objective

Contributing to Australian national environmental accounts.

2.3

Case study contacts

2.3.1

Site contacts

Thomas Day - Executive Officer

Gunditj Mirring Traditional Owners Aboriginal Corporation

PO Box 216, Heywood VIC 3304

4/48 Edgar Street, Heywood VIC 3304

Phone: 03 5527 1427 ceo@gunditjmirring.com

Matthew Butt – Land Management

0429 495 117 matthewbutt@windamara.com

2.3.2

External stakeholder contacts

Gordon Mansfield - Operations Manager, Gunns Forest Products, Mount Gambier.

08 8721 2280

Gordon.mansfield@gunns.com.au

1 These include halving the gap in employment outcomes between Indigenous and non-Indigenous Australians within a decade.

Economic participation is seen as a key building block for achieving this target, with the focus on enhancing employment opportunities, business creation opportunities, economic independence and wealth creation. http://www.healthinfonet.ecu.edu.au/closing-the-gap/key-facts/what-are-the-building-blocks-and-how-do-they-fit-in


3.

Site bio-physical features

The study site consists of several existing properties around Mt Eccles National Park between Macarthur and Heywood in southwest Victoria. The properties are located within the Local Government Areas of

Glenelg and Moyne Shires. The properties are in the Parishes of Bessibelle, Dunmore, Condah,

Ardonachie and Macarthur.

3.1

Climate

The study area has a mild climate with relatively reliable rainfall, which ranges from an average of 810mm annually in the south-west areas, to 760mm annually in the north east areas. The area surrounding Mt

Eccles has an average rainfall of about 750-810mm per year, and the area around the Condah Swamps

(west of Mt Eccles) has an average rainfall of about 650-750mm per year (Ecology Australia 2007).

The closest BOM weather stations are Hamilton to the north and Portland to the south west. The closest town is Macarthur to the east, with an average rainfall of about 760mm annually. In general, the average maximum and minimum temperatures tend to be more extreme around Hamilton than around the coastal town of Portland.

3.1.1

Hamilton and Portland

The climate statistics for Hamilton and Portland are shown in Table 2. The climate of the Hamilton area is

characterised by relatively hot, dry summers and cool, wet winters.

Average annual rainfall at Hamilton is

686.5 mm per year (BOM 2011a).

Table 2 Hamilton and Portland climate statistics

Hamilton Portland

Mean annual maximum temperature (

Mean annual minimum temperature ( o o C)

C)

18.6

8.0

17.89

9.7

Annual rainfall (mm) 686.5 827.3

Source: BOM 2011a (http://www.bom.gov.au/climate/averages/tables/cw_090044.shtml)

The Hamilton maximum average temperature for January and February is 25.7

o C and the minimum average temperature for July is 4.5

o C (BOM 2011a). An increase of around 0.10°C in mean annual temperature has occurred between 1970 and 2010 (BOM 2011b).

The climate of the Portland area is characterised by warm, relatively dry summers and cool, wet winters.

Average annual rainfall at Beverley is 827.3 mm per year (BOM 2011c).

The Portland maximum average temperature for February is 21.9

o C and the minimum average temperature for July is 6.5

o C (BOM 2011c). An increase of around 0.10°C in mean annual temperature has occurred between 1970 and 2010 (BOM 2011b).

Climate projections indicate that the temperature will continue to increase and that by 2070, the region will be 1.2

°C warmer and with 7% less rain (DSE 2008).

3.2

Geology and geomorphology

The study site area and surrounding landscape is on the Mt Eccles lava flow, and mostly consists of undulating plains of weathered basalt rocks, characterised by stony rises (often with limited soil formation), volcanic rocky areas, areas of relatively level plains with deeper soils, swamp and lake deposits, and costal dune deposits (DPI 2011a, Ecology Australia 2007).


The Mt Eccles area is characterised by moderately vesicular and blocky basalt of the Holocene age, while the Condah Swamp area is characterised by recent swamp deposits and some Holocene basalt (Ecology

Australia 2007).

Figure 3 illustrates a geological map provided by Department of Primary Industries (DPI) through a

geological survey of Victoria (DPI 2011a).

There are six main geological types in the study site area between Heywood and Macarthur. These include

(DPI 2011a):

 Qno2: Characterised by stony rises of igneous/volcanic environment. This lithological type is extrusive, comprised of tholeiitic to alkaline basalts, minor scoria and ash.

 Qn: Characterised by rocky areas of igneous/volcanic environment. This lithological type is extrusive, comprised of tholeiitic to alkaline basalts, minor scoria and ash.

 Nh: Characterised by rocky areas of sedimentary environment. This lithological type is marine, comprised of calcarenite, marl and silt.

 Qdl1: Characterised by coastal dune deposits of sedimentary environment. This lithological type is

Aeolian and littoral coastal and inland dunes, comprised of dune sand, some swamp deposits and beach sand.

 Qm1: Characterised by swamp and lake deposits of sedimentary environment. This lithological type is paludal lagoon and swamp deposits, comprised of silt and clay.

 Qns: Characterised by scoria deposits of igneous/volcanic environment. This lithological type is extrusive, comprised of scoria.

A report completed by Ecology Australia (2007) describes the geology and geomorphology at a higher level of detail.

Figure 3 Geology of the study site area. Source: DPI 2011a http://mapshare2.dse.vic.gov.au/MapShare2EXT/imf.jsp?site=geovic


3.3

Terrain and drainage

The study site is characterised by flat to undulating terrain with rock outcrops. The northern parts of Mt

Eccles National Park have some hilly formations, whereas the southern parts of Mt Eccles National Park are generally flat or undulating (DPI 2011a).

The Eumeralla River runs north/south on the eastern side of the study site (near Macarthur) and Darlot

Creek runs north/south on the western side of the study site (near Condah). There are smaller drainage lines running around the study site (DPI 2011a).

There are both minor and major wetland systems in the study site area. The major wetland systems include

Lake Condah and Condah Swamp. These wetlands, as well as others, drain into Darlot Creek. Drains have been cut through many swamps in order to extend pastures for livestock grazing. These drainage schemes were undertaken in the late 1800’s and into the 1950’s. The drainage of these major wetlands in the study site area has resulted in the lowering of the regional water table (Context 1993, Ecology Australia 2007).

3.4

Soils

The Mt Eccles area is characterised by shallow and stony red-brown organic loams. These areas are very stony and often preclude cultivation. There are no serious erosion hazards associated with this area

(Ecology Australia 2007). One of the main problems that commercial plantations face in the region is that of shallow soils over rocky outcrops (G Mansfield Pers. Comm. 2011, M Butt Pers. Comm. 2011).

The Condah area is characterised by peats and peaty clays. The area has been drained and used for agriculture. Severe humification losses are common following drainage (Ecology Australia 2007).

3.5

Existing vegetation types

The Mt Eccles area is generally characterised by woodlands of Euclayptus viminalis (Manna gum), Acacia melanoxylon (Blackwood) and Exocarpos cupressiformis (Native cherry), with understoreys of bracken and grasses. The Condah area is characterised by closed scrub of Leptospermum lanigerum (Woolly Tea-tree) fringed by tussock grasses (Ecology Australia 2007).

The plains around Condah and surrounding Mt Eccles National Park have been extensively cleared of native vegetation and are now mostly agricultural lands, primarily wool growing and beef production

(Context 1993). Extensive blue gum plantations have also been established in the area (Ecology Australia

2007).

Ecology Australia (2007) describes two broad types of vegetation that are recognised for practical purposes, dryland vegetation and wetland vegetation. Ecology Australia (2007) assigned the remnant native (indigenous) vegetation in the study area to Ecological Vegetation Classes (EVCs) by reference to the DSE vegetation modelling and mapping and EVC benchmarks and descriptions. These EVCs are described in detail in their report (Ecology Australia 2007).

According to Ecology Australia (2007), the native vegetation present in the study site area has national conservation significance, and represents a range of rare vegetation types in unique combination.

Revegetation of the study area is needed in order to enhance the flora and fauna values as well as enhance the visual amenity and help control weeds. Due to the competition from weeds in the area, only planting of tubestock is considered viable, as the range of annual and perennial grasses would restrict the effectiveness of direct seeding as well as natural recruitment (Ecology Australia 2007).

Vegetation details for each property are as follows:

 Allambie: The eastern part of the property is dominated by stony rises carrying, or formerly carrying, stony rises woodlands. The western and northern part of the property is substantially exotic dryland vegetation with spots of complex wetland vegetation (embracing numerous wetland EVCs) (Ecology

Australia 2007 p26);


 Lake Condah: The property is dominated by stony rises carrying, or formerly carrying, stony rises woodlands and substantially exotic dryland vegetation (Ecology Australia 2007 p27);

 Muldoons: The property is dominated by stony rises carrying, or formerly carrying, stony rises woodlands. The edges of the property carry some substantially exotic dryland vegetation. Spots of complex wetland vegetation (embracing numerous wetland EVCs) can be found throughout the property

(Ecology Australia 2007 p28);

 Kurtonitj: The central and eastern parts of the property is substantially exotic dryland vegetation, while the western and northern parts of the property is dominated by stony rises carrying, or formerly carrying, stony rises woodlands. Spots of complex wetland vegetation (embracing numerous wetland EVCs) can be found throughout the property (Ecology Australia 2007 p29);

 Tyrendarra IPA: The property is a mix between exotic dryland vegetation, stony rises carrying, or formerly carrying, stony rises woodlands and complex wetland vegetation (embracing numerous wetland

EVCs). The western edge of the property also has alluvial terraces carrying, or formally carrying plains swampy woodland (Ecology Australia 2007 p30);

 Vaughans, Lake Gorrie, Peters and Condah Mission were not included in the individual property scale study of Ecology Australia (2007). Condah Mission is almost entirely pasture with minimal native vegetation on the property.

The stony rises woodlands are predominantly covered with Euclayptus viminalis . Other common tree species include Acacia melanoxylon, Exocarpos cupressiformis, and Acacia mearnsii (Ecology Australia

2007).

The study site properties as a whole encompass about 3,200 ha of stony woodlands and wetlands.

Approximately 20,000 native seedlings have been planted across the properties since 2001 (Gunditj Mirring

Case Study Project EOI 2010). This includes plantings on Allambie, Lake Condah, Lake Gorrie, Kurtonitj

and Tyrendarra IPA (Figure 4).

Figure 4 Planting on Tyrendarra IPA, June 2011


3.6

Established plantations in the vicinity

There are several privately funded blue gum ( Eucalyptus globulus ) plantations planted in the vicinity of the

study site properties. Figure 5 illustrates the plantations surrounding the study site properties. The area

enclosed within Ettrick Condah Road, Woolsthorpe Heywood Road, Hamilton Port Fairy Road and Myamyn

Macarthur Road, totals about 3920 ha of blue gum plantations (DPI 2011b). These plantations are generally between three and eight years of age, and many are planted at a stocking rate of about 1000 stems per ha. Site preparation generally consists of ripping, mounding and weed control, and trees are planted as seedlings, not by direct seeding. One of the main problems that commercial plantations face in the region is that of shallow soils over rocky outcrops (G Mansfield Pers. Comm. 2011, M Butt Pers.

Comm. 2011).

Figure 5 Plantations of the study site area. Source: DPI 2011b http://nremap-sc.nre.vic.gov.au/MapShare.v2/imf.jsp?site=forestexplorer

There are also some pine plantations along Henty Hwy to the west, and some small E. cladocalyx (Sugar gum) plantings in the region which were established in the 1950’s for firewood. These E. cladocalyx plantings seem to grow well in the shallow soils, and coppice when harvested, providing for a continual supply of firewood from the same plant (G Mansfield Pers. Comm. 2011).


4.

Site constraints

The main restriction to planting trees on all the properties is the shallow soil over rock and the amount of surface rock restricting the ability to plant trees, as well as their ability to survive. Planting is limited to hand planting in between rock. Other restrictions include cultural sites, historical dry stone structures, wetlands and lakes, weeds, koalas and access. This section looks at the different site constraints in more detail.

4.1

Current land use/management

The majority of the study site properties are currently managed to promote cultural and natural heritage values under the Environment Protection and Biodiversity Conservation Act, 1999 , and some land is set aside for approximately 250 head of cattle. Commercial tourism and cultural awareness programs are also run on the properties through the community owned Budj Bim Tours Company (Gunditj Mirring Case Study

Project EOI 2010). Table 3 describes the past and present land use management for each of the properties

in the study site area, as at 10 May 2010. The information was provided by Gunditj Mirring Traditional

Owners Aboriginal Corporation.

Table 3 Property land use/management

Lake Condah

Projects at the property as at May 2010

Weir construction

Working on Country Rangers (Land Management Team)

Budj Bim Trails

Current land use

Past land use

Conservation of high cultural and biodiversity values. A weir is currently being constructed to re-flood the lake and return it to its traditional state.

In 1881 the land had been designated a public purposes reserve after which significant drainage works took place to facilitate grazing. Further drainage works in the 1950s meant that the lake still filled after significant rain, but would recede quickly. The lake was later designated a Wildlife Reserve after recommendations in the 1970s and 80s by the Land Conservation

Council. As a Wildlife Reserve, the property had been publicly available for duck shooting and grazing licences had been issued for the property under the Wildlife Act.

Allambie

Projects at property as at

May 2010

Working on Country Budj Bim Environment and Heritage Rangers

Current land use

Past land use

Grazing, and conservation of high cultural and biodiversity values.

Various private landholdings of the property are registered on the title from around 1900. Land uses from this time included grazing of sheep and cattle, and rock crushing at the quarry. Portions of the property are still used for grazing.

Vaughans


May 2010

Current land use

Past land use


Conservation of high cultural and biodiversity values, tourism.

Vaughans was freehold land in private ownership until acquired by the state government and was used for grazing.


Muldoons


May 2010

Current land use



Grazing Past land use

Lake Gorrie


May 2010

Current land use


Cattle enterprise, conservation of high cultural and biodiversity values, tourism.


Kurtonitj


May 2010

Current land use




Peters


May 2010


Current land use

Past land use


Grazing

Tyrendarra IPA


May 2010


Current land use

Past land use


Grazing

Condah Mission


May 2010

Working on Country Budj Bim Environment and Heritage Rangers

Current land use

Past land use

Grazing and conservation of high cultural and biodiversity values and

Accommodation.

In 1866, the property was set aside as an Aboriginal Reserve, and the Lake

Condah Aboriginal Mission Station was opened by Church of England in

1867.

At the height of the mission’s development in 1880’s there were about 26 houses and outbuildings with a population of over 100.

The mission was officially closed in 1918, but residents continued to visit and live in the buildings until 1950’s.


4.2

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 natural resource management (NRM) plans (Parliament of the Commonwealth of Australia, 2011). Through the Regional

Natural Resource Management 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 Gunditj Mirring properties is the Glenelg Hopkins Catchment

Management Authority (CMA). The Glenelg Hopkins Native Vegetation Plan 2006, prepared by the Glenelg

Hopkins CMA, is an integral part of the Regional Catchment Strategy and provides direction for the management of native vegetation in the Glenelg Hopkins region. The document highlights the need for a large scale revegetation effort over the medium to long term and outlines priorities for revegetation within the region. These include:

 Promoting regeneration, using indigenous species, to increase the size and quality of existing remnants.

 Establishing vegetation links between existing remnants.

 Restoring Ecological Vegetation Class (EVC) communities through revegetation

 Targeting revegetation work in high recharge areas and near waterways, including some wetlands, to help reduce salinity and protect water quality.

 Developing and integrating productive tree (and perennial vegetation) systems, including farm forestry, that provide significant benefits in terms of carbon sequestration, runoff, watertable control and water quality.

The Gunditj Mirring properties lie within the Darlots Creek subcatchment. The stony rises woodland, which is the predominant vegetation type on the Gunditj Mirring properties, is considered an endangered EVC with only 3.8% of its pre-1750 area in this subcatchment remaining in 2005. The target within the Glenelg

Hopkins Native Vegetation Plan is to increase this to 30 % of the pre-1750 area by 2030. The proposed revegetation on the properties to provide carbon and other benefits is therefore consistent with the Plan.

The land use zoning for each of the properties is shown in Table 4.

Table 4 Land use zoning

Lake Condah

Shire/s

Zoning

Partly in the Glenelg Shire and partly in the Moyne Shire.

Special Use Zone in both shires, as amended in their respective planning schemes in 2009 in order to:

 provide for the use and development of land, restoration and protection of natural systems at Lake Condah;

 protect and conserve the natural environment and natural processes for their historic and Indigenous cultural values and the scientific, landscape and habitat values;

 provide for the integrated management, protection and use of a heritage place and buildings of cultural significance for interpretation, education, community, recreational and tourism purposes; and

 provide for the continuation of Indigenous cultural practices. http://www.dse.vic.gov.au/PlanningSchemes/glenelg/home.html


Council Overlays Parts of the Moyne shire section of the lake property are subject to a

Wildfire Management Overlay.

( http://planningschemes.dpcd.vic.gov.au/aavpp/44_06.pdf

)

Allambie

Shire/s

Zoning

Council Overlays

Vaughans

Shire/s

Zoning

Moyne Shire.

Farming Zone http://planningschemes.dpcd.vic.gov.au/aavpp/35_07.pdf

Wildfire Management Overlay

Moyne Shire

The zoning is unclear as the Moyne Shire Planning Scheme Online website maps show it to have the same classification as the national park

(Public Conservation and Resource Zone), which should be incorrect.

The majority of the property is subject to a Wildfire Management Overlay.

Council Overlays

Lake Gorrie

Shire/s

Zoning

Council Overlays

Moyne Shire

Farming Zone

Heritage Overlay (HO38) VHR # H2033 over parts of property

(Bessiebelle sheepwashes and yards)


Kurtonitj

Shire

Zoning

Council Overlays

Condah Mission

Shire

Zoning

Council Overlays

Glenelg Shire

Farming Zone


Glenelg Shire

Farming Zone

Environmental Significance Overlay (ES02) http://planningschemes.dpcd.vic.gov.au/glenelg/ordinance/42_01s02_gelg

.pdf


The purpose of the Farming Zone is:

 To provide for the use of land for agriculture.

 To encourage the retention of productive agricultural land.

 To ensure that non-agricultural uses, particularly dwellings, do not adversely affect the use of land for agriculture.


 To encourage use and development of land based on comprehensive and sustainable land management practices and infrastructure provision.

 To protect and enhance natural resources and the biodiversity of the area.

It is unclear from the Glenelg and Moyne Planning Schemes whether a development application is necessary for the planting of trees in the Farming Zone if these are not for timber production. If a development application is required then the LGA will take into account a number of factors before making their decision, including:

 Whether the use or development will support and enhance agricultural production.

 Whether the use or development will permanently remove land from agricultural production.

 The potential for the use or development to limit the operation and expansion of adjoining and nearby agricultural uses.

 The agricultural qualities of the land, such as soil quality, access to water and access to rural infrastructure.

Several of the properties are covered by planning overlays. The Darlot Creek which runs through the SE boundary of the Condah Mission property is covered by Environmental Significance Overlay ESO2. The purpose of this overlay is to protect significant wetlands and waterways which need to be retained as natural waterways with vegetated buffers. This means that there would be limitations regarding how close to the creek any planting could occur on that property.

The Heritage Overlay on Lake Gorrie is over the Bessiebelle sheepwashes and yards – no planting is proposed for these areas.

All of the properties are covered by a Wildfire Management Overlay. The purpose of this overlay is to identify areas where the intensity of wildfire is significant and likely to pose a threat to life and property and to ensure that development which is likely to increase the number of people in the overlay area:

 satisfies the specified fire protection objectives; and.

 does not significantly increase the threat to life and surrounding property from wildfire.

The overlay relates primarily to subdivision and the construction of additional buildings which will increase the number of people in the area, and it is therefore not likely to restrict the proposed plantings.

Any development of land along the Budj Bim National Heritage Landscape (where the properties lie) will require an effects study on the natural and national heritage values, as under the Environment Protection and Biodiversity Conservation Act 1999 , as well as under the Aboriginal Heritage Act, 2006 (Vic) (Gunditj

Mirring Case Study Project EOI 2010).

4.3

Threatened species

The Ecology Australia (2007) report states that the botanical values of the Stony Rises Woodlands and associated Wetland EVCs, including the riparian and instream vegetation of Darlot Creek and Fitzroy River, rate very highly for conservation significance. In fact the moderately to highly intact indigenous vegetation of the Mt Eccles Lava Flow has National conservation significance. A total of 33 taxa of state or national conservation significance have so far been recorded from the study site region; these being considered rare, vulnerable or endangered in Victoria and/or Australia. Further to this list, another 75 species are considered to have regional conservation significance. The Ecology Australia (2007) report investigates these botanical species in great depth.

The Brolga is present on some of the properties, and was listed as threatened on the Victorian Flora and

Fauna Guarantee Act, 1988 . The Brolga has been listed as vulnerable on the advisory list of threatened vertebrate fauna in Victoria.


4.4

Access

The study site properties are all accessible by good road networks in the region. The only property that has limited access is Peters in the south west of the study site, however this property is largely forested/planted so there is little opportunity for planting (M Butt Pers. Comm. 2011).

Access within the properties is limited to small wheel tracks (Figure 6). Driving off these wheel tracks is

generally limited in the wet season due to boggy conditions. Peters is inaccessible in the wet season.

Currently tree planting activities are generally limited to within short walking distance of existing wheel tracks, because the planting season is restricted to the wet season.

Figure 6 Track on Allambie June 2011

4.5

Fire

Fire is a risk that needs to be considered when planting any vegetation for a profit. This study is considering the feasibility of planting trees in an environment where fires do occur, and this needs to be acknowledged as a risk to planting trees for carbon when they should be managed for up to 100 years.

The topography of the area is generally undulating or flat, so topographical related fire risk is minimal.

However, the properties Allambie, Lake Condah, Vaughans, Muldoons and Lake Gorrie all adjoin Mt Eccles

National Park, which is heavily forested and could be considered a higher fire risk factor for those properties. The Peters and Tyrendarra IPA properties are bordered to the west by Narrawong State Forest which is also heavily forested. Kurtonitj is in amongst mostly agricultural land, presenting a lower fire risk.

Some properties are also themselves heavily forested, either entirely (Muldoons) or in part.

Within the study area the main sources of ignition are lightning, vehicle accidents, carelessness (such as discarding cigarette buts or escaped campfires) and arson. Less common ignition sources include


accidental ignitions from agricultural or forestry activities or mechanical works, powerlines arcing or contacting with vegetation, and escaped agricultural burns or prescribed burns (DSE 2011).

4.5.1

Fire history

According to the Department of Sustainability and Environment (DSE 2010), there have been some small bushfires in the immediate vicinity of the study site over the past 10 years. These include fires close to, or on, Muldoons, Kurtonitj, Lake Gorrie, Peters and Tyrendarra IPA. Peters and Tyrendarra IPA had considerable forested areas burnt in 2006 and are now regenerating. Approximately 5000 of the newly planted seedlings were burnt in 2006. Grass lands in Lake Gorrie were also burnt but no forested areas were impacted (M Butt Pers. Comm. 2011). The largest fire in the wider region was North West of Portland

(about 50 km west of the study site), occurred in Cobboboonee National Park during the 2009 Victoria bushfires, which burnt 218 ha. The fire seasons have been slow since 2009 (DSE 2010).

4.5.2

Fire detection and suppression

There are no suppression resources on the study site properties, however the study site area incorporates substantial plantation resources as well as national parks and agricultural lands, which are all well resourced in the event of a bushfire occurring in the region.

Within the study area fire detection is comprised of fixed fire towers, aerial fire detection and informal reporting from the general public. The closest fire towers to the study site area are located at Mt Clay

(about 15-20 km SW of Mt Eccles National Park) and Annya (about 20km west of Mt Eccles National Park).

Fire detection and suppression arrangements are formalised through co-operative guidelines (Southern

Border Fire Co-ordination Association 2008) involving the Country Fire Authority, Department of

Sustainability and Environment (DSE), Department of Environment and Heritage, and forest industry brigades (such as Midway Afforestation, Hancock Victorian Plantations, Gunns, Green Triangle Forest

Products, Australian Blue Gum Plantations, Plantation Timbers and McEwans). Parks Victoria is part of

DSE and maintains fire suppression resources primarily for areas under its direct management. The Forest

Owners Conference is an industry group made up of twelve major plantation owners and three fire fighting agencies in the Green Triangle Region, forming a significant suppression force in the region, with extensive experience in fire mitigation, preparedness and response.

4.5.3

Prescribed burning

In 2010 Gunditj Mirring was able to receive Australian Government funding to develop and implement a cultural burning program to protect critical EVCs and the traditional aquaculture systems along the Budj

Bim landscape. The cultural burn has a target of 1300 ha. Discussions have been held with DSE and

Parks Victoria to combine a cultural burn program and its principles with the Victorian Government’s fuel reduction program (Gunditj Mirring Case Study Project EOI 2010). DSE are also planning their own burning program in the area, with a small burn planned for an area about three to five km west of Kurtonitj property

(DSE 2010).

Prescribed burning programs, either privately run or through the DSE burning program, can be considered a risk in the event that fires escape from the control boundaries (G Mansfield Pers. Comm. 2011).

4.6

Pest animals/weeds/pathogens

During the vegetation assessment conducted by Ecology Australia (2007), a total of 51 weeds were identified for control or elimination across the study site region. It is noted that without any weed management, the indigenous vegetation, indigenous plant species, and much of the fauna habitat values will be lost from the study area over varying time-scales. Due to the competition from weeds in the area, only planting of tubestock is considered viable, as the range of annual and perennial grasses would restrict the effectiveness of direct seeding as well as natural recruitment (Ecology Australia 2007). In the


agricultural land the most problematic weeds are general thistles and other pasture weeds (G Mansfield

Pers. Comm. 2011).

Further to this, Ecology Australia (2007) note that of the 20 weed species that have been declared as weeds of national significance by the Commonwealth Government, nine have been recorded in the study area. Most of these are rated as highly invasive with a high priority for control, however there is no statutory obligation to manage these weeds.

There is currently an overpopulation of koalas in the area and browsing koalas are known to have killed large numbers of eucalypts in the area, including some on the study site properties (especially Kurtonitj,

Figure 7). There is a koala management plan for the Budj Bim

– Mount Eccles National Park and this includes management actions such as sterilising the females. The Gunditj Mirring people are hoping to be able to extend this program to their country using funding from Caring for our Country.

Kangaroos and wallabies also present a problem, as survival rate of new plantings can be as low as 30-50

% due to browsing (potentially lower in drier areas). Although browsing is noted to have a beneficial effect in areas subject to windthrow, as browsed seedlings have a smaller ‘sail’ area but a similar root mass than similar age unbrowsed seedlings, and being less top heavy are less likely to get blown over. Other animal issues include pest rabbits, deer and hares which can browse on selected plants, as well as stock grazing and its management (Ecology Australia 2007, G Mansfield Pers. Comm. 2011).

4.7

Cultural heritage

The study area is within the traditional lands of the Dhauwurd Wurrund or Gundidjmara people. The clan associated with Lake Condah is the Kerupmar, and these people built many rock structures including channels, fish traps and stone hut bases (Context 1993, Ecology Australia 2007). The rock constructions are a distinctive feature of the local landscape and are of great cultural and archaeological significance

(Ecology Australia 2007).

Allambie and Kurtonitj have had cultural site investigations, and several areas of cultural significance have been mapped out. The same investigations are planned for the remaining properties.

4.8

Other (social/cultural)

The aim for the properties is to plant species that are indigenous to the area, to revegetate the properties to their natural state as much as possible. Ecology Australia (2007) produced a revegetation plan, which is the basis for the revegetation aims of the properties. Approximately 20,000 plants have already been planted, and there is an aim for another 20,000 to be planted annually. There is no interest in planting nonnative species or monocultures on the properties. Plants used currently include a 50:50 split of trees and shrubs/grasses, including manna gums ( E. viminalis ), black wattle ( Acacia mearnsii) , blackwood ( Acacia melanoxylon ), swamp gum ( E. ovata ), prickly and woolly tea tree, Poa and other grasses.

The cultural importance of burning the landscape can be a restriction to planting seedlings on the properties, since the ability of seedlings or juveniles to survive or regenerate after a fire is limited.


Figure 7 Koala damage, Kurtonitj June 2011

4.9

Conclusion

Following the analysis of site constraints and with the agreement of the Gunditj Mirring Traditional Owners

Aboriginal Corporation, the Muldoons, Peters and Tyrendarra properties have been excluded from further consideration in this feasibility study for the following reasons:

 Muldoons is already completely forested;

 Peters has access issues; and

 Tyrendarra comprises predominantly swampy areas and is of high cultural significance.

The remainder of this feasibility study therefore investigates the potential for planting on the remaining six properties.


5.

Analysis of eligibility for CFI reforestation project

5.1

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.

Table 5 shows the results of title searches performed for the six properties still under consideration for a

carbon project, showing land tenure and encumbrances.

For those properties (Lake Condah, Kurtonitj, Condah Mission and most of Lake Gorrie) where the nature of the tenure is estate in fee simple and where the registered proprietor is the Gunditj Mirring Traditional

Owners Aboriginal Corporation, the carbon sequestration rights will rest with the Gunditj Mirring Traditional

Owners Aboriginal Corporation. Two parcels on Lake Gorrie are designated Crown Land but these have been excluded from consideration as a potential planting area and therefore ownership of the carbon sequestration rights is irrelevant.

For those properties (Allambie and Vaughans) where the nature of the tenure is estate in fee simple but where the registered proprietor is currently the Minister for Aboriginal Affairs, Ministerial consent would be required for the transfer and registration of carbon sequestration rights. However both Allambie and

Vaughans are due to be transferred to the Gunditj Mirring Traditional Owners Aboriginal Corporation in the near future. Once the transfer has occurred, as the registered proprietor, Gunditj Mirring Traditional Owners

Aboriginal Corporation will hold the carbon sequestration rights to both these properties.


Table 5 Land tenure and encumbrances

Property Land Description

Lake

Condah

Allambie

CA 2001, Parish of Condah

Lot 1 on Title Plan 863747P

Land Identifier/

Reference

Volume 11077 Folio 444


Registered

Proprietor

Gunditj Mirring

Traditional Owners

Aboriginal Corporation

Minister for Aboriginal

Affairs

As above

Encumbrances

Nil (except those reservations in the

Crown Grant, relating to the Crown's ability to sink wells for water and extract and remove gold, silver and minerals from the land).

Nil (except any encumbrances created by Section 98 Transfer of Land Act

1958 or Section 24 Subdivision Act

1988).

As above

Nature of

Tenure

Primary CSR

Holder

Estate in fee simple Gunditj Mirring

Traditional Owners


Estate in fee simple Minister for Aboriginal

Affairs

As above As above

Vaughans

Lot 1 on Title Plan 449135U (formerly known as part of Crown Allotment 3),

Section 14, Parish of Ardonachie

Lots 1 and 2 on Title Plan 234941D

(formerly known as part of Crown

Allotment 1A Section 13, part of

Crown Allotment 2A Section 14 Parish of Ardonachie)



Lots 1, 2 and 3 on Title Plan 535248Q Volume 07263 Folio 482

Lot 2 on Plan of Subdivision 138567 Volume 09454 Folio 475

Volume 02763 Folio 440 CA 3, Section 14, Parish of

Ardonachie

CA 5, Section 14, Parish of

Ardonachie


As above

CA 5A, Section 14, Parish of

Ardonachie


Ardonachie


Ardonachie

CA 11C, Section 14, Parish of

Ardonachie

CA 69A, Parish of Dunmore






As above

As above

As above

As above

As above

As above

As above

As above

As above

Minister for Aboriginal

Affairs

As above

As above

Nil


Crown Grant, relating to the Crown's ability to extract and remove gold, silver and minerals from the land).



Nil

Nil





As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

As above

Estate in fee simple Minister for Aboriginal

Affairs


Property

Lake

Gorrie

Condah

Mission

Land Description

CA 69B, Parish of Dunmore

CA 70, Parish of Dunmore

CA 70A and 70B, Parish of Dunmore

CA 71, Parish of Dunmore

Lot 1 Pyes Road Bessiebelle

Land Identifier/

Reference






CA 11, Section 8, Parish of Macarthur Volume 10673 Folio 327


CA 28A, Section 8, Parish of

Macarthur

Standard Parcel Identifier:

28A~8\PP3026

CA 28B, Section 8, Parish of

Macarthur

Standard Parcel Identifier:

28B~8\PP3026


Kurtonitj Lots 1, 2, 3, 4 and 5 on Title Plan

318542C (formerly known as part of

Crown Allotment 3A, Crown

Allotments 1A3, 1A4 and 1A5, part of

Former Government Road, Parish of

Dunmore


Lot 2 on Plan of Subdivision 323639U Volume 8349 Folio 825

Lot 1 on Title Plan 800037D Volume 10526 Folio 280

Registered

Proprietor

As above

As above

As above

As above

Gunditj Mirring

Traditional Owners


RNTBC

As above

As above

Crown land declared

Part pursuant to the

National Parks Act.

Native title found to exist over whole of land parcel

Crown land declared

Part pursuant to the

National Parks Act.

Native title found to exist over whole of land parcel

Gunditj Mirring

Traditional Owners


RNTBC

Gunditj Mirring

Traditional Owners


RNTBC

As above

Gunditj Mirring

Traditional Owners


RNTBC

Encumbrances

As above

As above

As above

As above

Caveat AH212747D 11/05/2010

Caveator: Indigenous Land

Corporation

As above

As above

Nil

Nil

Caveat AH212747D 11/05/2010


Corporation

Caveat AG725005Y 01/09/2009


Corporation

As above



Nature of

Tenure

Primary CSR

Holder

As above

As above

As above

As above

As above

As above

As above

As above


Traditional Owners


RNTBC

As above

As above

Crown Land

As above

As above

Minister for

Environment and

Climate Change

As above

As above

Fee simple

As above


Traditional Owners


RNTBC


Traditional Owners


RNTBC

As above

Gunditj Mirring

Traditional Owners


RNTBC


5.2

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 Kyoto-consistent

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 properties contain 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 2 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.

For the six properties under consideration for a CFI reforestation project, the National Carbon Accounting

Toolbox, Data Viewer, was used to identify land use between 1989 and 2004 to determine whether any existing or proposed forest is/would be Kyoto-consistent:

 The majority of Lake Condah has been identified as pasture from 1989 to 2004.

 Allambie was clear of forest in 1989 and remained clear until 2004.

 Vaughans had tracts of cleared land in 1989 which remained clear until 2004. Some tracts of the property have remained forested throughout this time period.

 Lake Gorrie is a mixture of cleared land, pasture and patches of forested land and scattered vegetation.

This has generally remained the same from 1989 to 2004, however forested patches appear thicker towards 2004.

 Kurtonitj had tracts of cleared land in 1989 which remained clear until 2004. Some tracts of the property have remained forested throughout this time period.

 Condah Mission was completely clear and identified as pasture in 1989. This appears to have remained constant until 2004.

All of the properties therefore have Kyoto-consistent areas of land available for carbon planting projects.


6.

Resources and skills analysis

In order to determine whether a carbon project will be feasible on the Gunditj Mirring properties, it is necessary to identify whether the required resources and skills are available within the organisation 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.

Gunditj Mirring has been implementing a planting program on the properties for the last few years so the resources and skills required for growing, planting and managing the trees are already available. Currently, the planting program for the property uses a volunteer base, where during the wet season, international volunteers are used for one week at a time (for up to about five weeks) for tree planting. This system is funded through Caring for our Country and Biolinks. In the event that more trees were to be planted, there is the option to increase the volunteers to do so.

The current land management team has a large capacity and the capability to manage the tree planting activities on the property. The Budj Bim Rangers have now been going for 10 years and they have 6-12 people who have been working with DSE/Parks Victoria so have a good solid skills base. Gunditj Mirring is also very committed to increasing the skill set and to providing additional opportunities for people to work in the bush.

If there is a need for them to bring in additional resources, this should not be an issue. The properties are located within the Green Triangle which is an established plantation region with significant access to forestry specialist services. This can include labour, fencing, weed control, fire management, site monitoring and management.

Gunditj Mirring is currently accessing funds for around 15,000 plants/year. Seed is propagated at the Alcoa

Portland Seedbank in Portland. The seedbank is sponsored by Alcoa Portland and has been set up to support community capacity building. It services the south western region of Victoria in the coordination and collection of seed and the provision of technical information. It also offers a trading service for many local seed species. There would therefore be ready access to the necessary planting stock, within reasonable distance from the properties.

Gunditj Mirring is also relatively well placed in terms of the necessary skills to enable them to manage a carbon project. The organisation is a Registered Aboriginal Party (RAP) under the Victorian Aboriginal

Heritage Act, 2006 . RAPs have responsibilities relating to the management of Aboriginal cultural heritage under the Act. These include evaluating Cultural Heritage Management Plans, providing advice on applications for Cultural Heritage Permits, decisions about Cultural Heritage Agreements and advice or application for interim or ongoing Protection Declarations.

The organisation also has experience in developing fire management plans for their properties for asset protection and the protection of cultural and sustainable values. 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 skills. However Gunditj Mirring is interested in potential opportunities to increase capacity within the organisation and will actively seek to build these additional skills. “Give us five years and we can do it all” (Damein Bell former CEO).


7.

Proposed project

The project proposed for the study site properties is to plant a new forest for carbon and other benefits

(such as for cultural and spiritual reasons and biodiversity), as well as other commercial returns from activities such as tourism, or the multiple uses of plants on the properties such as bush foods and medicines (for further detail of uses see Ecology Australia 2007 2 ).

The intention is to plant mixed species of local flora. The aim is to enrich the environment and provide a cultural connection to how the land once was.

7.1

Proposed planting areas

Appendix A illustrates the location of the possible planting areas for the Allambie, Lake Condah, Vaughans,

Lake Gorrie, Kurtonitj and Condah Mission study site properties.

The size of the proposed planting areas on each property is shown in Table 6.

Table 6 Proposed planting areas

Property

Allambie

Lake Condah

Vaughans

Lake Gorrie

Kurtonitj

Condah Mission

Total

Planting Area (Ha)

240.61

43.59

132.03

323.82

72.15

31.20

843.40

The planting areas provided in Table 6 have been used as the basis for determining the carbon

sequestration potential on each property.

7.2

Suitable species and stocking rates

Ecology Australia has prepared a report and recommendations for planting the properties for revegetation and weed control purposes (Ecology Australia 2007). The species recommended are all native to the area and also provide a cultural connection to the sites.

Based on recommendations from Ecology Australia, the following tree and large shrub species could be

planted at the recommended stocking rates (Table 7).

2 Ecology Australia (2007): pp 69 – 72


Table 7 Recommended species, Ecology Australia (2007) Page 85-90

Species Common Name Propagation Number of Plants per

Unit Area/Location

Trees

Acacia mearnsii

Acacia melanoxylon

Black wattle

Blackwood

Seed

Seed

Seed

Seed

Seed, Cuttings

25/ha

25/ha

15-20/ha E. viminalis Ssp. viminalis

Exocarpos cupressiformis

Manna gum

Cheery

Eucalyptus ovata var. ovata

Swamp Gum

Acacia implexa Lightwood

Allocasuarina verticillata Drooping Sheoak

Silver Banksia Banksia marginata

Larger shrubs

Seed

Seed, Root suckers

Seed

5/ha

15/ha

20/ha

1/25m

1/25m

2

2

Bursaria spinosa Ssp. spinosa

Cassinia longifolia

Melicytus dentatus s.s.

Sweet Bursaria

Shiny Cassinia

Tree Violet

Seed

Seed (Cuttings)

Seed (Cuttings)

15/ha

30/ha

Unresolved

Melicytus sp. aff.dentatus

(VolcanicPlain variant)

Rigid Shrub-violet

Ozothamnus ferrugineus Tree Everlasting

Solanum laciniatum Large Kangaroo Apple

Seed (Cuttings)

Seed, Cuttings

Cuttings

15/ha

Unresolved

10/ha

Acacia paradoxa Hedge Wattle Seed 1/100m 2

Senecio pinnatifolius var. pinnatifolius

Urtica incisa

Rock Groundsel Seed 100/ha

Scrub Nettle Seed, Cuttings 3/m 2

While the primary aim is to use endemic species for planting, additional species may be selected to meet other needs. For example, while not listed as a local native species, Sugar Gum ( Eucalyptus cladocalyx ) has been used in the area since the 1950s for firewood. This species grows well on shallow soils and coppices, so it provides a continual supply of firewood that can be taken from the same tree (G Mansfield

Pers. Comm. 2011). It may therefore be an option to include this species as part of the mixed plantings.


7.3

Site preparation

Formal site preparation such as the ripping and mounding of soils to create a soil bed for planting is not an option on the study sites due to the excessive surface rock. Opportunistic hand planting in gaps between rocks is required, and although soil profiles are not deep, the higher retained soil moisture and elevated soil fertility compensates in plant growth.

Depending on the season weed control may be required prior to planting. Ecology Australia (2007) 3 gives guidance on weed control in more detail.

7.4

Propagation and planting

The objective of the reforestation project is to establish endemic species, and as such propagation material should be sourced from indigenous species at the nearest natural populations locally or regionally, and not planted populations (as their origin may be unknown). Plants must be propagated to allow sufficient size and hardening to achieve good growth by the time of planting (planting as seedlings, not direct seeding)

(Ecology Australia 2007). Ecology Australia recommends that a seed bank be set up in order to be able to collect seed opportunistically, and the seeds be used at a later date when required. Seed must be collected in accordance with the appropriate Department of Sustainability and Environment permits and protocols to avoid harm to the source populations by overexploitation. Gunditj Mirring currently obtains its seedlings from an indigenous plant nursery in Portland.

The current planting season is during the wetter winter period, although spring is identified as more preferable for planting (Ecology Australia 2007). During wet winter planting season, planting is generally limited to within walking distance of property tracks, as it is generally too wet to drive off track. Options to maximise the area planted during the wet season can include the use of All Terrain Vehicles (ATVs, or quad bikes) rigged with a planting trailer to transfer seedlings, tree guards, stakes and planting spades.

Fencing and tree guarding of planting seedlings is required in some areas due to browsing (Section 4.6)

and to improve seedling survival. Stock exclusion fencing may also be required for newly established areas that are grazed. Tree guards (including three stakes) are currently sourced for $2.50 each and seedlings are currently around $0.80 each (including transport costs) representing a significant establishment cost

($2,640/ha). An option to reduce costs may be to plant at a higher stocking rate without tree guards, though accepting only 50% survival. This option may be constrained though by the rocky surface area having insufficient planting gaps to enable a higher stocking rate to be achieved. An alternative option would be to source a cheaper supply of tree guards. GHD was able to obtain quotes for a tree guard for approximately

$1.15 each delivered to Heywood, Victoria. This cheaper price has been used in the calculations.

7.5

Site maintenance

Some site maintenance requirements may need to be fulfilled if the project is to succeed. These may include stock fencing (where stock are maintained on the same property and where fences are not currently in place), access and firebreak maintenance as required, weed control where needed, and maintenance of tree guards.

These site maintenance activities have not been costed in the feasibility study, as they would be carried out on an as needs basis, they are difficult to predict and are not necessarily required up front. They are also going to be dependent on the needs and aspirations of Gunditj Mirring (e.g. if they want to keep stock on the properties where plantings have been established). The cost of undertaking site maintenance activities will also be dependent on the availability of labour to undertake those activities.

3 Ecology Australia (2007) - Section 5.2 (p.81)


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 proposed plantings over time and what abatements could be achieved. ArcGIS version

10, the CFI Reforestation Modelling Tool (RMT) and the Reforestation Abatement Calculator (RAC) were

used to do this. Figure 8 shows a flowchart of the steps followed and the tools used to calculate carbon

abatements.

The total proposed planting area is 843 ha (refer to Table 6). On the advice of Gunditj Mirring, it was

assumed that every year 25 ha of trees would be planted. At this rate it would take about 33 years to plant the entire planting area. The RMT was used to estimate the carbon stock accumulated in the planting area 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 study site is classed as “Victorian Volcanic Plains” bioregion. The static representative location: Lake

Condah (Latitude -38.070999, Longitude 141.849) 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 25 ha annual planting area was considered the CEA.

A mixed species environmental planting was simulated with the planting assumed to have occurred on the

1 July, 2010. The simulation was run over a 100 year period until the 1 July, 2110. 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.

The RMT calculated carbon (C) mass on-site, C mass of trees and C mass of forest debris (tC) of the

25 ha CEA at monthly intervals over the entire simulation period. A number of different potential scenarios were compared and these are described below. A representative scenario was then chosen to be run through the RAC to determine abatements likely to be achieved by the project over a 40 year period.


Figure 8 Flowchart showing the steps followed to calculate carbon abatements


8.2

Sensitivity analysis

To assess the sensitivity of carbon sequestration to different planting rates and events (e.g. weeding, fire and windthrow) under the RMT, six different scenarios were run for a 25 ha area over 100 years. The

scenarios are described in Table 8.

The different scenarios had very little effect on onsite carbon mass over time. Table 8 shows the carbon

mass in tonnes (tC) accumulated on the 25 ha site after 20 years, 40 years and 100 years. 20 years after planting, Scenario 6 , with one weeding event, has the highest carbon stocks while Scenario 5 , with a large fire event, has considerably lower stocks. However, there is less than 2% difference between all the scenarios after 40 years and 100 years.

Figure 9 shows the carbon growth curves under each scenario. All scenarios follow very similar growth

curves however Scenario 5 has a distinct drop in carbon mass after 20 years coinciding with the fire event.

Carbon stocks are shown to reinvigorate quickly after the fire.

Table 8 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

1425 2227 2889 Scenario

1

Scenario

2

Scenario

3

Scenario

4

Scenario

5

Scenario

6

Low stocking - 800 stems/ha

High stocking - ≥

1200 stems/ha

Average stocking –

1000 stems/ha




-

-

-

Fire affecting 30% after 20 years (trees not killed)

Windthrow affecting

5% after 10 years

Fire affecting 100% after 20 years (trees not killed)

Windthrow affecting

15% after 10 years

Weeding event two months after planting

1464

1444

1322

1075

1487

2207

2216

2218

2195

2251

2833

2860

2890

2890

2894


Figure 9 Onsite carbon mass of 25 ha planting area under different scenarios modelled in RMT

3000

2500

2000

1500

1000

500

0

Scenario 1

Scenario 2

Scenario 3

Scenario 4

Scenario 5

Scenario 6

Time

8.3

Representative scenario

As this study is hypothetical and intended to provide an indication of potential future carbon abatements it was necessary to make some assumptions with respect to planting rates, weeding and other events. The sensitivity analysis presented above showed that planting rates, weeding and fire events (provided they are not significant enough to kill the trees) make little difference to overall carbon stocks. Scenario 1 (refer to

Table 8) was therefore chosen as the representative scenario to run in the RAC and calculate potential

carbon abatements for the entire study area.

To determine the on-site carbon mass of the entire study area it was assumed that each 25 ha plot grows and accumulates carbon at the same rate. The growth curve of Scenario 1 (25 ha) was repeated a year later to reflect the subsequent year’s planting and so forth for 33 years until the site had been fully planted. i.e. in the first year 25 ha has been planted, the second year a total of 50 ha has been planted, the third year a total of 75 ha has been planted and so forth. The on-site carbon mass for each of the

25 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 (CO

²

–e tonnes) were calculated over five yearly reporting periods for 40 years (2010-2015;

2015-2020; 2020-2025 and so forth). It was assumed the initial standing carbon stock in the first reporting period was zero, as recommended in the draft DCCEE methodology (DCCEE, 2011). Fuel likely to be 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.


8.4

Carbon outcomes

The projected carbon abatements across the study area are presented in Table 9 below 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 increases over the 40 year period to reach a total of over

49,000 tC.

The project abatement is the amount of carbon accumulated since the previous reporting period, converted into carbon dioxide equivalent (CO

2

-e) tonnes. A 5% risk of reversal buffer was subtracted from the estimated project abatement as required by the Carbon Credits (Carbon Farming Initiative) Act, 2011

(section 6.41). The total carbon abatement (after the risk of reversal buffer has been subtracted) of this project would be more than 170,800 t CO

2

-e over 40 years. The project abatement continues to increase over the reporting period.

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.

Table 9 Projected carbon abatements over 40 years

Reporting Period Planted Area

(ha)

Standing

Carbon Stock

(tonnes C)

Project

Abatement

(tonnes CO

2

-e)

Over Reporting

Period

Minus “Risk of

Reversal

Buffer” (5%)

(tonnes CO

2

-e)

Jul 2010 – Jun 2015 125

Jun 2015 – May 2020 250

May 2020 – Apr 2025 375

Apr 2025 – Mar 2030 500

Mar 2030 – Feb 2035 625

Feb 2035 – Jan 2040 750

Jan 2040 – Dec 2044 843

Dec 2044 – Nov 2049 843

137

1813

5967

12190

19954

28892

38721

49058

501

6147

15231

22818

28469

32774

36037

37903

476

5840

14469

21677

27046

31135

34235

36008

Total 843 49058 179879 170885


9.

Cost/benefit analysis

9.1

Costs

9.1.1

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 an afforestation 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.

Table 10 Range of reforestation project costs

Cost Group

Setting up, planning and managing the project

Site preparation

Description Range of Cost Types

Legal, audit and planning costs of setting up, registering and maintaining a scheme

Costs associated with preparing the site for planting

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 subbies, employment), insurance.

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.


Cost Group Description

Site establishment Costs associated with planting the site

Range of Cost Types

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.

Weed control, fire prevention (slashing, access), insurance premiums.

Site maintenance and protection

Keeping records and quantifying carbon

Costs associated with maintaining the plantings

Ongoing costs associated with maintaining the scheme

Providing reports Periodic reports required for submission to the

Regulator

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.

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

Registration of

Carbon Right

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

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)

Legal contracts for sale of

ACCUs

Notification of area adjustment

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

Preparation of employment and supply contracts

Estimate – legal fees will vary depending on number of contractors and supply contracts to be negotiated

Notification of Administrator of new planting areas – adjustment advice can be completed by farm manager

Unknown

$15,000

$5,000

-


Activity Item Assumptions Amount

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

Verification and report for subsequent reporting period

Seedling cost

Tree guards

Prepared on a five yearly basis

Costs are estimated for an external consultant – where standardisation of systems and reporting can be improved this cost may be able to be reduced

Seedling cost is estimated at $0.80 seedling.

Seedling stocking is 800 stems/ha

Current costs for tree guards are approximately $2.50 per seedling (three stakes with plastic cover). However quotations identified that guards with stakes could be supplied to Heywood for approximately half this price ($1.15 per seedling).

Seed stocking is 800 stems/ha.

Planting

Weed control

Annual maintenance

Risk mitigation

$5,000

$5,000

$640/ha

$920/ha

Currently planting is undertaken by volunteers and costs identified are volunteer supervision costs ($18,000 annually - $720/ha). If the volunteering component ceased the supervision costs can be transferred to planting costs, and at $720/ha, would be at the mid to upper end of planting costs. Note: supervision costs are currently externally funded for the next four years.

Plantings costs do 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.

$720/ha

No specific weed control in relation to the environmental plantings is identified.

-

No annual maintenance costs specifically for the activity are identified. Ongoing routine maintenance work will occur outside the project areas

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 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 CO

2

-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 CO

2

-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 CO

2

-e.

– The high price scenario assumes a nominal domestic starting price of $30/t CO

2

-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 CO

2

-e.

The projected carbon prices in 2010 dollars under each of the two Treasury scenarios are shown in Figure

10. 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 10 Treasury modelling of future carbon price (2010 $/t CO

2

-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;

 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 Net Present Value

The net economic benefits of the proposed reforestation project have been calculated using an analysis of the Net Present Value (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 B). 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).

The net economic benefit of the proposed reforestation project 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 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 modelling options, then the NPV will be positive. At just under $3 million, the NPV assuming the high price scenario will be approximately three times the NPV assuming the core policy price scenario.

Table 12 Net economic benefit under different carbon price scenarios

Carbon Price Scenario

$23 / tonne

Core policy

High price


$ - 128,323

$ 1,007,988

$ 2,928,034

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.

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%, the

project would generate a positive NPV under all three price scenarios (Table 13). 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

$23/tonne

Core policy

High price

5% Discount Rate

$ 93,772

$ 2,397,609

$ 6,113,931

7.5% Discount Rate 10% Discount Rate

$ - 128,323

$ 1,007,988

$ 2,928,034

$ - 216,231

$ 372,926

$ 1,422,303

Given the long time period over which it is proposed that the trees are planted, the establishment costs would be expected to have a fairly significant impact on the feasibility of the project. The assumption that it will be necessary to use tree guards around the seedlings, for example, adds $23,000 to the annual establishment costs. If the decision is taken that tree guards are not required, then the NPV under all three

price scenarios would be positive (Table 14). However tree losses may be greater and if that is the case,

the amount of carbon sequestered would be less.

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 the NPV under all three price scenarios would increase by almost $700,000. For the high price scenario that represents an increase of 24%, while for the core policy price scenario the increase would be almost 70%.

Table 14 Sensitivity analysis of NPV to establishment costs

Carbon Price Scenario Net Present value

$23/tonne

With Establishment

Costs

$ - 128,323

Without Tree Guards Without Any


$ 151,564 $ 565,525

Core policy

High price

$ 1,007,988

$ 2,928,034

$ 1,287,875

$ 3,207,921

$ 1,701,836

$ 3,621,882

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

little difference to the NPV under any of the price scenarios (Table 15).

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.


Table 15 Sensitivity analysis of NPV to up front transaction costs

Carbon Price Scenario Net Present Value

With Up Front Transaction Costs Without Any Up Front


$23/tonne

Core policy

High price

$ - 128,323

$ 1,007,988

$ 2,928,034

$ - 109,719

$ 1,026,592

$ 2,946,638

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.

These results 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 (particularly at the lower carbon price scenarios), but not very sensitive to the estimate of up-front transaction costs.


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 4.5.1, there have been a number of small bushfires in the vicinity of the project area over the last 10 years, and some of the existing plantings were impacted by fire in 2006. The likelihood of the CFI reforestation project plantings being affected by fire at some stage over the next 40 years is therefore fairly high, but the severity of the impact will depend on when that fire eventuates.


Table 16 General reforestation project risk factors

Risk Factor

Carbon price

Climate change

Growth model for species

Landscape variability

Seed supply

Propagation knowledge

Propagation time

Comment

Future carbon price is uncertain

Commercial Impact Likelihood

Investment decision

Potential impacts of climate change on tree survival/growth rates

Carbon yield

Environmental planting species for the proposed planting area may have a low default carbon yield

Carbon yield

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

Availability of seed supply, collector or storage option for the desired local species

Scale of planting

Success of propagating local species easily, and if it has been completed previously

Time it takes to grow local seedlings

The strike rate for local seeds to establish

Seedling cost

Seedling cost

Seedling cost

Likely

– as carbon sequestered will be sold in a free market

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

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

Insignificant to minor

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

Severity

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 Propagation efficiency

Establishment

(planting) techniques

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)

Establishment cost Insignificant – the property and surrounding area has been the subject of previous successful mixed species tree planting projects

Insignificant


Risk Factor

Planting density growth

Drought

Pests

Frost

Wind

Fire

Labour source

Comment

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

Commercial Impact Likelihood

Establishment cost Unlikely – stocking rates specified are based on the results of previous tree planting projects

Severity

Insignificant

Short term drought may impact on seedlings, while longer term hydrological drought may result in widespread stand mortality in mature stands

Delivery risk

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

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 – possibly some localised or single tree mortality

Minor

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 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

Minor – may result in single tree or partial stand mortality though in most instances tree recovery will occur

Windthrow is a significant damaging agent for planted forests

Delivery risk / replant cost 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

Minor –generally localised and single tree

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.

Delivery risk / replant cost 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

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

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 Unlikely – strong owner interest in positive project outcomes

Minor

* Adapted from: Chris Mitchell and Richard Harper presentation to ABARE conference 2011 “Status and prospects of carbon sink forestry in Australia”


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.

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 CO

2

-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

Reporting Period Standing

Carbon Stock

(tonnes C)

Jul 2010 – Jun 2015 137

Jun 2015 – May 2020 1813

May 2020 – Apr 2025 5967

Apr 2025 – Mar 2030 12190

Mar 2030 – Feb 2035 19954

Feb 2035 – Jan 2040 28892

Jan 2040 – Dec 2044 38721

Dec 2044 – Nov 2049 49058

Tonnes CO

501

6654

21898

44737

73232

106035

142105

180043

2

-e Value (Assuming

$23/tonnes CO

$11524

$153039

$503663

$1028945

$1684331

$2438811

$3268415

$4140978

2

-e)

Insurance

Premium ($/yr)

$86

$1148

$3777

$7717

$12632

$18291

$24513

$31057

When these insurance premiums were added as a cost item to the NPV spreadsheet the impact was to reduce the NPV by $44,438, from -$128,323 to -$172,761 . 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.


11.

Conclusion

The Gunditj Mirring properties are located within the Green Triangle, where plantation forestry is a traditional land use due to the favourable conditions for growing trees. Within the properties it is possible to identify a total of 843 ha on which mixed species environmental plantings could be established. These areas are mainly within the stony country which means that the seedlings would have to be hand planted, but given their location they would still be expected to have reasonable growth rates and hence carbon sequestration potential. Such plantings would continue the current process of establishing annual plantings of approximately 25 ha.

It would therefore be physically possible to establish a reforestation project on the properties which would meet the criteria for inclusion in the CFI. Plantings similar to those proposed in this feasibility study have been undertaken on the properties for a number of years, which indicates that the resources and skills available to establish and manage such plantings are also readily available. Specific skills relating to the set up and management of a carbon project do not currently exist within Gunditj Mirring but the organisation has indicated a willingness to increase capacity in these areas.

The potential feasibility of the project has been assessed on the basis of whether or not the costs of the project 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

$23/tonne

Core policy


With All Costs

$ - 128,323

$ 1,007,988

Without Up Front


$ - 109,719

$ 1,026,592

Without


$ 565,525

$ 1,701,836

High price $ 2,928,034 $ 2,946,638 $ 3,621,882

As shown in Table 18, the estimate of NPV is particularly sensitive to the estimate of the future carbon

price, but 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 the project will be negative. Under this scenario, the project is predicted to receive a return from the sale of ACCUs of just under $4 million, with total costs over the same period of just under $2 million. The reason the NPV is negative is that the planting is assumed to occur over 34 years, with planting costs of $57,000 per year for that period ($2,280/ha). Over that same period, the total amount of carbon sequestered is gradually increasing, with 36,000 tonnes of CO

2

-e sequestered over the final reporting period (2044-2049) and available to be sold, compared to just 475 tonnes in the first reporting period (2010-2015). Costs are therefore relatively steady across the whole 40 year period, whereas returns become significantly higher towards the end of that period.

If it is assumed that the carbon price will increase steadily over 40 years in line with Treasury modelling, then the NPV will be positive. Under both the core policy and high price scenarios, the costs will remain steady over time but the returns will increase significantly towards the end of the project as greater amounts of carbon are sequestered and available to be sold and the price per tonne is also much higher than at the beginning of the project.


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.

It may also be possible for Gunditj Mirring 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, however as shown in Table 18, removing all these

costs made very little difference to the NPV under any of the three carbon price scenarios. The NPV remained negative for the $23/tonne scenario and positive for the other two scenarios and of the same order of magnitude as if the transaction costs were included.

The NPV was however, found to be quite sensitive to the estimate of establishment costs. Currently Caring for our Country and Biolink provide funding which enables the tree planting to occur on the Gunditj Mirring properties. If long term funding could be sourced through private, philanthropic or public sector investment to cover all the establishment costs, then this would significantly increase the NPV under all three pricing scenarios and even the $23/tonne scenario would generate a positive NPV.

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 spe cific 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 Gunditj Mirring 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 11). 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 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 Gunditj Mirring, in order to become the project proponent but in return would accept all the project obligations and risk (Option 2 in

Figure 11).

Alternatively, Gunditj Mirring 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 Gunditj Mirring would still receive the ACCUs and be

responsible for complying with scheme obligations (Option 3 in Figure 11). 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.


Figure 11 Project structure options

In conclusion, the proposed CFI reforestation project would certainly enable Gunditj Mirring to meet its environmental objective by contributing to Australia’s national environmental accounts. It would also potentially enable the organisation to meet its social objectives:

 capacity development and participation of Gunditjmara Traditional Owners (and native title holders) and the wider Aboriginal and Torres Strait Islander community living in the far southwest of Victoria in a carbon-based commercial business;

 provision of enterprise and employment opportunities for Gunditjmara, Aboriginal and Torres Strait

Islander peoples in the far southwest of Victoria; and

 contribution towards Closing the Gap targets.

However, whether it would enable the organisation to achieve its economic objective of ‘an optimized revenue and a profit from the carbon market to sustain our ‘caring for country’ obligations as Gunditjmara people’ is far less certain, since this will be highly dependent on the future carbon price.

It is however worth noting that this feasibility study has focussed on opportunities under the CFI reforestation methodology. As additional CFI offset methodologies are approved, further opportunities for developing a carbon offset project on the Gunditj Mirring properties may arise.


12.

References

BOM Bureau of Meteorology. 2011a. Climate statistics for Australian locations – Hamilton. http://www.bom.gov.au/climate/averages/tables/cw_090044.shtml. Site accessed 20/4/11 .

BOM Bureau of Meteorology. 2011b. Australian climate variability & change - Trend maps. http://reg.bom.gov.au/cgi-bin/climate/change/trendmaps.cgi. Site accessed 14/4/11

BOM Bureau of Meteorology. 2011c. Climate statistics for Australian locations – Portland. http://www.bom.gov.au/climate/averages/tables/cw_090070.shtml. Site accessed 20/4/11 .

Context. 1993. Lake Condah Heritage Management Plan and Strategy. A Report prepared by Context Pty

Ltd in associated with Ecological Horticulture [Ecology Australia], Neville Rosengren and the Landscape

Advisory Service. (Aboriginal Affairs Victoria and Kerrup Jmara Elders Aboriginal Corporation: Melbourne).

Commonwealth of Australia. 2006. Handbook of Cost Benefit Analysis, January.

DCCEE Department of Climate Change and Energy Efficiency. 2011. Carbon Farming Initiative Draft

Methodology for Environmental Planting Version: 0.5) http://www.climatechange.gov.au/government/initiatives/carbon-farming-initative/methodologydevelopment/methodologies-under-consideration/~/media/publications/carbon-farminginitative/reforestation-permanent-clean-pdf.pdf. Site accessed 20/10/2011 .

DSE Department of Sustainability and Environment. 2011. Causes of Bushfire. http://www.dse.vic.gov.au/fire-and-other-emergencies/fire-management/causes-of-bushfire . Site accessed

28/4/11.

DPI Department of Primary Industries. 2011a. GeoVic. State Government of Victoria. http://mapshare2.dse.vic.gov.au/MapShare2EXT/imf.jsp?site=geovic . Site accessed 28/4/11.

DPI Department of Primary Industries. 2011b. Forest Explorer. State Government of Victoria. http://nremap-sc.nre.vic.gov.au/MapShare.v2/imf.jsp?site=forestexplorer . Site accessed 29/4/11.

DSE Department of Sustainability and Environment. 2008. Climate Change in the Glenelg Hopkins Region.

DSE Department of Sustainability and Environment. 2010. Fire Operations Plan: Far South West Districts.

The State of Victoria. http://www.dse.vic.gov.au/fire-and-other-emergencies/planned-burning-anintroduction/fire-operations-plans-approved-october-2010 . Site accessed 23/5/11.

Ecology Australia Pty Ltd. 2007. Mt Eccles Lava Flow Botanical Management Plan: Field Survey and

Analysis. Project 06-39. Prepared for Winda Mara Aboriginal Corporation.

GHD. 2011. Analysis of the Demand and Supply of an Indigenous Carbon Market in Australia. A Report for the Australian Department of Sustainability, Environment, Water, Population and Communities, Canberra

Glenelg Hopkins CMA. 2006. Glenelg Hopkins Native Vegetation Plan.

Gordon Mansfield. 2011. Personal Communication 18 May 2011. Operations Manager, Gunns Forest

Products, Mount Gambier.

Gunditj Mirring Case Study Project EOI. 2010. Supporting Indigenous Participation in Carbon Markets.

Submitted to Sue Salvin, GHD, 2010.

Matthew Butt. 2011. Personal Communication 23 May 2011. Land Manager for Gunditj Mirring properties.

Parliament of the Commonwealth of Australia. Senate. 2011. Replacement Explanatory Memorandum.

Carbon Credits (Carbon Farming Initiative) Bill 2011.


Robinson, CJ, Wallington, T, Gerrard, E, Griggs, D, Walker, D, and May, T. 2011. Draft Indigenous cobenefit criteria and requirements to inform the development of Australia’s Carbon Farming Initiative. A report for the Australia’s Rural Industry Research Development Corporation and Australian Government

Department of Department of Sustainability, Environment, Water, Population and Communities, Canberra.

Southern Border Fire Co-ordination Association. 2008. Guidelines for co-operation between Victorian and

South Australian Organisations for Fire Suppression in the Southern Border Area (South of Naracoorte),

Final Version, December 2008.

The Forest Owners Conference (FOC). 2003. Forest Owners Conference Plantation Design Guidelines.

The Forest Owners Conference.

The Treasury, 2011. Strong Growth, Low Pollution, Modelling a Carbon Price.


Appendix A

Property planting plans

Appendix B

NPV analysis

GHD

133 Castlereagh St Sydney NSW 2000

-

T: 2 9239 7100 F: 2 9239 7199 E: sydmail@ghd.com.au

© GHD 2012

This document is and shall remain the property of GHD. The document may only be used for the purpose for which it was commissioned and in accordance with the Terms of Engagement for the commission.

Unauthorised use of this document in any form whatsoever is prohibited.

Document Status

Rev

No.

1

2

3

Author

D Adshead

D Adshead

S Salvin

Reviewer

Name

S Salvin

S Salvin

P de Mar

Signature

Approved for Issue

Name

P de Mar

Signature

P de Mar

E Ray

Date

30/11/11

20/12/11

2/2/2012

4 S Salvin E Ray E Ray 12/3/2012

www.ghd.com