Estimating the financial risks of Andropogon gayanus to greenhouse gas abatement projects in northern Australia

Vanessa Adams, Samantha Setterfield

    Research output: Contribution to journalArticleResearchpeer-review

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    Abstract

    Financial mechanisms such as offsets are one strategy to abate greenhouse gas emissions, and the carbon market is expanding with a growing demand for offset products. However, in the case of carbon offsets, if the carbon is released due to intentional or unintentional reversal through environmental events such as fire, the financial liability to replace lost offsets will likely fall on the provider. This liability may have implications for future participation in programmes, but common strategies such as buffer pool and insurance products can be used to minimize this liability. In order for these strategies to be effective, an understanding of the spatial and temporal distributions of expected reversals is needed. We use the case study of savanna burning, an approved greenhouse gas abatement methodology under the Carbon Farming Initiative in Australia, to examine potential risks to carbon markets in northern Australia and quantify the financial risks. We focus our analysis on the threat of Andropogon gayanus (gamba grass) to savanna burning due to its documented impacts of increased fuel loads and altered fire regimes. We assess the spatial and financial extent to which gamba grass poses a risk to savanna burning programmes in northern Australia. We find that 75% of the eligible area for savanna burning is spatially coincident with the high suitability range for gamba grass. Our analysis demonstrates that the presence of gamba grass seriously impacts the financial viability of savanna burning projects. For example, in order to recuperate the annual costs of controlling 1 ha of gamba grass infestation, 290 ha of land must be enrolled in annual carbon abatement credits. Our results show an immediate need to contain gamba grass to its current extent to avoid future spread into large expanses of land, which are currently profitable for savanna burning.
    Original languageEnglish
    Pages (from-to)1-10
    Number of pages10
    JournalEnvironmental Research Letters
    Volume8
    Issue number2
    DOIs
    Publication statusPublished - 2013

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    Andropogon
    Poaceae
    Greenhouse gases
    savanna
    greenhouse gas
    Carbon
    Gases
    grass
    carbon
    liability
    Fires
    Insurance Pools
    market
    Insurance
    Agriculture
    Gas emissions
    temporal distribution
    Grassland
    project
    Buffers

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    title = "Estimating the financial risks of Andropogon gayanus to greenhouse gas abatement projects in northern Australia",
    abstract = "Financial mechanisms such as offsets are one strategy to abate greenhouse gas emissions, and the carbon market is expanding with a growing demand for offset products. However, in the case of carbon offsets, if the carbon is released due to intentional or unintentional reversal through environmental events such as fire, the financial liability to replace lost offsets will likely fall on the provider. This liability may have implications for future participation in programmes, but common strategies such as buffer pool and insurance products can be used to minimize this liability. In order for these strategies to be effective, an understanding of the spatial and temporal distributions of expected reversals is needed. We use the case study of savanna burning, an approved greenhouse gas abatement methodology under the Carbon Farming Initiative in Australia, to examine potential risks to carbon markets in northern Australia and quantify the financial risks. We focus our analysis on the threat of Andropogon gayanus (gamba grass) to savanna burning due to its documented impacts of increased fuel loads and altered fire regimes. We assess the spatial and financial extent to which gamba grass poses a risk to savanna burning programmes in northern Australia. We find that 75{\%} of the eligible area for savanna burning is spatially coincident with the high suitability range for gamba grass. Our analysis demonstrates that the presence of gamba grass seriously impacts the financial viability of savanna burning projects. For example, in order to recuperate the annual costs of controlling 1 ha of gamba grass infestation, 290 ha of land must be enrolled in annual carbon abatement credits. Our results show an immediate need to contain gamba grass to its current extent to avoid future spread into large expanses of land, which are currently profitable for savanna burning.",
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    year = "2013",
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    language = "English",
    volume = "8",
    pages = "1--10",
    journal = "Environmental Research Letters",
    issn = "1748-9326",
    publisher = "Institute of Physics Publishing (IOP Publishing)",
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    Estimating the financial risks of Andropogon gayanus to greenhouse gas abatement projects in northern Australia. / Adams, Vanessa; Setterfield, Samantha.

    In: Environmental Research Letters, Vol. 8, No. 2, 2013, p. 1-10.

    Research output: Contribution to journalArticleResearchpeer-review

    TY - JOUR

    T1 - Estimating the financial risks of Andropogon gayanus to greenhouse gas abatement projects in northern Australia

    AU - Adams, Vanessa

    AU - Setterfield, Samantha

    PY - 2013

    Y1 - 2013

    N2 - Financial mechanisms such as offsets are one strategy to abate greenhouse gas emissions, and the carbon market is expanding with a growing demand for offset products. However, in the case of carbon offsets, if the carbon is released due to intentional or unintentional reversal through environmental events such as fire, the financial liability to replace lost offsets will likely fall on the provider. This liability may have implications for future participation in programmes, but common strategies such as buffer pool and insurance products can be used to minimize this liability. In order for these strategies to be effective, an understanding of the spatial and temporal distributions of expected reversals is needed. We use the case study of savanna burning, an approved greenhouse gas abatement methodology under the Carbon Farming Initiative in Australia, to examine potential risks to carbon markets in northern Australia and quantify the financial risks. We focus our analysis on the threat of Andropogon gayanus (gamba grass) to savanna burning due to its documented impacts of increased fuel loads and altered fire regimes. We assess the spatial and financial extent to which gamba grass poses a risk to savanna burning programmes in northern Australia. We find that 75% of the eligible area for savanna burning is spatially coincident with the high suitability range for gamba grass. Our analysis demonstrates that the presence of gamba grass seriously impacts the financial viability of savanna burning projects. For example, in order to recuperate the annual costs of controlling 1 ha of gamba grass infestation, 290 ha of land must be enrolled in annual carbon abatement credits. Our results show an immediate need to contain gamba grass to its current extent to avoid future spread into large expanses of land, which are currently profitable for savanna burning.

    AB - Financial mechanisms such as offsets are one strategy to abate greenhouse gas emissions, and the carbon market is expanding with a growing demand for offset products. However, in the case of carbon offsets, if the carbon is released due to intentional or unintentional reversal through environmental events such as fire, the financial liability to replace lost offsets will likely fall on the provider. This liability may have implications for future participation in programmes, but common strategies such as buffer pool and insurance products can be used to minimize this liability. In order for these strategies to be effective, an understanding of the spatial and temporal distributions of expected reversals is needed. We use the case study of savanna burning, an approved greenhouse gas abatement methodology under the Carbon Farming Initiative in Australia, to examine potential risks to carbon markets in northern Australia and quantify the financial risks. We focus our analysis on the threat of Andropogon gayanus (gamba grass) to savanna burning due to its documented impacts of increased fuel loads and altered fire regimes. We assess the spatial and financial extent to which gamba grass poses a risk to savanna burning programmes in northern Australia. We find that 75% of the eligible area for savanna burning is spatially coincident with the high suitability range for gamba grass. Our analysis demonstrates that the presence of gamba grass seriously impacts the financial viability of savanna burning projects. For example, in order to recuperate the annual costs of controlling 1 ha of gamba grass infestation, 290 ha of land must be enrolled in annual carbon abatement credits. Our results show an immediate need to contain gamba grass to its current extent to avoid future spread into large expanses of land, which are currently profitable for savanna burning.

    KW - Carbon

    KW - Climate change

    KW - Commerce

    KW - Finance

    KW - Greenhouse gases

    KW - Risk perception

    KW - Risks

    KW - Andropogon gayanus (gamba grass)

    KW - Carbon markets

    KW - exotic grass invasion

    KW - Financial viability

    KW - Fire management

    KW - Greenhouse gas abatements

    KW - Implications for futures

    KW - Spatial and temporal distribution

    KW - Risk assessment

    KW - abatement cost

    KW - cost-benefit analysis

    KW - demand analysis

    KW - emission control

    KW - estimation method

    KW - fire behavior

    KW - fire management

    KW - grass

    KW - greenhouse gas

    KW - market system

    KW - participatory approach

    KW - risk factor

    KW - savanna

    KW - spatiotemporal analysis

    KW - Australia

    KW - Andropogon gayanus

    U2 - 10.1088/1748-9326/8/2/025018

    DO - 10.1088/1748-9326/8/2/025018

    M3 - Article

    VL - 8

    SP - 1

    EP - 10

    JO - Environmental Research Letters

    JF - Environmental Research Letters

    SN - 1748-9326

    IS - 2

    ER -