Market Instruments and the Protection of Natural Resources
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Market Instruments and the Protection of Natural Resources

  • Critical Issues in Environmental Taxation series

Edited by Natalie P. Stoianoff, Larry Kreiser, Bill Butcher, Janet E. Milne and Hope Ashiabor

Only through a concerted global effort can we protect our natural resources, save our precious natural environment, and indeed our future. But pressures on natural resources come from many directions such as overuse, mismanagement and contamination. This much-needed book reviews and evaluates the use of market and fiscal instruments in protecting our natural resources, from rural to marine environments. Market instruments that are designed to protect the global atmosphere are evaluated, along with carbon instruments and environmental tax incentives. Meanwhile, consideration is given to shifting the tax burden to achieve environmentally responsible outcomes, balancing sustainable use and natural resource protection, and protecting water resources.
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Chapter 3: Sowing the seed of change: Why Australia’s land sector needs a carbon price to encourage mitigation of GHG emissions and promote sustainable land use

Vanessa Johnston

Extract

According to Australia’s most recent National Greenhouse Gas Inventory, greenhouse gas (‘GHG’) emissions arising from agricultural activities, forestry and land use change (‘land sector’) accounted for almost 15% of Australia’s GHG emissions in 2013, being the third largest contribution of any economic sector. More than half of Australia’s total land area is used for agricultural or forestry purposes. In light of the legal obligations that Australia has under the Kyoto Protocol to mitigate GHG emissions by 2% below 2000 levels by 2020, it is important that entities in Australia’s land sector are encouraged to mitigate GHG emissions that arise from their activities. The ‘Emissions Reduction Fund’ (‘ERF’) is intended to encourage mitigation of GHG emissions in all economic sectors, as the flagship measure of Australia’s current climate change policy, the ‘Direct Action Plan’. Projects that mitigate land sector GHG emissions may also promote sustainable land use practices that reduce human-induced degradation or disturbance of land in relation to water, soil, biodiversity, native vegetation, invasive species or diseases. As far as possible, land sector entities should be encouraged to implement emissions mitigation projects that also improve the sustainability of land use. Between 1 July 2014 and 30 June 2017, the Government will distribute approximately $2.55 billion from the ERF as grants paid to entities that voluntarily undertake eligible GHG emissions mitigation projects. More specifically, these grants are paid to entities in exchange for GHG emissions ‘savings’, each tonne of which is represented by an Australian Carbon Credit Unit (‘carbon credit’). To date, the Australian Government has paid an average of $13.10 for each carbon credit purchased from GHG emitters. The process of creating and exchanging carbon credits is governed by the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (‘Carbon Credits Act’).

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