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By the Queensland Government
Natural capital investment strategies are offering the chance to generate additional income — but is there a cost to agricultural production?
Investors are seeing an opportunity for additional profitability beyond farm production returns and capitalised asset values. Natural capital revenues are creating additional investment returns providing the cash-flow to help properties put in more efficient infrastructure to boost the productivity uplift and substantially improve margins.
Queensland — known for its vast landscapes, significant biodiversity and world-class agricultural systems is becoming the testing ground for natural capital investment strategies, that can cushioning some of the extreme impacts around seasonality, market shocks, or weather. More than 80% of Queensland (138 million hectares) is used for primary production, co-existing with natural ecosystems — particularly in the grazing sector’s open woodlands and natural grasslands.
Natural capital is an important factor of production – providing whole-of-property benefits to the bottom line. ‘Farming for the Future’ has collected data in some Australian regions to quantify the relationship between on-farm natural capital and farm productivity and profitability in the livestock industry, creating evidence linking management of natural capital to business performance.
Investment into environmental markets
The sequestration of carbon is one way to generate new income from a property. The environmental market for Australian Carbon Credit Units (ACCUs) incentivises carbon sequestration, with the increased demand for ACCUs driven by large emitters required to reduce annual baseline emissions by 4.9 percent each year until 2030. The Australian Government’s Clean Energy Regulator ensures that projects are registered and measures of carbon abatement are verified. Acceptable ‘methods’ provide integrity to the process by ensuring a project delivers the intended outcome.
Supply is also forecast to increase, with ACCU project registrations showing an increase of 157 percent from 2020-2024 (World Bank Carbon Pricing Dashboard).
For the astute agribusiness, there is an opportunity that can be scaled according to farm size and growth strategy, though the opportunity requires a balanced alignment between land used for production and land used to generate credits, or identifying land that can do both.
The long time periods associated with carbon sequestration projects — up to 100 years — need careful consideration. The ‘locking up’ of land assets to generate carbon credits becomes a trade-off between financial incentive from environmental markets and the ability to continue supply to meet market demand for food and fibre. If there is a limit on profitable growth, it has not been fully explored.
Beyond carbon, Reef credits and Cassowary credits also certify farm improvements that deliver an environmental outcome, such as reducing nutrient or sediment loads to the Reef or increasing rainforest biodiversity in Far North Queensland. The Nature Repair Market is another emerging market for national biodiversity, designed to deliver high-integrity biodiversity outcomes and increase investment in nature.
Is there a ‘sweet spot’?
The emerging voluntary markets have the potential to open up new opportunities for investment into primary industries that work in sync with production, not against it to achieve the ultimate ‘sweet spot’.
While positive correlation has been noted, there is likely limits that will vary across individual agribusinesses and value achieved from asset sale at the end of the investment. Opportunities to invest in natural capital may deliver win-win outcomes for production and the environment, making Queensland very attractive for investment at scale.
There is significant investment occurring. A $250 million investment into the Meldora platform is a strategic partnership between Canada’s La Caisse and Australia’s Clean Energy Finance Corporation (CEFC), with investment managed through Gunn Agri Partners. Sustainable agriculture production is mixed with large-scale environmental plantings to generate ACCUs. The partnership aims to demonstrate how large-scale regenerative land management can improve agricultural productivity even when the production footprint is reduced, at the same time generating income to offset the project costs for landscape restoration.
Pastoral Partners is another example, with a vision for responsible production across 12 properties, consisting of 150,000 hectares. They’ve invested in native forest regeneration efforts to support the cattle grazing business, with a focus on productivity by transforming grazing assets and improving infrastructure, with the aim to sequester large amounts of carbon, increase biodiversity and unlock potential for more sustainable production.
Productivity improvements have been predicted to outweigh losses in production. When trees regrow, some reduced stocking may occur through limiting pasture availability, but the benefits to farm sustainability and resilience are potentially immense.
Sustainable finance and farm values
Natural capital is fast becoming a pillar for sustainable finance, ensuring capital is genuinely flowing to economic activities aligned to ‘green’ outcomes. Capital allocations prioritised to deliver returns, resilience and sustainability all help to reduce environmental risk while also being aligned to global objectives.
By valuing the environment through the balance sheet, projects can be more easily compared. Australia’s Sustainable Finance Taxonomy is one tool that helps investors by using a science-based framework to classify activities for their contribution to environmental sustainability.
The Australian story of upward appreciating land values has often augmented the equity available to agribusinesses as part of their enterprise. However, it is yet to be seen how land values will perform once land is committed to long-term environmental stewardship over the next few decades.
Queensland is looking forward to welcoming investors and delegates to Brisbane to further discuss these concepts and others at the Global AgInvesting Australia 8-11 June 2026.
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