Journal / Issues / Volume 2 / Volume 2, Issue 2 / New Economic Opportunities in Northern Australia: A Case Study of Carbon Economy

What are the current economic development opportunities in Northern Australia

Northern Australia offers unique and rich natural resources including an undisturbed 1.9km² swath of savannas in the North (Image 1). Currently, about 90% of the landscape is used for beef production, mostly under unmodified pastures, with much of the remaining land reserved for  Indigenous and conservation uses (Fig. 1). However, the sustainability of the Northern beef businesses is questionable as typical enterprises, comprising 75% of the total, are performing poorly with <0.2% operational profitability (except top 25% enterprises with large cattle numbers of >5400).^[1] Moreover, there are substantial environmental impacts of cattle grazing on land, water and biodiversity resources.^[2] If the economic costs of these impacts are accounted for, then the total costs of operating a beef business in the North will far outweigh the financial returns—for example, Greenhouse Gas (GHG) Emissions alone from an average pastoral property cost about $97,000/yr.^[3]

Figure 1: Land uses in northern Australia (courtesy of Andrew Edwards)

Under the ‘Developing the North’ agenda proposed by the Australian Government in 2015,^[4] the key focus is on making Northern Australia an economic powerhouse through expanding agricultural (especially pastoral and cropping), mining, and tourism sectors. This expansion largely aims at developing broad-scale models of production. That agenda follows a typical utilitarian economic approach to enhance outputs and exports mainly for the Asia-Pacific region, with little appreciation for local geography including soil and water resources, the value of unique natural and cultural assets, and related Indigenous peoples’ knowledge, aspirations and rights to land.^[5]

A significant part of the Northern Australian landscape is managed by the Indigenous people. As at June 2019, 80% of the region comprises legally recognised Indigenous interests in land, most of which is under Native Title, Aboriginal Land Rights Act (ALRA 1976), and Indigenous Land Use Agreement (ILUA) arrangements that recognise peoples’ ongoing affiliation with their traditional estates (Fig. 2). Moreover, about 650 rangers work on country, particularly in the North, through Commonwealth programs such as Working on Country (WoC) and Indigenous Protected Area (IPA). Despite legal entitlements and knowledge of working ‘on country,’ the current legal arrangements offer few economic property rights for the local people to develop their Indigenous estates.

Figure 2: Conservation estate in northern Australia under CAPAD (Collaborative Australian Protected Area Database 2016), and Indigenous land entitlements – Aboriginal land under Aboriginal Land Rights (Northern Territory) Act (1976), Native Titles determinations and Indigenous Land Use Agreements as on 20 July 2018, and distribution of discrete Indigenous communities (using ABS census 2016).

Conversely, formal conservation estate (e.g. National Parks, Nature Reserves, etc.) comprises 20% of the total area (~0.5m km²) of land in Northern Australia (Fig. 3). Given the current high rates of decline of natural resources such as biodiversity, soil, and water, and the unprecedented rate of climate change across the globe, preserving these resources is a necessity to date.^[6] Importantly, indigenously managed lands are considered best for showing least declines with little deforestation or exploitation.^[7] These lands are the least modified and so offer unique opportunities for innovative Ecosystem Services (ES)-based enterprises for local, regional and global markets.^[8] Most importantly, these lands deliver a range of ES not just for the locals but also for regional and global human populations, however such ES contributions are scarcely recognized or rewarded to date.^[9]

Figure 3: Savanna Burning projects on Indigenous lands as on 22 August 2018.

Acknowledging the meagre economic opportunities, very limited land and water resources, and poor socio-economic status of Indigenous communities across the North,^[10] it is important to consider alternative land-based economic opportunities that suit Indigenous capabilities and the local geography. Developing mechanisms such as Payments for Ecosystem Services (PES), where the ES delivered from managing Indigenous lands are valued and acknowledged by the public or beneficiaries, offer feasible alternative pathways for developing the North.^[11] It also makes economic sense to utilise Indigenous capabilities in order to manage the vast and diverse Northern landscape while saving substantial welfare costs for the government.^[12] Moreover, there is a growing global demand to value ecosystems and their services with a greater recognition of the role of ES for people’s wellbeing.

Indigenous management of land delivers conservation benefits, contributing to the well-being of Australian public

Australia is a signatory to a number of international agreements on biodiversity, including the Convention on Biological Diversity (CBD), Rio Earth Summit, the Intergovernmental Platform on Biodiversity and Ecosystem Services (IPBES) and others, with a commitment to protect 17% of the land (and 10% of the sea). This commitment informs our National Reserve System which aims to protect the representative areas of all diverse bioregions across the country.

Currently, the IPAs (voluntarily declared conservation lands) constitute 45% of that National Reserve System, covering a total area of 67 million ha.^[13] IPAs are typically registered under International Union for Conservation of Nature (IUCN) category 5 and 6, allowing conservation and other sustainable use for social, cultural and economic benefits to Indigenous communities. However, compared to National Parks and Reserves, the expenditure for managing the IPAs is far less:  $0.07/ha/yr.^[14]

Image 1: Savanna country of conservation significance in northern Australia.

Importantly, IPAs and other indigenously managed lands deliver a range of ES for being managed sustainably and used conservatively without much exposure to modern practices such as the introduction of new pastures or crops, mechanisation, or others. The key services from these lands include the abatement of GHG emissions, particularly from prescribed burning on Indigenous estates applying traditional knowledge and skills; protection of biodiversity, soil, and water resources; and socio-cultural and spiritual values for the locals. Moreover, well-maintained Indigenous lands further contribute to maintaining the flow of ES from freshwater and marine systems. Sangha et al. (2019) identified five key services: livelihood, social, cultural, spiritual value, and peoples’ capabilities. These are generic among many Indigenous societies across the globe who manage their natural resources and thus benefit the wider public.^[15]

Typically, the provision of ES is largely taken for granted, with little or no financial support for Indigenous people who manage those lands. There are some exceptions such as the carbon economy for GHG emissions abatement under the Emission Reduction Fund (ERF) scheme in Australia; REDD+ (Reduced Emissions from Deforestation and forest Degradation) by the international Forest Carbon Partnership Facility supporting GHG emissions abatement and sequestration in tropical countries; biodiversity credits; and a few other international programs. These programs indeed create new opportunities through supporting ES economies. An example of such an economy from the North is discussed below.

Carbon economies in Northern Australia

Northern Australia is characterized by frequent fires, especially extensive wildfires in the late dry season that contribute up to 4% of the national inventory.^[16] In areas receiving >600 mm annual rainfall, these extensive fires currently recur at frequencies greater than once every two years.^[17] This recurrent fire problem has resulted in novel economic opportunities becoming available in recent years through applying traditional knowledge on prescribed burning in the early dry season (Image 2). This prescribed fire management has led to the development of market-based, landscape-scale, ‘savanna burning’ methodologies.^[18] Under these methodologies, land owners or managers in the North can register projects to abate GHG emissions and claim Australian Carbon Credit Units (ACCUs; abatement of 1t CO_2-e=1ACCU). Importantly, savanna burning projects serve as an illustration of the regional potential of the ES industry sector generally, and especially for remote Indigenous land owners and managers.

Image 2: Prescribed burning in Arnhem Land by the Indigenous rangers (Photo courtesy Jimmy Morrison)

As at June 2019, there are 74 registered and 45 contracted savanna burning projects across Northern Australia (above the 600mm rainfall isohyet) that collectively abate 4.452m tonnes of GHG emissions (through contracted projects). These deliver an estimate of AUD 62million worth of economic benefits (applying a carbon price of $13.87/t CO_2-e from December 2018 ERF auction) to the land managers/landholders (Fig. 3). These savanna projects set a pioneer example of an emerging carbon economy.

This new economy is currently operating on an approximately 342,000 km² area, covering both Indigenous and non-Indigenous estates across Northern Australia (Fig. 3). Particularly for Indigenous estates, it supports 31 projects on Native Title land, 13 on ALRA (Aboriginal Land Rights Act 1976 in the NT), and 46 under land use agreements (ILUAs) with Indigenous Native Title holders that collectively cover ~180,000 km² and abate about 2.8million tonnes of GHG emissions annually. For Indigenous stakeholders alone, prescribed fire management generates approximately $38 million (using $13.87/t CO_2-e) per annum.

Moreover, the carbon economy delivers many additional socio-economic benefits, including improved health, local jobs and economies, promotion of cultural learning and ceremonies, and reduced domestic violence and incarceration.^[19] Likewise, the conservation estate also offers many similar advantages for employing ~650 Indigenous full-time equivalent positions, mostly through Commonwealth commitments to WoC and IPA funding programs to service the conservation sector.^[20]

Conclusion

Acknowledging that our current ecosystems are under threat, and maintaining ES is a challenge across the globe (IPBES 2019), it is essential to recognise the role of Indigenous communities for ensuring the delivery of ES to maintain and enhance people’s well-being. This paper presents an overview of existing and emerging unconventional economic opportunities to promote the sustainable, inclusive and innovative development of the North by acknowledging and harnessing Indigenous cultural strengths, capabilities and knowledges to take care of Northern estates.

As carbon and conservation economies demonstrate, market-based ES enterprises also offer a multitude of socio-cultural benefits. It is important to develop a diversified policy agenda that supports a sustainable and culturally appropriate land sector economy befitting the capabilities and aspirations of the local people and geography of the region.

Footnotes

• ^[1] Holmes, McLean & Banks, The Australian Beef Report (Bush AgriBusiness Pty Ltd., 2017); Russell-Smith & Sangha, ‘Emerging opportunities for developing a diversified land sector economy in Australia’s northern savannas’ (2018) 40 The Rangeland Journal 315-330.
• ^[2] Russell-Smith, James, Pedersen & Sangha, Sustainable Land Sector Development in Northern Australia: Indigenous rights, aspirations, and cultural responsibilities (Florida: CRC Press, 2019).
• ^[3] Russell-Smith & Sangha, above n 1
• ^[4] Australian Government, Our North, Our Future: White paper on developing Northern Australia (2015).
• ^[5] For details, see critique by Chambers et al, ‘Australia’s north, Australia’s future: A vision and strategy for sustainable economic, ecological and social prosperity in northern Australia’ (2018) 5:3 Asia & the Pacific Policy Studies 615-640.
• ^[6] Intergovernmental Platform on Biodiversity and Ecosystem Services, Summary for policymakers of the global assessment report on biodiversity and ecosystem services (2019).
• ^[7] Reytar & Veit ‘5 Maps Show How Important Indigenous Peoples and Local Communities Are to the Environment’ (2017) World Resources Institute.
• ^[8] Chambers et al, above n 5; Russell-Smith, Sangha, Costanza, Kubiszewski & Edwards, ‘Towards a Sustainable, Diversified Land Sector Economy for North Australia,’ in Russell-Smith, James, Pedersen & Sangha (eds), Sustainable Land Sector Development in Northern Australia: Indigenous rights, aspirations and cultural responsibilities (Florida: CRC Press, 2019) 85-132.
• ^[9] Reytar & Veit, above n 7.; Jacquelin-Andersen, The Indigenous World (Copenhagen: International Working Group for Indigenous Affairs, 2018) 640.
• ^[10] Russell-Smith, Sangha, Costanza, Kubiszewski & Edwards, above n 8.
• ^[11] Russell-Smith & Sangha, above n 1.
• ^[12] Sangha, Gerritsen & Russell-Smith ‘Repurposing government expenditure for enhancing Indigenous well-being in Australia: A scenario analysis for a new paradigm’ (2019) 63 Economic Analysis and Policy 75-91; Gerritsen, Whitehead & Stoeckl ‘Economic development across the North: historical and current context of possible alternatives’ in Russell-Smith, Pedersen, James & Sangha (eds) Sustainable land sector development in Northern Australia: Indigenous rights, aspirations, and cultural responsibilities (Florida: CRC Publishing, 2019).
• ^[13] Department of the Prime Minister and Cabinet, Indigenous Protected Areas  (2018).
• ^[14] Department of the Prime Minister and Cabinet, Indigenous Rangers – ‘Working on Country’ program (2016); see also the 2006-2015 budgets.
• ^[15] Sangha, Russell-Smith & Costanza, ‘Mainstreaming indigenous and local communities’ connections with nature for policy decision-making’ (2019) 19 Global Ecology and Conservation 1-13.
• ^[16] Russell-Smith, Sangha, Costanza, Kubiszewski & Edwards, above n 8.
• ^[17] Felderhof & Gillieson, ‘Comparison of fire patterns and fire frequency in two tropical savanna biomes’ (2006) 31 Austral Ecology 736-746; Edwards, Russell-Smith & Meyer, ‘Contemporary fire regime risks to key ecological assets and processes in north Australian savannas’ (2015) 24:6 International Journal of Wildland Fire 857–870.
• ^[18] For example, the Australian Government Clean Energy Regulator’s Emission Reduction Fund.
• ^[19] Burgess, Johnston, Bowman & Whitehead, ‘Healthy Land: Healthy People? Exploring the health benefits of Indigenous Land Management’ (2005) 29 Australian and New Zealand Journal of Public Health 117-122; Garnett, Sithole, Whitehead, Burgess, Johnston & Lea, ‘Healthy Country, Healthy People: Policy implications of links between indigenous human health and environmental condition in tropical Australia’ (2009) 68:1 Australian Journal of Public Administration 53-66; Hunt, Looking After Country in New South Wales: Two Case Studies of Socioeconomic Benefits for Aboriginal People (Canberra: ANU Centre for Aboriginal Economic Policy Research Working Paper 75, 2010); Social Ventures Australia, Consolidated report on Indigenous Protected Areas following Social Return on Investment analyses (2016); Sangha, Russell-Smith, Morrison, Costanza & Edwards, ‘Challenges for valuing ecosystem services from an Indigenous estate in northern Australia’ (2017) 25 Ecosystem Services 167-178; Sangha, Preece, Villarreal-Rosas, Kegamba, Paudyal, Warmenhoven & Ramakrishnan, ‘An ecosystem services framework to evaluate Indigenous and local peoples’ connections with nature’ (2018) 31 Ecosystem Services 111-125.
• ^[20] Sangha, Russell-Smith & Costanza, above n 15.

Kamaljit K Sangha

Dr. Kamaljit K. Sangha has gained skills and knowledge in a trans-disciplinary field of Ecological Economics over the last 20 years. She has extensively worked with the Indigenous peoples across northern Australia, especially on linking ecosystem services from the rainforests and savannas with the well-being of remote communities. Her work involves assessing the value of ecosystem services/benefits from natural resources to inform policy decision-making, and to enhance our understanding of nature’s role in our daily lives. She is currently working as an Ecological Economist at the Darwin Centre for Bushfire Research, Charles Darwin University, NT. She is author of a book ‘Ways to live in harmony with nature’ published by JoJo Publishing, VIC, in which she outlines how we can comprehend the importance of nature’ services and benefits in our daily living. In 2019, she has co-edited a book on ‘Sustainable Land Sector Development in Northern Australia: Indigenous rights, aspirations and cultural responsibilities’ published by the CRC Press. She has published about ~80 articles in various national and international journals, and conference proceedings.

See all articles by Kamaljit K Sangha

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