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Designer policy for carbon and biodiversity co-benefits under global change

Abstract

Carbon payments can help mitigate both climate change and biodiversity decline through the reforestation of agricultural land1. However, to achieve biodiversity co-benefits, carbon payments often require support from other policy mechanisms2 such as regulation3,4, targeting5,6, and complementary incentives7,8. We evaluated 14 policy mechanisms for supplying carbon and biodiversity co-benefits through reforestation of carbon plantings (CP) and environmental plantings (EP) in Australia’s 85.3 Mha agricultural land under global change. The reference policy—uniform payments (bidders are paid the same price) with land-use competition (both CP and EP eligible for payments), targeting carbon—achieved significant carbon sequestration but negligible biodiversity co-benefits. Land-use regulation (only EP eligible) and two additional incentives complementing the reference policy (biodiversity premium, carbon levy) increased biodiversity co-benefits, but mostly inefficiently. Discriminatory payments (bidders are paid their bid price) with land-use competition were efficient, and with multifunctional targeting of both carbon and biodiversity co-benefits increased the biodiversity co-benefits almost 100-fold. Our findings were robust to uncertainty in global outlook, and to key agricultural productivity and land-use adoption assumptions. The results suggest clear policy directions, but careful mechanism design will be key to realising these efficiencies in practice. Choices remain for society about the amount of carbon and biodiversity co-benefits desired, and the price it is prepared to pay for them.

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Figure 1: Supply of, and trade-offs between, carbon sequestration and biodiversity co-benefits for different policy mechanisms.
Figure 2: Spatial arrangement of potential land-use change under M3 Central and a budget of AUD$292 billion.
Figure 3: Cost of a biodiversity premium payment and impact on the supply of carbon sequestration and biodiversity co-benefits.
Figure 4: Impact of a carbon levy on carbon sequestration and biodiversity co-benefits.

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Acknowledgements

The authors are grateful to the Australian Research Council Centre of Excellence for Environmental Decisions and the National Environmental Research Program for funding two national workshops in which much of this paper was conceived. We are also grateful for the support of our individual organizations, especially CSIRO Agriculture and Australian National Outlook initiative.

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B.A.B., T.C., E.A.L., R.C. and K.A.W. conceived and designed the experiments, B.A.B. performed the experiments, all authors analysed the data, B.A.B. and M.N. contributed materials/analysis tools, and B.A.B., R.K.R., T.C., M.P.P., S.C.C., M.E.K., E.A.L., A.R.R., S.E., R.C. and K.A.W. wrote the paper.

Corresponding author

Correspondence to Brett A. Bryan.

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The authors declare no competing financial interests.

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Bryan, B., Runting, R., Capon, T. et al. Designer policy for carbon and biodiversity co-benefits under global change. Nature Clim Change 6, 301–305 (2016). https://doi.org/10.1038/nclimate2874

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