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Abstract
With agriculture occupying approximately sixty per cent of Australia’s land surface, policy makers,
scientists and land managers are becoming increasingly interested in opportunities to sequester
greenhouse emissions through land use change. The announcement of the Labor Government’s Carbon
Farming Initiative brings Australian agriculture a step closer to participating in recognised domestic
and international climate change mitigation action. In this paper, the costs and opportunities for carbon
sequestration options under the Carbon Farming Initiative are assessed. The following section
discusses the substantial hidden costs that may be associated with an offset trading scheme and
potential for these costs to substantially shrink the size of the market. The paper concludes by
presenting some potential solutions to the challenges raised and identifies some critical questions for
policy makers.