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With the impending introduction of an Australian Carbon Pollution Reduction Scheme, farmers and landholders in rural Australia have increased opportunities to participate in the market. This includes the adoption of land-use change to sequester additional carbon in exchange for carbon credits and the production of a renewable energy source (biofuels). However, these land-use changes compete with existing farm enterprises and may contain significant transaction costs. Therefore it is necessary for the institutional arrangements to provide adequate incentives for landholders to adopt these land-use changes. This paper examines the potential supply of these land-use changes for climate mitigation from landholders in a northern NSW catchment. These results will allow further investigation of how incentive structures and policy instruments may be developed to increase the supply of these goods from landholders.


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