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Abstract
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.