Payment for ecosystem services in practice – savanna burning and carbon abatement at Fish River, northern Australia

Abstract

Tropical savannas occur in Africa, Australia, South America and southeast and southern Asia. These ecosystems support about 10% of the world’s population, occupy one-sixth of the land surface and contain the most fire prone vegetation on earth (Russell-Smith et al., 2013). In Australia, savannas occur in the wet-dry tropics and feature both trees, dominated by eucalypts, and herbaceous plants, principally grasses. A defining feature of savannas is the existence of a dry season lasting up to nine months of the year. Grasses in the savanna have short, intense growing periods during the wet season, then cure rapidly during the dry. Rainfall is seasonal, ranging from 300 to 2000 mm with high inter-annual variation. Here, we outline the Fish River Fire Project, the first early dry season savanna burning project to be declared under the Australian Government’s Carbon Farming Initiative and the first to have sold those credits, as a practical example of payment for ecosystem services.

Full text

78
Payment for ecosystem
services in practice –
savanna burning and carbon
abatement at Fish River,
northern Australia
Nerissa Walton and James Fitzsimons
Introduction
Tropical savannas occur in Africa, Australia, South America
and southeast and southern Asia. These ecosystems support
about 10% of the world’s population, occupy one-sixth of the
land surface and contain the most fire prone vegetation on
earth (Russell-Smith et al., 2013). In Australia, savannas occur
in the wet-dry tropics and feature both trees, dominated by
eucalypts, and herbaceous plants, principally grasses. A
defining feature of savannas is the existence of a dry season
lasting up to nine months of the year. Grasses in the savanna
have short, intense growing periods during the wet season,
then cure rapidly during the dry. Rainfall is seasonal, ranging
from 300 to 2000 mm with high inter-annual variation.
Indigenous people possess a long history of fire management
prior to European settlement, living on their lands and
maintaining skilled fire management over large parts of the
landscape (Russell-Smith et al., 2009). This regime was
disrupted with European arrival, which resulted in the
movement of many Indigenous people away from their lands
and the consequent breakdown of skilled fire management over
large areas. Currently, over 20% of Australia’s northern savanna
is owned or managed by Indigenous people and Indigenous
land interests span a much greater area, through joint
management arrangements and non-exclusive native title.
A feature of contemporary savanna fire regimes is the
predominance of fires occurring in the late dry season, typically
under severe fire weather conditions. Savanna wildfires can
occur at any time in the dry season (March to November),
however, 85% of fires occur in the late dry season, from August
to November (Garnaut, 2011). Late dry season fires are
characterised by low levels of patchiness, high intensity, high
total fuel consumption and propensity to spread.
Contemporary northern Australian fire regimes are having
significant impacts on regional biodiversity values (e.g.
Woinarski et al., 2011) and contribute to national greenhouse
gas emissions. Reinstating the traditional fire regimes for
biodiversity, cultural and carbon benefits is now a rapidly
increasing activity in northern Australia (e.g. Fitzsimons et al.,
2012). Management of this significant ecosystem process
presents great opportunity for ecosystem services. Here, we
outline the Fish River Fire Project, the first early dry season
savanna burning project to be declared under the Australian
Government’s Carbon Farming Initiative and the first to have
sold those credits, as a practical example of payment for
ecosystem services.
The Fish River protected area
Fish River is a spectacular property with high conservation and
cultural values in the Daly River region of the Northern Territory
in Australia. It covers 182,500 hectares and encompasses
sandstone ranges, large tracts of intact savanna, an extensive
mosaic of monsoon forest wetlands, as well as the pristine
waters of the Daly River and its tributaries. Fish River is home to
unique assemblages of terrestrial and aquatic species and is an
important refuge site for nationally-listed and Northern Territory-
listed threatened species. It was purchased in 2010 by the
Indigenous Land Corporation with support from the Australian
Government’s National Reserve System Program, The Nature
Conservancy, Pew Environment Group and Greening Australia
(for more information, see Fitzsimons and Looker, 2012). As
part of the National Reserve System it is managed primarily for
biodiversity conservation and cultural values with other
congruent objectives such as the management of visitor use,
the needs of Indigenous people and local communities
(including subsistence resource use) and to contribute to local
industries such as tourism and the emerging carbon market.
The tenure is a perpetual Crown lease for the purposes of
‘grazing and ancillary’ activities. The property is planned to be
divested to Traditional Owners, upon the Northern Land
Council’s resolution of the current native title claim.
Section 4. Case studies of protected areas and ecosystem services

Valuing Nature | Protected Areas and Ecosystem Services 79
Savanna burning on Fish River Station. Photo: © Ted Wood

80
The Carbon Farming Initiative
The Carbon Farming Initiative is a legislated offsets scheme of
the Australian Government that allows farmers and land
managers to earn carbon credits by storing carbon or reducing
greenhouse gas emissions on the land. These credits can then
be sold to people, business and government wishing to offset
their emissions. Carbon credits are a financial commodity
representing one tonne of CO2 or carbon dioxide-equivalent
(CO2-e) that is sequestered and stored, or prevented from being
released into the atmosphere, which can be sold as offsets. In
Australia, the Carbon Credits (Carbon Farming Initiative) Act
2011 (Cth) and Regulations are the regulatory instruments that
enable the production and trading of carbon credits and
establish a set of integrity principles for Carbon Farming
Initiative projects. These integrity principles require that
abatement must be measureable and verifiable, additional to
what would occur in the absence of a project, supported by
peer-reviewed science and consistent with Australia’s
international greenhouse gas accounts.
Within this framework, ‘methodology determinations’, the legal
instruments that set out the rules for undertaking activities and
measurement methods, are developed for each type of project
activity, including for early dry season savanna burning.
Application of the savanna burning Carbon
Farming Initiative methodology on Fish River
The Fish River Fire Project applies the Carbon Farming
(Reduction of GHG Emissions through Early Dry Season
Savanna Burning 1.1) Methodology Determination 2013. The
methodology is based on traditional Indigenous knowledge
coupled with western science which together demonstrate
that controlled mosaic burning in the early dry season reduces
fires in the late dry season and results in the avoidance of
emissions of nitrous oxide and methane, both powerful
greenhouse gases. Eligibility criteria for the methodology
require the project to be on land receiving above 1000 mm
average annual rainfall, containing the specified vegetation
types, in this case eucalypt woodland and sandstone
woodland, and having a history of regular late dry season fire.
Once eligibility is established, the legal right to carry out the
project needs to be established and feasibility of the project
assessed. The Northern Territory Government was approached
to provide confirmation that the operation of an early dry season
savanna burning project on the property was not inconsistent
with the purpose of the Fish River lease. The Indigenous Land
Corporation applied to the Clean Energy Regulator to become a
recognised offsets entity and have the project declared an eligible
offsets project. Once the project is approved, the activity, in this
case early dry season burning, is undertaken. In some situations
projects have been ‘backdated’ to include activity undertaken in
the past and in the case of the Fish River Fire Project, project
approval was backdated to 1 January 2011.
Under the savanna burning methodology, abatement is
determined by calculating the annual emissions in the reporting
period, and comparing this with the average annual emissions
during the baseline period, the ten years prior to the project
commencement. The abatement is the difference between the
baseline and total emissions in the project year. Various tools are
used to undertake the calculations, including a pre-validated
vegetation map, seasonal fire maps from the North Australian
Fire Information (NAFI) Service and the Savanna Burning
Abatement Tool (SavBAT). Applications for Australian Carbon
Credit Units are then submitted to the Clean Energy Regulator
with an independently audited project offset report.
Impact of early dry season burning on
greenhouse emissions
Prior to commencement of the project, 75% of Fish River
burnt every year. Since the introduction of planned early
dry season burning, the total area of the property burnt has
reduced to 40%. Importantly, the proportion of the property
burnt in the late dry season has reduced from 36% to 1%
(Figure 1). This has resulted in significant avoidance of
emissions of nitrous oxide and methane, which is converted
to a carbon dioxide equivalent for carbon credit calculation
purposes (Figure 2). A total of 49,041 credits have been
issued to date, an average of 12,260 credits annually.
Selling credits on the market and media interest
The ILC has been issued with three tranches of credits to
date, those for 2011 and 2012 combined and those for the
2013 and 2014 activity years. On each occasion, the ILC
undertook a well publicised expression of interest process
promoting the valuable cultural, social and biodiversity
co-benefits associated with the project. Successful bids were
identified based on three key criteria: the price; the
organisation’s compatibility with Indigenous values; and how
the company proposed to market the sale. Expressions of
interest were received from liable entities (those corporations
having an emissions liability under the Carbon Pricing
Mechanism), carbon brokers and banks. Prices were high,
recognising a genuine market value of the co-benefits
produced by the project. The first two tranches of credits were
sold to Caltex Australia for more than $22/t, a liable entity with
a corporate social responsibility focus on Indigenous people
and the environment. The media provided coverage to the
expression of interest process and the sale of the credits. In
particular, the ABC’s 7.30 NT program reported the first
Indigenous owned Carbon Farming Initiative project and the
first savanna burning project to sell credits on the market
(Middleton, 2013).

Valuing Nature | Protected Areas and Ecosystem Services 81
Figure 1. Impact of early dry season burning on seasonality and area burnt at Fish River.
Figure 2. Impact of early dry season burning on greenhouse gas emissions – the red dashed line represents the baseline
emissions for the 10 years prior to the purchase of Fish River and the green bars the emissions avoided from the baseline
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Farming (Reduction of GHG Emissions through Early Dry Season Savanna Burning 1.1) Methodology Determination 2013.
Actual abatement claimed for these years under v1.0 was slightly less, as the baseline is lower when calculated under the
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baseline nor the project crediting period.

82
Land management costs
A deed with the Australian Government for Fish River requires
that the reserve is managed in accordance with IUCN
protected area category II (National Park). The types of costs
incurred in managing the property include labour,
infrastructure repairs and maintenance, weed management,
fire management, visitor management, feral animal
management, track maintenance and divestment
consultations. Annual income under the Carbon Pricing
Mechanism has represented approximately 1/3 of the annual
cost of managing the reserve. Other complementary sources
of income are the mustering of buffalo for pet meat, fire
management on a neighbouring property, the ILC’s Real Jobs
Program and contributions from The Nature Conservancy
towards fire management and feral animal management.
Co-benefits of the Fish River Fire Project
The Fish River Fire Project is delivering social, cultural,
biodiversity and economic benefits. All revenue from the sale
of credits is reinvested in managing the property and
supporting jobs and training for Traditional Owners. The
employment of local Indigenous people, most of whom have
familial connections to Fish River, is facilitating access for
Traditional Owners to the property, reconnection with cultural
values and protection of important cultural sites. The reduction
in late dry season wildfire helps protect significant fire sensitive
ecosystems and the many threatened species on the property,
such as the Northern Quoll, Gouldian Finch and northern
Masked Owl. The Fish River Fire Project is being used as a
demonstration project to assist the development of other
savanna burning projects by Indigenous groups in northern
Australia.
Challenges and opportunities
Fish River was the first project to be accredited for the
production of carbon credits from savanna burning and the
first to sell its credits under the Carbon Farming Initiative.
However, since registration of the Fish River Fire Project, a
further 33 projects covering 13 million hectares have been
approved by the Clean Energy Regulator and issued with over
one million carbon credits as at January 2015 (Figure 3). This
includes the registration of savanna burning programs that
have been operating for a number of years (for example,
EcoFire in the Kimberley, see Legge et al. 2011, and the West
Arnhem Land Fire Abatement project in the Northern Territory).
The planned burning is undertaken about a year before credits
are issued, so funds to undertake feasibility assessment,
project development and burning are required prior to any
income being received. This up-front cost could potentially
inhibit more groups from entering the market without
philanthropic or government support. Another challenge is
land tenure, particularly the level of government involvement
and consultation required to make land use decisions relating
to Indigenous held land tenures.
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NT
QLD
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rainfall
600-1000mm rainfall
600-1000mm rainfall
600-1000mm rainfall
Greater than
1000mm rainfall
Derby
Cooktown
Cairns
Katherine
DARWIN
DARWIN
145° E
145° E
140° E
140° E
135° E
135° E
130° E
130° E
125° E
125° E
-10° S
-10° S
-15° S
-15° S
-20° S
-20° S
ILC Map No. 2472
Savanna Burning Carbon Farming Initiative Projects
as of 29 January 2015
$
Enlargement
Savanna burning project areas and indicative average rainfall zones sourced from the Clean Energy Regulator and the Department of the Environment, respectively, January 2015.
Fish River
Fish River
Project
Project
Figure 3. Declared savanna burning projects under the Carbon Farming Initiative as of 29 January 2015. Colours represent
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Valuing Nature | Protected Areas and Ecosystem Services 83
The Clean Energy Act 2011 (Cth) was repealed in 17 July
2014 and the Carbon Farming Initiative Amendment Act 2014
(Cth), which gives legislative effect to the new Emissions
Reduction Fund (ERF), commenced in November 2014. The
Australian Government’s ERF will buy the lowest cost
emissions reductions offered through a reverse auction
process, where bidders will be required to submit bids that
offer up a specified quantity of emissions reductions from
identified projects at a specified price. Although savanna
burning is recognised under the ERF, a number of
uncertainties are presented under this new system for new
and current projects. Government auctions commence in April
this year and it is hoped that a process valuing the important
co-benefits achieved by these projects will be incorporated
into the ERF in the future.
Conclusion
We consider the following key steps would contribute to
furthering the policy direction for savanna burning in Australia:
• Recognition of Indigenous land managers as key custodians
of land and providers of ecosystem services, including carbon
projects, and consider support for capacity building and
project startup on Indigenous-held land.
• A stable domestic carbon policy and compliance market, and/
or a vibrant voluntary market to create demand.
• Society (community, private and public sectors) valuing the
ecosystem services provided by nature. For example, valuing
externalities, recognising the costs of unsustainable systems
and product design in pricing. Appropriately valuing these
services can create viable, sustainable opportunities for
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References
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acquisition and conservation management: the case of Fish River
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Links
Fish River Carbon Credits - http://www.fishriver.com.au/
Nerissa Walton
Senior Policy and Environment Advisor
Indigenous Land Corporation
121 King William Street, Adelaide SA 5000, Australia
nerissa.walton@ilc.gov.au
Nerissa Walton leads the development of carbon
strategy and policy advice at the Indigenous Land
Corporation, as well as the design, implementation,
monitoring and communication of demonstration
projects on Indigenous-held land, including the Fish
River Fire Project.
James Fitzsimons
Director of Conservation (Australia Program)
The Nature Conservancy
Suite 2-01, 60 Leicester Street, Carlton VIC 3053, Australia
jfitzsimons@tnc.org
Dr. James Fitzsimons is the Director of Conservation
for The Nature Conservancy’s Australia Program where
he oversees conservation science, planning and policy
across terrestrial, freshwater and marine projects.
He’s also an adjunct associate professor at Deakin
University where he researches protected area policy,
conservation planning and ecology.