Economic Tools

Examining innovative policies to sustain environmental offsets in rural communities


Carbon farming and the creation of environmental offsets is not only an important activity to control emissions and enhance the environment and biodiversity, it is also of increasing importance within the rural community in providing a more diversified portfolio for agribusiness. The importance of offsets can be observed as they are the key climate policy to control carbon dioxide emissions within Australia, using the $2.5bn Emissions Reduction Fund (ERF).

This project will investigate the effectiveness of current offset policy on specific rural communities (Granite Belt) and consider if more efficient and sustainable policies can help improve the uptake and resilience of the agribusiness sector, specifically small- and medium-sized agribusiness owners that often find current policies restrictive. This project will consider carbon farming intensive areas as well as the potential to open up new activities within the sector across Queensland. This project will use Cost-Benefit Analysis and non-market valuation to consider the current net benefits of offsets to all stakeholders in Australia, including specific local communities and examine how more effective polices can improve the uptake of carbon farming in these rural communities.

Current and alternative policies will be experimentally tested on location to investigate how to incentivise uptake of environmental offsets by small and medium sized agribusinesses.

  • Has the current offset policy been effective for the Granite Belt?
  • How are the benefits and costs of the current offset policy (and alternatives to it) distributed among the various stakeholders?
  • Is there a more efficient and cost effective way to increase offsets while improving the benefits to rural communities in the form of increased economic activity and resilience?
  • How do we assist in providing small and medium-sized agribusiness owners with greater capacity to maximize their returns from an offset policy?


Research Methodology

Stage 1: In Stage 1 we will scope out the research problem and identify key stakeholders within the area of environmental offsets (for example, agribusiness owners, local community, government agencies, related non-agricultural industry, invited outside experts in relevant fields). This will involve data creation of the current offset programs within Queensland and the uptake from small- and medium-sized agribusinesses.

Stage 2: Within Stage 2 we will hold a workshop with key stakeholders and the external experts in relevant fields to identify their experiences of offset programs in order to focus on potential challenges of participation. Within this stage we will begin to identity the key costs and benefits of new offset programs relative to the Business As Usual (BAU) policy scenario.

Stage 3: We will design a field experiment that takes the current opportunities and challenges of existing schemes and propose an alternative policy that will increase participation and biodiversity/carbon storage. The purpose of the experiment is to specify the new regulatory  proposal versus the Business As Usual (BAU) scenarios on which the Cost Benefit Analysis (CBA) will be based. We will use the CBA to fully reflect the net expected overall gains of offset programs as well as the gains and losses to each stakeholder group impacted by the offset programs.

Stage 4: We will implement the field experiment with key stakeholders combined with a Deliberative Value Assessment (DVA) workshop. The main purpose of this workshop is to elicit stakeholder valuations/preferences in the appraisal process while also communicating the preliminary results of the CBA analysis. The key advantage of DVA combined with CBA is to gain stakeholder ownership of and support for the proposed policy option.

Stage 5: We will disseminate the findings and policy recommendations via a report and a further (optional) workshop to communicate the findings to key stakeholders and the wider community.


Dr. Ian MacKenzie (Lead Investigator) is a Senior Lecturer in the School of Economics, University of Queensland. His research interests include environmental economics, environmental policy, and public economics. In particular, he has a focus designing and evaluating environmental auctions and offset programs that help increase biodiversity and carbon storage.

Assoc. Prof Richard Brown is an Associate Professor of Economics, School of Economics UQ, and has substantial experience as an applied economist with a strong domestic and international reputation in applied cost-benefit analysis (CBA). He is co-author of a leading textbook on CBA and has extensive consulting and advisory experience applying CBA to project and policy analysis for a wide range of organisations and sectors. Associate Professor Brown will design and apply an appropriate conceptual framework for the application of CBA to the offset programs to be considered under this project, to support the development of clear and consistent policy recommendations.

Dr. Sally Driml is a Lecturer in tourism management, Business School, UQ. Her research draws on a background in economics and environmental economics and experience in government in developing environmental policy and managing natural environments that are also tourism destinations. In government, Dr Driml led a project that developed the Queensland Government’s Environmental Offsets Policy. She has recently researched airline Voluntary Carbon Offset programs. .

Assoc. Prof Lana Friesen is an Associate Professor of Economics, School of Economics UQ. She is an expert in experimental and environmental economic. Her focuses is on designing and implementing experiments in order to investigate the effectiveness of environmental regulations.