Property valuation set to skyrocket due to carbon potential

Years of drought have left many rural properties flogged out or degraded in Australia, but experts say they are now set to skyrocket in value due to their carbon potential.

Carbon farming is a practice that focuses on destocking land to regenerate bush in order to store or sequester carbon. It is an important pillar of efforts to reduce greenhouse gas emissions.

Tim Lane, national client manager at property valuers Herron Todd White, said that degraded land would be of greater interest to investors than well-maintained properties.

Any improvement would increase the amount of carbon sequestered on the property, making it potentially more valuable for the purpose of carbon farming than premium, healthy land.

South Pole and Regenco predict that demand for carbon credits will grow quickly with Australia's commitment to reduce emissions by 43 per cent by the year 2030.

It will be interesting to see how they balance out the demand for carbon credits but also the cost of remediating degraded land, and where the trade-off is there, Manager of Agriculture with South Pole Alice Debney said.

The carbon market is still evolving, but the property market is catching up, as highlighted by a recent sale in the Northern Territory, one of the largest independent property valuation and advisory groups in Australia.

He said that the carbon opportunity as a percentage of the overall property was somewhere in the order of 18 per cent premium for the carbon opportunity over and above what you would consider the agricultural use of that property.

There is a lot more interest and a lot more activity in the sector, whether or not that 18 per cent is justified. Ms Debney said project developers have focused on large parcels of land, around 500 hectares or more, but that could also be set to change.

That would be great because I do actually speak to a lot of smaller landholders who are really keen to have an impact on either increasing their soil carbon stocks or achieving carbon neutrality. The Managing Director of Regenco Greg Noonan said banks would play an important role in the development of the industry.

It's important that we take them on the journey and arm them with the same kind of information and skills. The review of Chubb would address integrity problems within the industry, as it was currently underway, said Noonan.

Critics have raised concerns about meaningless credits that have resulted in increased emissions.

The responsibility is to restore or improve public confidence in the validity of what we are doing and that has to be a priority for all participants, Mr Noonan said.

We need to use the best current day technology to make sure the offsets we generate are unchallengeable.