Stepping into the world of natural capital accounting - A grazier's perspective

Landcare Farming offered grants to 13 producer groups across Australia to further their natural capital journey.

In 2021, Melinee's producer group, the Barfield Road Producer Group (BRPG), attended a workshop run by Accounting for Nature on natural capital accreditation. As an outcome of that workshop, two members of the BRPG were afforded the opportunity, via the Landcare Farming Natural Capital Project (which awarded 13 projects nationwide), to undertake natural capital baselining. Melinee and Rob Leather were awarded a grant for their Barfield Station property, as were their neighbours, Melanie and Alastair Shannon, for their property, 'Wirra'.

These grants initiated an exciting and exhausting period of learning, reporting and testing, all working towards the accounting and accreditation of the natural capital of the two properties.

Accounting for Nature's framework is a scientifically rigorous methodology for measuring the biophysical condition of environmental assets (e.g. native vegetation, soils, freshwater, native fauna, marine). Within the framework, there are many different accounting 'methods' which contain detailed measurement and reporting requirements for environmental assets in specific regions, ecosystems, or sub-regions. Methods are divided into categories for assessing native vegetation, soil, native fauna, fresh water and marine environmental condition.

These scores are easy-to-understand metrics that summarise complex scientific information into a single number between 0-100.

Depending on the method used, environments are assessed and assigned an Econd and/or a Pcond score. These scores are easy-to-understand metrics summarising complex scientific information into a single number between 0-100. Econds assess the environmental condition of an area, with a score of 0, meaning the asset is completely degraded, and a 100, meaning the asset is in the highest possible environmental condition.

A Pcond score describes the productive condition of an environmental asset in terms of its production potential, also on a scale of 0, which would be completely unproductive, to 100, extremely productive.

On Barfield Station, the Leathers decided on using AfN-METHOD-S-02, which assesses soil condition for productive land. This method includes an Econd calculation as well as a Pcond calculation.

On Wirra, the Shannons used AfN-METHOD-NV-08, which assesses the Econd and Pcond of permanent and perennial pastures. They chose this method to easily monitor and understand the environmental and productive condition of native vegetation within their grazing paddocks.

Choosing methods that include both an Econd and Pcond calculation means landholders can easily compare and understand any potential trade-offs between production and their environment. This allows them to set a target - or optimal zone - specific to the goals of their enterprise.

Accounting for Nature representative and advisor Dr Amanda Hannson supported the Leathers and the Shannons throughout the accreditation process. 'It's important to select a method that's right for your purpose and targets what your consumers and stakeholders are interested in measuring.' says Dr Hannson, 'Some of the methods available are really broad and measure things like the health of soil, vegetation or water. There are also quite specific methods, for example, focusing on conservation for a particular fauna species.'

While the process of accreditation was worthwhile for both Barfield Station and Wirra, the biodiversity market and natural capital accounting are in their infancy. Because of the newness of this opportunity, there were some challenges along the way.

Melanie Shannon highlighted the importance of sitting in the discomfort of the steep learning curve. Producers undertaking these accreditation journeys will need to learn new concepts and terminologies and may have to upgrade their computer literacy skills.

Another challenge was finding resources and experts to visit the properties for auditing and testing. Unlike the carbon market, in which there are many providers who manage and streamline the entirety of a project for landholders, natural capital accounting is new territory for the industry, and as such there are limited support services available. 'We don't have enough extension staff in the industry to actually deliver some of the research and development, and the technology that we require to be able to do these programs,' says Melinee.

Fortunately, both of these challenges had the same solution, largely driven by community engagement and networks.

'We broadly collaborated with as many people as we could to try and get that extension, help on the ground.' says Melinee, 'We've worked with government departments like DAF, the NRM groups like the Fitzroy Basin Association, universities, even private enterprise like Integrity Ag has been a huge assistance for us with our project.'

Each of these groups, as well as Landcare Farming and Accounting for Nature, offered support for the two producers, whether that be by offering clarity around new scientific concepts or sending representatives and extension officers out to do testing and training field days.

'Accounting For Nature offers an online training platform which gives you a certain amount of skill level to be able to undertake a lot of the work yourself. We've also engaged technical experts, particularly around soil sampling and the more scientific level of the program.' says Melinee.

Melinee also said that climatic conditions present another challenge as they can skew baselining tests. They had significantly higher rainfall in the summer of 2022. She said in this instance, recording data was paramount for ensuring baselining was as accurate as possible. On Barfield Station, they use two automated weather monitoring systems, as well as satellite technology and even data from the Bureau of Meteorology (BOM) to monitor climatic conditions, which can inform baselining.

The accreditation process has resulted in many positive outcomes for the Leathers. Now that baselining is complete, Melinee and Rob are focused on building the property's ecological health and biodiversity to improve their metrics each year. So far, they have noticed significant improvements in birdlife, as well as an increase in the biodiversity of their pasture species.

'Beef producers manage over 50% of Australia's land mass. So we've got a huge responsibility to make sure that we're doing that job well. The accreditation process will help us upskill and learn how we can steward our land profitably and responsibly. But it will also give us something solid to show to the global population what the Australian beef industry is doing in that space.'

Melinee stresses that in the coming years, accredited metrics on environmental condition will be critical for market access, so she encourages primary producers to consider starting the journey now.

Melinee stresses that in the coming years, accredited metrics on environmental condition will be critical for market access.

Dr Hansson outlines that there are many reasons why looking into environmental accreditation now will pay future dividends for farmers. Whether it's by informing management practices and tracking improvements over time, transparency for easier market access, or the potential diversified income from selling credits as the biodiversity market evolves. Each of these outcomes offer benefits to long-term profitability for primary producers.

'Actively participating in environmental accounting today can really help you have a step forward in the market. It can showcase that you have started to reverse the losses that are happening and that you're doing better than your neighbours, or your region, or even the average of your country.' says Dr Hansson, 'There's a lot of policy uncertainty at the moment, but taking time to train yourself in environmental condition accounting will make sure that you are ready to jump on opportunities when they occur for you.'