What does a gas-led recovery strategy mean for farmers?

Published 23 Nov 2020

The Federal Government has announced that part of Australia’s strategy to deal with the economic impacts of COVID-19 will be a ‘gas-led recovery’. This strategy asserts that increasing gas production (by opening new basins and building more gas-burning power stations) and creating a transparent market will make Australian energy cheaper and more readily available. It is hoped this will aid in economic recovery at both the primary (e.g. use in manufacturing and industry) and secondary levels by driving gas prices down for consumers.

Recent AFI research on land use conflict has found that, beyond the direct competition for land and water assets, many farmers experience additional negative impacts from coal seam gas (CSG) activities including aquifer depletion, water contamination and severe personal stress. Clear links have been established between CSG extraction activities and negative pressure on farmers’ mental health (Morgan et al., 2016).

The National Farmers’ Federation (NFF) has pushed back on the gas-led strategy, noting that farmers need to be in control of their land to manage it properly, and highlighting the critical importance of groundwater security. In reviewing the Narrabri Gas Project for approval, the Independent Planning Commission (IPC) of NSW noted concerns regarding confidence in the applicant’s groundwater impact modelling and estimation of greenhouse gas (GHG) emission levels. Public comments on the proposal included concerns about:

  • groundwater supply impacts
  • insurance and liability concerns for farmers hosting CSG wells
  • reduction of agricultural investment
  • leakage of labour from agriculture to the mining project
  • the degree to which the project has fractured social cohesion

However, gas mining and agriculture co-exist in many parts of the country and farming communities are often divided on the benefits of gas production. Research on the economic impacts of early unconventional gas mining in NSW found that regions with CSG activity had 7% higher family income than regions without (Marcos-Martinez et al., 2019), and many landowners report minimal disruption from gas exploration.

At a time when the Australian farming sector has committed to an aspirational economy-wide target of net carbon zero by 2050, concerns have also been expressed that accelerating gas production might undermine these goals. While the gas-led strategy is intended to deliver a net climate benefit by replacing more emissions-intensive energy sources such as coal, a group of leading scientists sent an open letter to Australia’s Chief Scientist in August warning that prioritising gas production “is not consistent with a safe climate … [and] there is no role for an expansion of the gas industry” (Hepburn, 2020). Analysis on post-COVID-19 economic stimulus options by McKinsey, (2020) also holds that a low-carbon recovery would stimulate more economic growth and create more jobs than a high-carbon recovery.

In response to these concerns, the AFI has produced a briefing paper1 asking what impact a gas-led recovery might have on the protection of productive agricultural land, the social capital of farming communities, and our long-term food and water security. The paper also provides maps of petroleum exploration licence (PEL) areas in Australia overlaid on the Great Artesian Basin and on the country’s primary agricultural activities, highlighting regions where these intersect (Figure 1).

 

Figure 1: The intersection of PELS with agricultural areas and the Artesian Basin.

Australia-wide, grazing is subject to the greater proportion of PEL area (with 33% of grazing land subject to PELs), with irrigated regions and dryland cropping roughly equal at almost 13%.

A grazier interviewed for the paper highlighted the disparity between the values of the enterprises, contrasting the short-term extractive outlook of gas production with that of her farming enterprise which relies entirely on natural capital to succeed, aiming for long-term profitability through environmental sustainability.

The briefing paper concludes that while agricultural enterprises and gas mining can exist together, this co-existence comes at a compromise – particularly for agriculture. Despite efforts to mitigate these impacts via landholder compensation, offset arrangements and community support programs, gas production has the potential to significantly impede the agriculture sector. For some farmers, gas development offers a beneficial business mix. However, if the values and aims of the agricultural and extraction enterprise are not aligned and the risks outweigh the benefits, farmers should have the right to say no.

While the direct costs are often considered and accounted for when negotiating agreements and approvals for shared land use, indirect effects, externalities and hidden costs can exacerbate the impacts of the mining enterprise on farming businesses, land and social networks. Agricultural advocacy bodies in impacted regions should increase investment in resources to help farmers understand their rights in negotiating with gas mining companies and ensure they are protected by strong and binding agreements.

Unfortunately, the same is true of this issue as of many facing the agriculture sector today; i.e. there is often insufficient information to make fully informed decisions to protect agricultural enterprise. As such, the authors recommend a precautionary approach should be taken to the proposed strategy. The precautionary principle is not merely an admonishment to be wary when considering potentially damaging activities, but also includes taking preventive action in the face of uncertainty; shifting the burden of proof to the proponents of the activity; exploring alternatives to the proposed actions; and increasing public participation in decision-making (Kriebel et al., 2001; Peterson, 2006).

Increasing gas production in Australia creates obstacles to the agriculture sector’s economic viability, social cohesion, environmental stewardship and ability to meet sustainability goals. The paper recommends that the Australian agricultural sector should advocate to limit those activities which could cause unknown damage and seek further research on the impacts of gas exploration to ensure future strategies are based on robust evidence.


The briefing paper was supported by Farmers for Climate Action and the Australian Conservation Foundation.


References
Hepburn, S (2020, August 25), 4 reasons why a gas-led economic recovery is a terrible, naïve idea, The Conversation.
Kriebel, D, Tickner, J, Epstein, P, Lemons, J, Levins, R, Loechler, EL, Quinn, M, Rudel, R, Schettler, T & Stoto, M (2001), The precautionary principle in environmental science, Environmental Health Perspectives, 109(9), 871–6.
Marcos-Martinez, R, Measham, TG & Fleming-Muñoz, DA (2019), Economic impacts of early unconventional gas mining: Lessons from the coal seam gas industry in New South Wales, Australia, Energy Policy, 125, 338–46.
McKinsey (2020, May 27), A low-carbon economic stimulus after COVID-19.
Morgan, MI, Hine, DW, Bhullar, N, Dunstan, DA & Bartik, W (2016), Fracked: Coal seam gas extraction and farmers’ mental health, Journal of Environmental Psychology, 47, 22–32.
Peterson, DC (2006), Precaution: Principles and practice in Australian environmental and natural resource management, The Australian Journal of Agricultural and Resource Economics, 50(4), 469–89.

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