The Great Barrier Reef credit scheme requires global banks to pay farmers to improve practices

As the dust settles over Labor’s electoral victory in Queensland, banana growers and ranchers in the state’s north are preparing for greater regulation of water quality.

Labor reef protection laws, introduced last year, have been controversially implemented to try to reduce the run-off of nutrients and sediments in wetlands, rivers and ultimately the Great Barrier Reef.

The LNP had promised to “correct unjust draconian components” of the reef laws if it won the government.

While reed growers across much of the state already have to meet minimum standards of practice, banana growers in the humid tropics and ranchers in the Burdekin region will also need to maintain water quality standards starting next month.

But against the backdrop of laws that many farmers claim to punish them for growing food and fiber, a new initiative – the Reef Credit Scheme – aims to incentivize best practices while meeting a growing corporate demand for green finance.

Australian company GreenCollar recently launched the Reef Credit Scheme product in response to requests for a water quality incentive program.

The scheme was developed in collaboration with landowners, the Queensland government and natural resource management organizations Terrain NRM and NQ Dry Tropics.

Like carbon credits, tradable barrier credits are independently governed and verified by a scheme hosted by Eco Markets Australia.

“A lot of people have heard of carbon credits. In the world of water quality and coral reef credits, we will provide an incentive and payment for people who are taking on jobs that improve water quality,” said Carol Sweatman, GreenCollar’s Water Quality Manager.

“Water quality is something very tangible, something we can deliver and it’s in the hands of farmers up and down the coast, and getting that extra payment and recognition for what they’re doing means we can achieve that.” Ms. Sweatman said.

Buy credit where it is due

One of the largest banks in the world, HSBC, has now joined the program and is paying farmers who voluntarily improve their farming practices to be more environmentally friendly beyond what is required by law.

HSBC became Australia’s first corporate investor in coral reef credits when it paid a reed grower in far north Queensland who had achieved lower nitrogen emissions through improved fertilizer management on his farm.

HSBC’s head of global banking, Hamish Kelly, said each credit purchased equates to 1 kilogram of nitrogen, or 538 kg of sediment, which would no longer end up polluting the reef basin.

When nitrogen hits the reef, it leads to algal blooms, providing food for young crown-of-thorns starfish, which eat the coral when they reach adulthood.

Mr. Kelly said the new market opportunity is in line with that recently announced by the bank Net-zero global economy ambitions, which aimed to encourage customers to switch to more sustainable ways of conducting their operations.

“The Reef Credit Scheme fits clearly into our program and aligns very strongly with our broader support for a transition to a sustainable economy.”

The farmer hopes the program will inspire research

Tully reed grower Jamie Dore was paid an undisclosed amount by HSBC for preventing more than 3,000 kg of nitrogen from entering the reef through farm activities, including improved fertilizer management.

Mr. Dore said the program gave cane growers the opportunity to answer a burning demand.

“Can it provide improvements in water quality?”

Dore said he hopes the reef credits will inspire more companies to invest in space to help the industry meet its goal of reducing nitrogen pollution by up to 80% in key basins under the Reef 2050 plan. .

“I think we have to be honest and say that the 2050 targets are not achievable unless we see some sort of technological leap in slow-release nitrogen fertilizers,” he said.

“So this will require real investment, not just in terms of money, but from corporate players who really want to inject money into research and development.”

‘We are incredibly optimistic’

Mr. Kelly said he also believed the market would attract more corporate interest.

“We believe it could attract substantial funding from a wide range of participants and become a new traded asset class.

“It demonstrates the ability to put market-based solutions like this on the balance sheets of responsible companies and is a clear demonstration of how nature-based solutions can support communities.”