IN THE not too distant future, farmers will be trading their carbon and biodiversity services on the environmental version of the ASX.
The federal government has committed $4.4 million to establish a biodiversity trading platform, which will be up and running by the end of the year.
Australia National University environmental market expert Andrew Macintosh is advising the government on the platform, which in the long-term could look like the ASX, but initially would function as a bulletin board.
"It'll be a place that farmers say 'I've got this type of vegetation' and buyers say 'I'm looking for this type of offset', and brings the two together," Professor Macintosh said.
"Ultimately that trading platform would morph into a full-fledged exchange, with bids and offers, and the system matching them."
But it's about more than just trades. The platform will also aim to give farmers a simple tool to plan carbon or biodiversity projects and see how much they are likely to get for it.
There will also be environmental accounting tools, allowing people to score or assess their natural capital.
Prof Macintosh said the final version of the platform would allow buyers to see where offsets were and track their purchase over time.
"At the moment, you need third-party verification, so you pay someone to come out and look at the site," he said.
"If you're planting 15-hectares for a carbon project, you have to get three third-party assessments, which can be $10,000 a pop. So 30 per cent of your project is going towards someone looking at trees.
"We can automate these systems and strip out unnecessary costs for farmers. Compliance is a big thing in environmental services, the buyers need to see what you've planted and that it's still there. But we can do a lot of that already with freely available imagery."
Business Council of Australia chief executive Jennifer Westacott said there was growing demand from the business community for the trading platform.
"Businesses want to work with the government to deliver a credible biodiversity offsets scheme because it's win-win," Ms Westacott said.
"Getting this right gives farmers a new way to generate income, it strengthens environmental outcomes and it means businesses can invest in new projects that create new jobs."
Prof Macintosh said hopefully in the future, farmers would look at environment markets like their existing commodity markets.
"The idea is not to convert all farm land to environmental services, but to integrate it into farming operations by turning that unproductive land into potential high-earning land, while boosting productivity and earning a more drought-proof income," he said.
Running alongside the trading platform is a biodiversity certification scheme.
The Commonwealth committed $5.4 million to develop the project, which would allow farmers to stamp a label on their products, similar to the Australian Made label.
The certification could also be used for increased market access and fetching price premiums.
Prof Macintosh said the key to the certification would be regionally-based assessments.
"At the end of the day, we want to be comparing apples with apples," he said.
"There is no point comparing farmers in the west of Tasmania with farmers in east Tasmania, let alone with farmers in Western Australia."
The regional assessment system will be trialled in the second half of the year to ensure it is accurate, with the next step to take the whole certification live.
The certification would be the first of its kind and the demand for it is "the great unknown".
"There are global and domestic signals for something of this scope, the question is what is that something," Prof Macintosh said.
"We've seen similar things work well in other spaces, such as the forestry industry and on seafood products with the MSC label."
There is still time for farmers to get involved in the government's $34m Carbon+Biodiversity trial, which sees farmers paid for planting a range of native trees. Applications close on June 11.