Carbon Farming Initiative

Water Interception Activities


The Carbon Farming Initiative (CFI) is a voluntary carbon offsets scheme. It is an integral component of the Emissions Reduction Fund and allows land managers to earn carbon credits by changing land use or management practices to store carbon or reduce greenhouse gas emissions.

One of the land use or management change practices supported under the CFI is the establishment of permanent tree plantings under the Plantation Forestry Method. However, tree plantings that pose a significant adverse risk to water availability, biodiversity conservation, employment, the local community or access for agricultural production, are excluded.

Water Interception Activities

Permanent tree plantings have the potential to impact on water availability by intercepting surface or groundwater, especially in moderate to high rainfall areas. As a result, tree planting projects are generally excluded from the CFI in areas that receive greater than 600mm average annual rainfall. However, environmental plantings and plantings for the mitigation of dryland salinity may be permissible in these areas under the CFI. Plantings may also be permissible where:

  • water management arrangements to address interception in a region are National Water Initiative (NWI) compliant (see CFI Regulation 3.37(4) below), or
  • it is not possible to obtain a water access entitlement and the Clean Energy Regulator is satisfied that there will be no material impact on water availability or on the reliability of existing water entitlements (see CFI Regulation 3.37(8)).

Carbon Credits (Carbon Farming Initiative) Regulations 2011

Regulation 3.37(4) states:

Specified tree planting is not an excluded offsets project if the project area is in a region in relation to which the Water Department has determined that the commitments by the relevant state or territory government under the National Water Initiative (NWI) to manage water interception by plantations have been adequately implemented.

For the purposes of the CFI, adequate management arrangements refers to:

  • the relevant state or territory government having adequately implemented the commitments under the NWI to manage water interception by plantations, or
  • where the project proponent holds a water entitlement, meeting the requirements of the Carbon Credits (Carbon Farming Initiative) Regulations 2011 clause 3.37(5).

Department of Agriculture’ role in relation to water interception

The Department of Agriculture (DAWR) (the Water Department) is responsible for assessing the interception management arrangements in place for regions that receive greater than 600mm average annual rainfall under clause 3.37(4) of the CFI Regulations. The assessment will determine if such arrangements are consistent with the NWI, and therefore considered to be adequate for the purpose of managing water interceptions by new commercial forestry plantations. DAWR will focus on those regions that are either subject to a CFI project proposal or have been identified as a region of priority development in commercial forestry.

The NWI prescribes measures to manage the impact of interception as a result of land use change such as plantation establishment, to protect the integrity of the water access entitlements system and deliver on environmental objectives (NWI Clauses 55–57).

Further information about the NWI can be found at on the department website.

DAWR uses the below framework to assist in assessing the adequacy of water planning arrangements for CFI purposes.

Carbon Farming Initiative framework

Based on DAWR assessments and consultation with relevant state/territory government departments to date, DAWR is satisfied the following regions (water catchments) are NWI compliant for the purpose of CFI Regulation 3.37(4):

  • Lower Limestone Coast (South Australia)
  • Mount Lofty Ranges (South Australia)

DAWR will continue to review the interception management arrangements in regions with greater than 600mm average annual rainfall on a priority basis. Regions found to be NWI consistent will be listed on this website.

Project proposals in regions that are not listed above may still be eligible for the CFI and should refer to the Carbon Credits (Carbon Farming Initiative) Regulations 2011 for more information on eligibility criteria.

The Department of the Environment and Energy is responsible for determining what activities are eligible under the CFI.  More information about the CFI and how to participate is available on the Department of Environment and Energy website along with information on CFI methods.

Further information about the Emissions Reduction Fund is available on the Clean Energy Regulator website.

Last reviewed: 4 December 2019
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