A national market allowing farmers to cash in for protecting and increasing biodiversity on their land would be set up under a federal government plan.
The Morrison government will soon start targeted consultation on legislation to help create a voluntary national biodiversity stewardship market.
The program - which is being trialled in six regions across Australia - is designed to offer a new source of income for farmers while protecting the environment and reducing the carbon footprint.
Under one component of the pilot, farmers who plant native trees and shrubs would be eligible for carbon credits which could be sold to either the federal government or private buyers. The vegetation would need to be conserved for at least 25 years.
Farmers could also receive a biodiversity payment, supplementing their other farm income.
The proposal to be circulated for consultation would look to create a "credible way" to measure biodiversity outcomes and establish safeguards to protect the integrity of the trading market.
Agriculture Minister David Littleproud said the pilot program had demonstrated that a stewardship market could benefit farmers as well as the environment.
Some 65 offers have been made to farmers who successfully applied to the pilot program, with negotiations underway.
The government has committed $66 million toward the program, including $32 million in the latest federal budget.
"The legislation would ensure that farmers can be recognised for delivering environmental services and would provide a means of earning a drought-proof income from less productive areas of farmland," he said.
"The private sector would also gain access to an easy and cost-effective way to invest in credible on-farm biodiversity.
"Many corporations in Australia are interested, or already investing, in projects with biodiversity benefits."
It is unclear if legislation will be ready to be introduced to the Federal Parliament before the next election.
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