THE future for farmers lies in being paid for food and fibre production, and preserving the environment, says JOHN WILLIAMS

The cost of our food rarely includes the cost of maintaining and improving the natural resource base from which it is produced. This is a clear indicator of market failure.

Further, farmers continue to be caught with declining terms of trade and can no longer be expected to produce cheap, clean food and fibre, as well as provide the "ecosystem services" urban societies are demanding.

These services will need to be paid for and be recognised as a fundamental part of the economy.

Farmers in the future will be paid not only for the goods they produce but for the services they deliver in managing healthy landscapes, rivers, wetlands and estuaries.

Thus the future will require a new vision for the role of agriculture in the landscape.

Farmers will be seen as custodians and managers of the life-support systems for society as a whole.

This service should be recognised as a fundamental part of our economy, and paid accordingly.

We need agricultural enterprises that yield food and fibre coupled with management of native ecosystems that is given a present day value.

Currently, future generations are footing the bill.

In 2002, the Wentworth Group argued we must establish new economic systems to pay farmers for environmental services.

Where we expect farmers to maintain land, vegetation, wetlands, rivers and estuaries and improve the natural resource base from which our food and fibre is produced, we should pay them.

Unless our society values natural resource assets on privately managed land (some 80 per cent of the Australian continent) these environmental assets will be lost.

Currently natural resource assets on private land such as key vegetation habitats, wetlands and streams are a financial liability.

They have much more value to our society as cropping and pasture lands, car parks, shopping centres, suburbia or resorts.

Yet natural resource assets on privately managed land hold the key for healthy, resilient landscapes on which all Australians ultimately depend.

Currently our most common solutions are either further regulation that tends to erode property rights, or purchase and conversion of land with natural assets into a national park or reserve. We must find other ways.

One of the first ecosystem services to emerge is the storage of terrestrial carbon to help mitigate climate change.

However, putting a price on carbon or other ecosystem services can be a double-edged sword.

If implemented with foresight and planning, it could be a critical tool in the fight against climate change and also a way to breathe new life into rural landscapes.

If implemented poorly, its effectiveness in combatting climate change will not only be reduced but will lead to less water for our parched rivers, the loss of productive farm land and more pressure on our declining biodiversity.

Our landscapes are not blank canvasses on which we can randomly unleash our markets for ecosystem services.

We must understand this riddle if we are to avoid creating a new suite of environmental problems.

A key requirement here is to ensure that all land-use change and vegetation management is consistent with a regional or catchment plan that has a blueprint for landscape-wide vegetation planning.

We need a plan with market-driven signals and incentives which support remnant native vegetation with planting of trees in ways that minimises reduction in river flows and maximises the opportunity for maintaining food and fibre production while improving biodiversity and, of course, carbon storage.

Clearly this signals a need for planning to ensure carbon and other ecosystem services markets drive the creation of sustainable and resilient landscapes.

The good news is we can have our cake and eat it too.

The carbon market and incentives and markets for ecosystem services can work together to deliver the multiple benefits to rural productivity, water resources, health of land, soils and biodiversity.

As these markets develop, we can expect an increasing proportion of farm income will derive from managing healthy landscapes, rivers, wetlands and estuaries, the production of clean water and the sequestration of carbon dioxide.

Today, farmers are seen simply as the providers of food and fibre. Tomorrow they will be seen as the custodians and managers of the life support systems for society as a whole.

• John Williams is head of the Natural Resources Commission in NSW, former chief of CSIRO Land and Water and was a founding member of the Wentworth Group of Concerned Scientists.