Restoring Australia’s farm dams could slash emissions, improve water quality, boost livestock productivity, and enhance biodiversity – all at low cost.

Hardly a minute goes by in Australian politics, business, the environment sector, and increasingly among the general public, without discussion about achieving net zero by 2050. Yet one major source of agricultural greenhouse gas emissions has been largely overlooked. Fortunately, there are straightforward ways to reduce these emissions while also boosting agricultural production and improving drought resilience and biodiversity.

This problem – and opportunity – lies in the millions of poorly managed farm dams across the country. The benefits of restoring dams are well supported by substantial research and can be achieved through a new financing model that imposes no added financial burden on farmers.

Consider the following scenario. On a hot summer day, a farmer drives a couple, visiting from the city, to a farm dam. The water is dirty – fouled by livestock urine and faeces. The farmer says, “let’s have a drink." The woman responds, unamused “this water is not drinkable!” Her partner asks the question: “if the water is so bad can you expect the stock to drink it?”

This captures the reality of the vast majority Australia’s 1.765 million farm dams. Water quality is often appalling, with high levels of E. coli and faecal coliforms, slowing livestock weight gain. Poorly managed dams also generate large amounts of nasty greenhouse gas emissions in the form of methane and nitrous oxide, and lose vast volumes of water through evaporation. They are generally poor habitats for biodiversity such as frogs, birds, and aquatic species such as freshwater crayfish (or yabbies).

Recent research shows that simple restoration strategies can lead to marked and rapid improvements in dam condition. Fencing keeps livestock from fouling the waterbody or becoming bogged in the mud at the water’s edge. Ground cover plantings filter animal waste and sediments before they enter the dam, and decrease soil erosion through root stabilisation. Trees planted around dams provide shade, lowering water temperatures and making it more palatable and healthier for livestock.

By comparing more than 100 well managed and unmanaged dams, research has found significant improvements in water quality within one to two years.

Critically, restored dams can shift from being sources of greenhouse gases to becoming carbon sinks. Livestock weight gain can increase by 10-20 per cent, and the positive response of biodiversity is spectacular – including birds, frogs, aquatic plants, and a wide array of native invertebrates.

Modelling of better shading and management has shown a slowing of evaporation by around 30 per cent. Given the steep rise in empty dams across many regions in recent decades, this is a huge boost for drought resilience.

Renovating a farm dam typically costs $6,000-$8,000, depending on size. Conventional economic analyses show that the productivity gains far outweigh these costs. But alongside the benefits for animals, biodiversity and farm profitability, there is another largely unrecognised payoff: major reductions in methane emissions. Research illustrates that replacing all unfenced dams with well managed fenced dams, would cut CO2 emissions by an amount equivalent to taking around 3.6 million fossil fuel-driven cars off the road.

These climate benefits remain almost entirely absent from policy discussions, despite their scale.

How might farmers undertake this work in a practical, affordable way? One option is a revenue-contingent loan system, similar in principle to the Higher Education Contribution Scheme (HECS) for university students. Under such a model, government would provide the upfront funds to farmers for dam restoration, with repayments required only in years where farm revenues are relatively high. Because restored dams help lift farm revenues and productivity, this approach aligns repayment with the efficiency benefits farmers receive.

For taxpayers, the cost would be low or close to zero. For farmers and their livestock, the gains are tangible. And for the climate, the reductions in greenhouse gas emissions would be significant, with a positive biodiversity “dividend”.

The story of farm dams shows how identifying hidden problems – and supporting innovative solutions – can lead to a rare win-win-win outcome across economics, climate, and the environment. Policy will be negligent if this rare opportunity is missed.

The views expressed in this article may or may not reflect those of Pearls and Irritations.