Farmers could be almost $3 billion a year richer if they invested in clean energy measures such as wind and carbon farming, according to a report by the nation's top science agency.
The Agriculture Alliance on Climate Change (AACC) commissioned the CSIRO to examine opportunities to provide fuel, as well as greenhouse-friendly food, to the national economy.
Farmers could earn up to $1.3 billion a year, including wind royalties of up to $263 million, by harvesting clean, renewable energy and farming carbon, the CSIRO report found.
The total potential revenue, including biodiversity stewardship payments, was up to $2.94 billion.
Following the CSIRO report, the AACC made several key recommendations, including setting a clean renewable energy target of 25 per cent by 2020.
"The interests of rural businesses and landholders are likely to be best served by scenarios with more ambitious mid-term emissions reduction targets, along with higher carbon prices and policies that support renewable energy deployment in the near-term," the AACC said.
"It is likely that a range of clean energy technologies will be able to meet projected demand for peak and base load power to 2050 and beyond."
Last month, the Federal Government pledged 30,000 gigawatt hours of energy each year would come from low emissions sources by 2020 - about 15 per cent of national energy consumption.
Labor has backed a 60 per cent cut from 2000 levels by 2050.
The AACC called for boosting biodiversity conservation on private land from six to 14 per cent nationally.
"Environmental stewardship payments have the potential to address climate-related pressures on both landholders and ecosystems," it said.
"Implementing an ambitious, voluntary stewardship scheme could more than double the area of actively conserved native vegetation through total outlays of $740 million to $1,360 million per year, some of which might be funded through the carbon value of the native vegetation protected."
The AACC also recommended creating environmentally sound offsets in the rural sector, as part of a national emissions trading scheme (ETS).
"Policy makers should engage the agriculture sector in the design of an emissions trading scheme so that ... agriculture has a say in how and when agriculture is included as an active participant in an ETS and complementary policies so that the sector is rewarded for early action," it said.
Both the government and Labor have embraced a national emissions trading scheme.
Members of the AACC include the Australian Conservation Foundation, WA Farmers Federation and The Climate Institute.The CSIRO - Commonwealth Scientific and Industrial Research Organisation - is Australia's national science agency