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Shrub cover has increased in semi-arid regions worldwide. This change has generally been viewed as land degradation, due to shrub-induced declines in pastoral productivity. As a consequence, widespread management treatments to reduce shrub density have been applied in many pastoral areas. These treatments, however, often do not have long-term positive benefits for forage production. Alternative uses for shrub-encroached lands have received little consideration, but a recent move towards economic incentives for carbon (C) storage could lead to financially viable alternative land management strategies. We examined changes in above- and belowground C storage following 20 years of factorial land management treatments (grazing/no grazing and shrub removal/no removal) in an Australian semi-arid woodland. Disturbance by shrub removal (root ploughing) and/or livestock grazing significantly reduced the amount of soil organic carbon (SOC). The most disturbed treatment (grazed and ploughed) contained the least SOC (15.30 Mg C ha(-1)) while protection from grazing and shrub removal led to the greatest SOC (28.49 Mg C ha(-1)). Declines in SOC in shrub removal treatments (with and without grazing) were compensated, in part, by enhanced aboveground C accumulation, derived mainly from woody plants. Destocking currently grazed shrublands for two decades resulted in a net C accretion, over 20 years, in the order of 6.5 Mg ha(-1), almost entirely through increasing belowground C. At the current price for C in Australia, the economic benefit for C accumulation from removing livestock grazing would be similar to the economic benefit of grazing. The results suggest that C farming in this semi-arid woodland system may offer an economically viable alternative management strategy to grazing, although uncertainties in future climate, C credit value, and assessment protocols present hurdles for implementing alternative management aimed at C farming. (c) 2013 Elsevier B.V. All rights reserved.