Climate change is a double edged sword for agriculture. Firstly, there is the challenge of maintaining sustainable production and profitability given the likelihood of more adverse climate conditions and consequent needs to adapt agricultural risk management such as converting marginal crop land to permanent pasture. Secondly, agriculture can help mitigate climate change by reducing and capturing GHG emissions but this may also reduce profitability. This paper outlines our on-farm work in southern Queensland's Darling Downs region, and highlights bio-economic analyses to assess climate impacts and management options concerning the contribution of sown pastures to agricultural returns including changes in soil health through increased soil carbon. Current field trials on 7 properties address sub-tropical sown grass and grass-legume pastures established on both old cultivations and pastures needing renovation. Carbon levels in these soils (0-10 cm) are low and range from 0.4% on sandy loams to 2.0% on clay soils. A modified version of the GRASP model is being used to assess impacts of climate variability, climate change and management on the growth and condition of sown pastures, cattle live weight gains, economic returns, GHG emissions and soil carbon. Results show significant annual and decadal fluctuations in pasture productivity. They highlight the benefits of legumes and the importance of adjusting stock numbers to manage risk. Results are relevant to some 0.3 M ha in the region and suggest carbon sequestration rates up to 500 kg/ha/yr. Rates are dependent on environment and management regimes and can be negative due to drought or over-grazing.