Economic Analysis of Agricultural Soil Carbon Sequestration: An Integrated Assessment Approach
Antle, John M., Capalbo, Susan M., Mooney, Sian, Elliott, Edward T., Paustian, Keith H., Journal of Agricultural and Resource Economics
This study develops an integrated assessment approach for analysis of the economic potential for carbon sequestration in agricultural soils. By linking a site-specific economic simulation model of agricultural production to a crop ecosystem model, the approach shows the economic efficiency of soil carbon (C) sequestration depends on site-specific opportunity costs of changing production practices and rates of soil C sequestration. An application is made to the dryland grain production systems of the U.S. Northern Plains which illustrates the sensitivity of the sequestration costs to policy design. The marginal cost of soil C ranges from $12 to $500 per metric ton depending upon the type of contract or payment mechanism used, the amount of carbon sequestered, and the site-specific characteristics of the areas.
Key words: carbon sequestration, Century ecosystem model, econometric process model, economic efficiency, integrated assessment approach, marginal cost of soil C
Over the last decade there has been a high level of interest in carbon (C) sequestration as an efficient means for offsetting greenhouse gas (GHG) emissions. Starting with Sedjo and Solomon and a report from the National Academy of Sciences, carbon sequestration has been suggested as a potentially low-cost means to reduce atmospheric concentrations of GHGs. The Kyoto Protocol to the United Nations Framework Convention on Climate Change added further impetus to carbon sequestration. If ratified, this agreement would require the United States and many other industrialized countries to reduce net emissions of GHGs 6-8% below 1990 levels by 2008-2012.
Agricultural soil C sequestration can be enhanced through changes in land use or changes in production practices. Changes in agricultural land use and management practices alone could potentially sequester between 75 and 208 million metric tons (MMT) of C per year in agricultural soils (Lal et al.). This represents approximately 5-12% of U.S. annual emissions of all GHGs. A single land use or management practice, however, will not be effective at sequestering C in all regions. Lal et al. estimate approximately 49% of agricultural C sequestration can be achieved by adopting conservation tillage and residue management, 25% by changing cropping practices, 13% by land restoration efforts, 7% through land-use change, and 6% by better water management. Furthermore, if and when a producer reverts to conventional management, stored C is released.' These assessments are based on the technical potential for soils to sequester C; additional research is needed to demonstrate whether agricultural producers could sequester C at a cost competitive with emissions reductions or the use of other C sinks such as forests.
Previous economic studies of C sequestration in the United States have focused primarily on the conversion of cropland to forest land (Adams et al.; Parks and Hardie; Alig et al.; Pfaff et al.). Producers convert land to trees if they are compensated for the agricultural rents of the land, where the rents reflect regional or county-level estimates of net returns to agricultural lands. Plantinga, Mauldin, and Miller, and Stavins utilize county-level econometric land-use models to derive the costs of sequestering soil C associated with conversion of cropland to forested uses and vice versa. In these studies, the marginal cost of C sequestration increases as higher quality agricultural lands are converted to forested use. Within the agricultural sector, Pautsch et al., and Feng, Zhao, and Kling have addressed carbon sequestration costs associated with changes in tillage practices, notably the adoption of conservation tillage.
This study extends the economic literature on C sequestration by showing how the integrated assessment approach to analysis of agricultural production systems (Antle and Capalbo) can be used to estimate the marginal cost of sequestering C in soil. …