Academic journal article Contemporary Economic Policy

The Efficiency of Sequestering Carbon in Agricultural Soils

Academic journal article Contemporary Economic Policy

The Efficiency of Sequestering Carbon in Agricultural Soils

Article excerpt

CATHERINE L. KLING [*]

Agricultural tillage practices are important human-induced activities that can alter carbon emissions from agricultural soils and have the potential to contribute significantly to reductions in greenhouse gas emission (Lal et al., The Potential of U.S. Cropland, 1998). This research investigates the expected costs of sequestering carbon in agricultural soils under different subsidy and market-based policies. Using detailed National Resources Inventory data, we estimate the probability that farmers adopt conservation tillage practices based on a variety of exogenous characteristics and profit from conventional practices. These estimates are used with physical models of carbon sequestration to estimate the subsidy costs of achieving increased carbon sequestration with alternative subsidy schemes. (JEL Q38)

I. INTRODUCTION

The Kyoto Protocol to the United Nations Framework Convention on Climatic Change, (UNFCCC, 1998), proposes to limit future aggregate anthropogenic carbon dioxide- equivalent greenhouse gas emissions (Article 3.1). The Kyoto Protocol also establishes the concept of credits for carbon sinks. These credits can be used to meet a country's emission limitation and reduction commitment. Currently, carbon sinks are limited to recent efforts in afforestation, reforestation, and deforestation and do not include agricultural soils (Article 3.3). However, Article 3.4 leaves the future inclusion of agricultural soils a distinct possibility by stating, "Parties to this Protocol shall ... decide upon modalities, rules, and guidelines as to how, and which, additional human-induced activities related to greenhouse gas emissions by sources and removals by sinks in the agricultural soils and the land use change and forestry categories shall be added to or subtracted from the assigned amounts."

Conservation tillage is the primary means of increasing soil carbon. Conservation tillage uses crop residue to serve as mulch to protect and increase the soil organic carbon (SOC) levels. Conventional tillage systems disturb the soil, leading to oxidation and subsequent loss of soil carbon, and leave it unprotected from wind and rainfall, resulting in a decrease in SOC levels. Increasing the adoption of conservation tillage will increase carbon sequestration rates in agricultural soils and decrease the greenhouse gas emissions from the agricultural sector (Lal et al., 1998).

The purpose of this article is to examine various government- and market-based instruments to reduce the amount of carbon emissions from agricultural soils through the increased adoption of conservation tillage. First, the farmer's adoption decision is formally modeled. Next, the design of subsidy and market-based instruments are discussed with specific focus on the institutions and practices surrounding agricultural policy. Finally, the costs of implementing a variety of subsidy and market-based schemes are estimated and compared.

II. A MODEL OF CONSERVATION TILLAGE ADOPTION AND CARBON SEQUESTRATION

In this section, we present a simple adoption model of the farmer's tillage choice and a model of changes in carbon soil levels. Carbon sequestration levels will depend on the farmer's choice of tillage practice and the environmental impact of that choice. Hence, the expected change in environmental quality from a newly instituted policy depends on the increased probability that conservation tillage is adopted and the expected change in soil carbon levels. Because both adoption probabilities and the change in carbon levels vary across production sites, the site-specific expected change in environmental quality must be aggregated across all sites to obtain the aggregate change in expected supply.

Producers will adopt either a conventional or conservation tillage system when growing their crops. Conservation tillage generally lowers fuel, labor, and machinery costs relative to conventional tillage. …

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