Download Document

Bio-economics of Climate Change
Payments for Carbon Sequestration in Michigan
This poster shows how strategies to mitigate global warming can also help
Michigan farmers earn more money from their conservation practices.
Carbon sequestration credits: Potential gains
for Michigan landowners
The growth in Michigan’s forests raises the state’s carbon
sequestration potential. Michigan farmers can earn income by
selling carbon credits from post-1990 forest plantations and
post-1999 grass plantings and no-tillage practices. The
estimated value of carbon credits from Michigan is $9.3
million/annum. As CO2 emissions rise, there will be a higher
demand for these carbon credits.
This produces the ‘the greenhouse effect’. CO2
absorbs more heat in the atmosphere, leading to
global warming, thereby increasing temperature,
changing weather patterns, melting glaciers and
polar ice, and raising sea level. Continued global
warming may have adverse impact on national
and international economies.
Carbon Sequestration – a solution
Possible solutions to combat global warming include reducing CO2
emissions (e.g. by burning less fossil fuels) and carbon sequestration
– removing excess CO2 from the atmosphere and storing it as other
forms of carbon. Plants and trees absorb CO2 from the atmosphere
and convert it into biomass and soil organic matter through
photosynthesis. Forestry, conservation tillage, and grass plantings
are viable carbon sequestration activities.
France
Australia
1990
2002
UK
Germany
Japan
USA
6400
19200
6200
6000
5800
18400
5600
18000
5400
17600
5200
1992
1997
2000
3000
4000
5000
6000
7000
8000
Million Tons of CO2e
19600
18800
1000
Realizing this value will require:
• ‘aggregator’: an organization that helps individual
farmers link up and sell carbon credits on CCX.
• ways to reduce costs for monitoring and measuring
carbon sequestration on farmers’ fields. Researchers
are working on computer based models that can use
satellite images to monitor and measure carbon
sequestration on farmers’ fields.
2002
Years
Forest Area
Total Carbon Stock
Potential Income for Michigan Landowners from Carbon Sequestration
The Kyoto Protocol enacted in 2005, requires member
countries to reduce carbon emissions by 5.2% below
1990 levels by 2008-12. Countries can achieve these
targets by trading in carbon credits, which are units of
carbon emissions reduced at source (measured in tons
of CO2 equivalent – tCO2e). These efforts have led to
growth in carbon markets such as the European Union
Emission Trading Scheme. In 2006, more than 760
million tCO2e were traded in this market, valued at
$18.9 billion. Another market for carbon credits is the
US based Chicago Climate Exchange.
Chicago Climate Exchange (CCX) and Carbon Payments
Farmers can make money by selling carbon sequestration credits
from forestry, conservation tillage, and grass plantings. In 2005,
Iowa farmers sold 20,000 tons of carbon credits on the CCX from
no-till farmland and grasslands. The University of Iowa, a CCX
member, bought all these credits. As the map shows, Michigan can
also earn CCX carbon payments for conservation tillage, grass
planting, and forestry.
Italy
Forest Carbon Stock in Michigan is
Increasing
1987
Markets for carbon credits
CCX is a voluntary emission reduction and trading program
whose members reduce their carbon emissions by 1% per year.
Members include Ford, DuPont, IBM, Motorola, New Mexico,
Chicago, and Universities of Minnesota and Iowa. Members that
cannot reduce their own emissions can buy credits from other
members that exceed their reduction targets and from farmers
engaged in carbon sequestration. Since its 2003 inception, CCX
has traded more than 15 million tons of carbon credits. The
present price of carbon on CCX is $4/ton.
Michigan
0
Total Carbon Stock
(million tons CO2e)
Life on earth exists due to presence of gases like carbon dioxide (CO2) that keep
the earth’s surface warm by absorbing sun’s radiation reflected by it. The global
carbon cycle keeps the optimum concentration of CO2 in the atmosphere. Human
activities – burning of fossil fuels and large-scale deforestation – have disrupted
this natural cycle by sharply increasing the atmospheric CO2 concentration.
Forest Area
(thousand acres)
Threat of Global Warming
Global Carbon Emissions Are Increasing
US Central Region for CCX Soil Offsets
325,682
Sequestration
(tons of CO2/acre)
2.4
Land under Christmas Trees
60,520
Land under woody crops
Land Use
Post-1990 Timberland
Acres
Total Sequestration
(tons of CO2)
At CCX price
($4/ton CO2)
781,637
3,126,548
2.4
145,248
580,992
10,966
2.4
26,318
105,272
Land under Conservation Tillage
296,666
0.5
148,333
593,332
Idle land for cover crops
Woodland
607,936
0.5
303,968
1,215,872
1,224,237
0.75
918,178
3,672,712
Total
2,526,007
2,323,682
9,294,728
*Calculations based on conservative sequestration estimate of 6 ton CO2 / acre for post-1990 timberland. CCX estimates of
0.50 ton CO2 / acre for both land under conservation reserve and for cover crops, and 0.75 ton CO2 / acre for woodlands.
In November 2006, MSU joined the CCX as part of its
commitment to promote ‘green’ technologies and reduce its
own emissions of about 520,000 tons CO2e/year. As CCX
prices continue to rise, MSU can help Michigan farmers sell
additional carbon credits on the exchange, thus setting an
example for all the Great Lakes states.
Data Sources
Chicago Climate Exchange, Department of Natural Resources, Intergovernmental Panel on Climate Change, Michigan
Land Resource Project, MSU (Office for Campus Sustainability), Natural Resource Conservation Service, United
Nations Environment Program, UN Framework Convention on Climate Change, University of Michigan (SNRE),
USDA (National Agricultural Statistical Service), US Environment Protection Agency, and USDA (Forest Service).
Offsets for no-till or grasses
Offsets for grasses only
Contributing Authors
Rohit Jindal (CARRS), John Kerr (CARRS), Stuart Gage (Entomology), Gene Safir (Plant Pathology), Brent Simpson
(Institute of International Agriculture), David Skole (Forestry), and Terry Link (Office for Campus Sustainability).