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JOHN ANTLE, SUSAN CAPALBO, SIAN MOONEY Departm ent of
Agri cu!tural Economi cs and Eco nom ics, M ontana State Un iversity
M
any industrial-
C credits at a cost that
annual increase
ized counties are
is economically compet-
in C resulting
looking at ways
itive with other so urces.
ftom a change to
croppmg systems
Recent research suggests
that U.S. emissions could
to reduce their net emissions
of greenhouse gases such as
carbon dioxide. The Kyoto
be reduced by up. to 8 percent
protocol of the United
thtough sequestering C in agricul-
Nations Framework
(Ural soils (Lal et al.1998) .
Soil C can be increased by adopting
Convention on Climate Change inuo-
that increase biomass production in six
different "agroecozones"
within Montana. C estimates are predicted using the Century ecosystem
duces the idea of a C (carbon) credit
management practices that reduce soil
model (Antle et al. 2001). Figure 1
trading scheme that would give credit
disturbance (and thus C oxidation)
shows that the quantity of C sequestered
to participating countries for reducing
and/or increase biomass production. A
varies across space, thus all management
emissions domestically or purchasing
mix of practices is likely under a market
practices are not equally suited to each
them internationally. This potential
for C reflecting the spatial variability of
area. Based on Figure 1, ecozone 58a-
new market could be beneficial to agri-
resource endowments and economic
high has tl1e greatest technical potential
cultural producers if they can provide
considerations. Figure 1 presents the
to sequester soil C. Examining only tl1e
technical potential ignores a key eco-
Figure 1. Average annual rate of carbon accumu lation for selected crop system
changes that increase biomass (Century ecosystem model)
nomic question: what level of incentive
or compensation is required to encourage producers to adopt practices tl1at
increase soil C?
A producer will participate in a policy or market to sequester additional C
if the net returns from production
0.8
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0' ..
QJ c.s
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~
..
0.5
u
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0 __
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.0
VI
changes plus tl1e market value of C
0.7
QJ
•
53a high
produced exceed the net returns from
•
53a low
existing production practices. Figure 2
•
58a high
•
58a low
presents C supply curves for each
region, reflecting the opportunity COSt
0,4
c.s C
per metric ton of C incurred by pro-
~ ~ 0.3
c.s u
C
0';:;
'.;:i
ducers tl1at swi tch to a system that
.-
Q)
:o~
0.2
sequesters additional soil C.
-c
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0.1
0
For example, 3 million metric tons
SF-WF
SF-WF
SF -GR
SF -SR
SF-WR
24
C H O I C ES
Fall 2002
SF-GR
Spring
Spring
Spring
Spring
wheat
wheat
wheat
wheat
fallow
fallow
fallow
fallow
SF-SR
to
to
to
to
SF-W R
winter wheat fallow
grass
continuous spring wheat
continuous winter wheat
of C can be supplied from ecozone 52high for approximately $45 per metric
ton, while the same quantity in ecozone 58a-high could be supplied for
approximately $60 per meuic ton.
Figure 2. Supply of carbon at payments ranging between
$10 to $100 per metric ton
lW~----------------------------~==~
. 52 high
. 52 low
100
c
•
•
•
•
~
u
EC!>
2;
~
80
53a hilJh
53a low
58a high
58a low
Figure 3. Proportion of eligible land area entering a carbon payment
program at payments ranging between $10 to $100 per metric ton
lW ~~~==~--------------------------c
100
. 52 high
. 52 low
BO
• 53a high
• 53a low
• 58a high r - - - - - - - - - -f--+f--+>H - -
~
-EC!>
• 58a low
2;
bO
~
C!>
bO
C!>
D-
c.
~ 40
~
(5
0
Vl
~ 40
(5
0
W
0
0.0
W
05
1.0
15
2.0
25
3.0
35
4.0
45
5.0
00.0
u
~
Addit ional Carbon (Mi llion Met r ic Tons )
u
u
~
U
U
M
U
Proportion of Area Entering Payment Program
Figure 2 demonsrrates that the efficien-
tions that vary by location have two
and Economics, Montana State
cy of so il C sequestration varies spatial-
imporrant implications. First, a market
University, Bozeman, 2001.
ly and is dependent on both the bio-
for C will be beneficial ro regions that
physical rates of C accumulation and
have tile lowest opporrunity cOSts per
Intergovernmental Panel on C limate
the site-specific opportunity costs of
metric ron of C sequestered, and as the
Change (IPCC). Land Use, Land-Use
changing production practices.
demand for C increases, there will be
Change, and Forestry. A special report of
the Intergovernmental Panel on Climate
Change. R.T. Watson, LR. Noble, B.
Figure 3 shows that as the price per
more opporrunities for more producers
metric ron of C increases, parricipation
to
in C sequestration also increases.
enter tile market. Second, C can be
sequestered in agricultural soils of the
Bolin, N.H. Ravindranath, D.].
T hese shares are simulated using a
Northern Great Plains at a cost compet-
Verardo, and D.]. Dokken, eds.
model for dryland grain production in
itive with other sources. Related work
Canlbridge: Cambridge University
Montana (An tle et a1. 2001). The
by Stavins (1999) and IPCC (2000)
Press, 2000.
model reflects both site-specific net
show tllat forest practices can sequester
returns and the biophysical potential
C at costs that range from $3 per metric
LaI, R. , L.M. Kimble, R.F.
ro sequester C. At low payment levels,
ton to over $100 per merric ton. These
Follert, and C.V Cole. The
only producers with the lowest oppor-
figures suggest that C sequesrration
tunity cost per metric ron C will par-
could provide new economic opportuni-
ticipate. As payments increase, produc-
ties for U.S. agricultural producers.
Potential of U S. Cropland to
Sequester C and Mitigate the
Greenhouse Effect. Chelsea,
MI: Ann Arbor Press, 1998.
ers with higher opportuni ty cos ts can
enter the market increas ing the percentage of producers and land area
that are engaged in the market and the
benefits that accrue ro agriculture.
Impli cations for agriculture
Biophysical and economic condi-
For More Information
Antle, ].M., S.M. Capalbo, S. Mooney,
and K.H. Paustian. "Spatial heterogene-
Stavins, R.N. 1999. "The
costs of carbon sequestra-
ity, contract design and the efficiency of
tion: A revealed-preference
carbon sequestration policies for agri-
approach. " Amer. Econ.
culture." Draft working paper.
Rev. 89(September
Department of Agricultural Economics
1999):994- 1009.
Fall 2002
CH O I C ES
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