Food
Environment
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BiorenewablesCarbon Sequestration
Objective: To explore options for reducing carbon dioxide concentration in the atmosphere, particularly using economic incentives in the agricultural sector to sequester carbon.
Economic assessment of multiple benefits of conservation tillage
In this study, we estimate empirically the multiple benefits of a subsidy policy that would offer payments to farmers in return for the adoption of conservation tillage and compare the outcomes of alternative targeting designs for such a policy. Using data for roughly 12,000 National Resource Inventory (NRI) points, we simulate for the state of Iowa the least-cost policy schemes for offering payment incentives. We use an economic model of conservation tillage adoption to evaluate the costs of adoption, and we use a model that simulates physical processes (Environmental Policy Integrated Climate, or EPIC) to estimate the environmental benefits of adoption at each of the NRI points.
We assess the costs and environmental consequences of two targeting options. The first is a practice-based policy instrument that maximizes the acres of land in conservation tillage, regardless of the level of environmental benefits achieved. The second is a performance-based instrument that yields the highest amount of environmental benefits per dollar spent. We consider four performance-based benefits: carbon sequestration in agricultural soils, reduction in nitrogen runoff, reduction of erosion of soil by wind, and reduction of erosion of soil by water. We find that the practice-based instrument provides high proportions of the four benefits relative to the performance-based instrument, especially at higher budget levels. Similarly, we estimate that targeting one of the four benefits provides high percentages of the other benefits compared to the amounts obtainable if they were targeted directly. See CARD Working Paper 03-WP 326. See also Agriculture and the Environment.
Transaction costs in environmental policy: assessment for carbon sequestration in agricultural soils
The 2002 farm bill includes conservation programs that could pay farmers for adoption of carbon-friendly agricultural practices. If soil carbon storage can be measured at the field level, a payment program can target sites with higher carbon storage potential, thereby cost-effectively achieving sequestration. When field level measurement is not available, the program can only target at more aggregate levels, such as counties or crop reporting districts. This study estimates the value of accurate field-scale measurement by estimating the cost savings associated with the ability to target at the field level. See Agriculture and the Environment.
A theoretical exploration of the optimal carbon sequestration path and the efficiency of some alternative policies
In particular, we develop a dynamic model to investigate the optimal time paths of carbon emissions, sequestration, and the carbon stock. We show that carbon sinks should be utilized as early as possible, and carbon flow into sinks should last until the atmospheric carbon concentration is stabilized. We rule out any cyclical patterns of carbon sequestration and release. We propose and assess three mechanisms to efficiently introduce sequestration into a carbon permit trading market: a pay-as-you-go system, a variable-length-contract system, and a carbon annuity account system. Although the three mechanisms may not be equally feasible to implement, they are all efficient.
The dynamics of carbon sequestration and measures of cost-effectiveness
The economics literature on sequestration often discusses the cost-effectiveness of carbon sequestration alternatives. Researchers sometimes use average or marginal costs and annual carbon supply curves as measures of cost-effectiveness. Sequestration is inherently a temporal process, and how time is accounted for in the various measures of cost-effectiveness is critical for appropriate cross-study comparisons. Three factors that affect the magnitude of measured cost-effectiveness are examined: the study period, the sequestration path, and the discount rate if discounting is used. We illustrate empirically the extent to which these factors affect the consistency of cross-study comparisons.
In this study, we estimate empirically the multiple benefits of a subsidy policy that would offer payments to farmers in return for the adoption of conservation tillage and compare the outcomes of alternative targeting designs for such a policy. Using data for roughly 12,000 National Resource Inventory (NRI) points, we simulate for the state of Iowa the least-cost policy schemes for offering payment incentives. We use an economic model of conservation tillage adoption to evaluate the costs of adoption, and we use a model that simulates physical processes (Environmental Policy Integrated Climate, or EPIC) to estimate the environmental benefits of adoption at each of the NRI points.
We assess the costs and environmental consequences of two targeting options. The first is a practice-based policy instrument that maximizes the acres of land in conservation tillage, regardless of the level of environmental benefits achieved. The second is a performance-based instrument that yields the highest amount of environmental benefits per dollar spent. We consider four performance-based benefits: carbon sequestration in agricultural soils, reduction in nitrogen runoff, reduction of erosion of soil by wind, and reduction of erosion of soil by water. We find that the practice-based instrument provides high proportions of the four benefits relative to the performance-based instrument, especially at higher budget levels. Similarly, we estimate that targeting one of the four benefits provides high percentages of the other benefits compared to the amounts obtainable if they were targeted directly. See CARD Working Paper 03-WP 326. See also Agriculture and the Environment.
Transaction costs in environmental policy: assessment for carbon sequestration in agricultural soils
The 2002 farm bill includes conservation programs that could pay farmers for adoption of carbon-friendly agricultural practices. If soil carbon storage can be measured at the field level, a payment program can target sites with higher carbon storage potential, thereby cost-effectively achieving sequestration. When field level measurement is not available, the program can only target at more aggregate levels, such as counties or crop reporting districts. This study estimates the value of accurate field-scale measurement by estimating the cost savings associated with the ability to target at the field level. See Agriculture and the Environment.
A theoretical exploration of the optimal carbon sequestration path and the efficiency of some alternative policies
In particular, we develop a dynamic model to investigate the optimal time paths of carbon emissions, sequestration, and the carbon stock. We show that carbon sinks should be utilized as early as possible, and carbon flow into sinks should last until the atmospheric carbon concentration is stabilized. We rule out any cyclical patterns of carbon sequestration and release. We propose and assess three mechanisms to efficiently introduce sequestration into a carbon permit trading market: a pay-as-you-go system, a variable-length-contract system, and a carbon annuity account system. Although the three mechanisms may not be equally feasible to implement, they are all efficient.
The dynamics of carbon sequestration and measures of cost-effectiveness
The economics literature on sequestration often discusses the cost-effectiveness of carbon sequestration alternatives. Researchers sometimes use average or marginal costs and annual carbon supply curves as measures of cost-effectiveness. Sequestration is inherently a temporal process, and how time is accounted for in the various measures of cost-effectiveness is critical for appropriate cross-study comparisons. Three factors that affect the magnitude of measured cost-effectiveness are examined: the study period, the sequestration path, and the discount rate if discounting is used. We illustrate empirically the extent to which these factors affect the consistency of cross-study comparisons.