Economic Potential of Greenhouse Gas Emission Reductions: Comparative Role for Soil Sequestration in Agriculture and Forestry

Uwe A. Schneider, Bruce A. McCarl, Brian C. Murray, Jimmy R. Williams, Ronald D. Sands
August 2001  [01-WP 281]

The authors use the Agricultural Sector Model to analyze the economic potential of soil carbon sequestration as one of several agricultural greenhouse gas emission mitigation strategies, including afforestation. For low incentives on carbon emission savings, agricultural soil carbon sequestration is the most cost-efficient strategy. As incentive levels increase above $50 per ton of carbon equivalent, afforestation and biofuel production become the key strategies, while the role of soil carbon diminishes. If saturating sinks are discounted based on their net present value, the competitive economic equilibrium among agricultural mitigation strategies shifts away from soil carbon sequestration and afforestation and toward more biofuel production. Regardless of the discounting assumption and the carbon savings incentive level, the economic potential of soil carbon sequestration never attains its technical potential as estimated by soil scientists. The authors also estimate the impacts of agricultural mitigation policies on welfare, prices, production, and input use in the traditional food and fiber sector and the effects of emission leakage from unregulated agricultural sources.

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