Economic and Resource Impacts of Policies to Increase Organic Carbon in Agricultural Soils

Aziz Bouzaher, Derald Holtkamp, Randall Reese, Jason F. Shogren
May 1993  [93-WP 105]

Economic impacts are evaluated for four agricultural policies intended to increase organic carbon stored in agricultural soils. Two policies are directed at changing agricultural practices on tillage and cover crops. The other two involve alternative land use scenarios under the Conservation Reserve Program (CRP) and the Wetlands Reserve Program (WRP).

Two economic simulation models are used. The Resource Adjustment Modeling System (RAMS), a linear programming model, is capable of evaluating an extensive set of crop production practices including tillage, cover crops, rotations, irrigation, and several conservation practices for U.S. corn and sorghum areas. RAMS provides short-run, region-specific results for producer income, resource use, erosion, and cropping patterns as well as information about the mix of agricultural practices. The alternative land use scenarios under CRP and WRP are evaluated by the Basic Linked System (BLS), an applied general equilibrium model capable of estimating the economic effects of changing land use patterns on the agricultural sector.

Several scenarios are considered for each of the four policies and the results are compared with a baseline set of outcomes. In most cases under the BLS, producers and consumers are worse off, so any increase in organic carbon stored in the soil must be weighed against the economic costs. Decreases in erosion and fertilizer use from higher levels of conservation tillage and cover crops must be included in the environmental side of the equation. For the CRP and WRP scenarios the costs of these programs are more than offset by savings from commodity program outlays.

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