Market Impact of Domestic Offset Programs

Tristan Brown, Amani Elobeid, Jerome Dumortier, Dermot J. Hayes
January 2010  [10-WP 502]

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Suggested citation:

Brown, T., A. Elobeid, J. Dumortier, and D.J. Hayes. 2010. "Market Impact of Domestic Offset Programs." Working paper 10-WP 502. Center for Agricultural and Rural Development, Iowa State University.


Three recent reports have estimated the market impacts of domestic offset programs, including afforestation, contained in the American Clean Energy and Security Act (ACES). The magnitude of these estimated impacts motivates this study. We show that with carbon prices as low as $30 per metric ton, a significant number of U.S. crop acres would be used to grow trees and this would cause price increases for some U.S. commodities. Although we present only one carbon price scenario, the modeling approach that we use suggests that the acreage and price impacts we describe here would increase at higher carbon prices.

Keywords: afforestation, agricultural sector, commodity prices, land-use change.