Easy winnings? The economics of carbon sequestration in agricultural soils

Marit Kragt, David Pannell, Michael J. Robertson and Tas Thamo

No 109247, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: Carbon sequestration in agricultural soil has been identified as a potential strategy to offset greenhouse gas emissions. Within the public debate, it has been claimed that provision of positive incentives for farmers to change their land management will result in substantial carbon sequestration in agricultural soils at a low carbon price. There is, however, little information about the costs or benefits of carbon sequestration in agricultural soils to test these claims. In this study, the cost-effectiveness of alternative land-use and land-management practices that can increase soil carbon sequestration is analysed by integrating biophysical modelling of carbon sequestration with whole-farm economic modelling. Results suggest that, for a case study model of a crop-livestock farm in the Western Australian wheatbelt, sequestering higher levels of soil carbon by changing rotations (to include longer pasture phases) incur considerable opportunity costs. Under current commodity prices, a profit-maximising farmer would require over $60 compensation for every additional tonne of CO2-e stored in soil, depending on their adoption of residue retention practices. Lower carbon prices are likely to generate only modest increases in soil carbon sequestration.

Keywords: Agricultural and Food Policy; Crop Production/Industries; Environmental Economics and Policy; Farm Management (search for similar items in EconPapers)
Pages: 26
Date: 2011-07-15
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Working Paper: Easy winnings? The economics of carbon sequestration in agricultural soils (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uwauwp:109247

DOI: 10.22004/ag.econ.109247

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