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Deriving Australian Citizens’ Willingness to Pay for Carbon Farming Benefits: A Choice Experiment Study

Ynze Landstra and Marit Kragt

No 229286, Working Papers from University of Western Australia, School of Agricultural and Resource Economics

Abstract: The Australian Government is facing the considerable challenges to cut back greenhouse gas emissions to five percent under 2000 levels by the year 2020. One of the substantial emission sectors in Australia is agriculture and the Australian Government is pursuing policies to incentivise emission reductions by farmers. These incentives are driven by the Carbon Farming Initiative (CFI), which is a national programme that financially compensates farmers who take measures to reduce their greenhouse gas emissions or increase carbon storage in soils and vegetation. Next to mitigating greenhouse gas concentrations, carbon farming practices can be accompanied by so-called ‘co-benefits’ such as positive effects on biodiversity, increasing the value of landscape aesthetics and the reduction of soil erosion. These co-benefits will generate social and environmental values that are not only experienced by farmers but also by other citizens. A better understanding of the values that the public attaches to these co-benefits can play an important role to support farmers in their carbon farming practices. This is because if projects deliver more benefits next to carbon mitigation, buyers might be willing pay a higher price for the carbon credits. In this study, we measure the public’s willingness to pay (WTP) for the co-benefits of carbon farming. A choice experiment was conducted among Australian citizens that included three environmental attributes: carbon emission reductions, increase in native vegetation and a reduction in soil erosion. The results of multi-nominal logit models and mixed logit models show that Australians are likely to receive welfare benefits from carbon mitigation activities that also provide biodiversity benefits. This means that carbon farming policies could potentially be broadened to capture co-benefits and not be restricted to solely carbon sequestration. Public incentives that aim to change agricultural land management could therefore include higher payments for carbon credits that generate additional environmental co-benefits.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 27
Date: 2015-12-19
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DOI: 10.22004/ag.econ.229286

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