Policies to address global warming must be multifaceted, encompassing all industries and rich and poor nations and consumers. Taxes that bring private marginal costs up to social marginal costs induce private firms to act in the public interest. A carbon emissions tax, for example, would apply to agriculture and nonagricultural enterprises. Parry (2002) has estimated that a gasoline tax of $1.00 per gallon, 2.5 times the current U.S. rate, is required to bring private cost up to the social cost. That externality tax correction applied to all carbon fuels, not just gasoline, could significantly reduce carbon emissions and encourage a shift to cleaner energy.
Other policies would encourage sequestering carbon in agricultural soils. Farming practices that sequester carbon in soils also reduce atmospheric carbon. When carbon is sequestered as organic matter, it is kept out of the atmosphere where it causes global warming. Organic matter holds water and nutrients such as phosphate, potash, and nitrogen for slow release to growing plants. Organic matter improves soil structure to diminish soil compaction and erosion. High-yield agriculture in general helps to confine cropping to environmentally safe areas, thereby enhancing soil conservation, wildlife, and biodiversity.
Tanner (2000) measured the cost of sequestering additional carbon in soils with crops, livestock, and trees under specific resource situations for northern Ohio. The cost of carbon sequestration was measured by the net income foregone by following enterprises and practices that build carbon reserves in the soil. Not surprisingly, she found considerable complementarity — some measures that increased organic matter in soils in perpetuity also increased farm income in perpetuity. Her study found that the cost in foregone net receipts to farmers per metric ton for modest levels of carbon sequestration achieved with no-tillage practices is less than Nordhaus's (1993) estimates of benefits of carbon sequestered per year, ranging from $6 per metric ton of carbon (MTC) in 2001 to $21 per MTC by 2100.
Continuous no-tillage corn, the most profitable rotation for farmers, also ranked at or near the top in sequestering carbon. On the other hand, Tanner's (2000) results indicated that the cost per metric ton of carbon sequestered is several times higher than estimated benefits, and hence is economically prohibitive for other tillage practices under the resource situations considered in her study.
Agricultural crops and practices other than no-tillage could not compete with forestry and fossil fuel conservation measures in cost-effective carbon sequestration. Tanner (2000) calculated the one-time cost, which is equivalent to total net present cost in perpetuity at a 5% discount rate, to be $5 per metric ton of carbon sequestrated in Ohio forests. Nordhaus (1991), Adams et al. (1999), and Plantinga et al. (1999) report that the cost for sequestering carbon in U.S. forests ranges from a low of $5 to a high of $120 per MTC depending on the region and forestry sector. Annual cost is also below the discounted benefit of $6 (short run) to $21 (long run) for storing a metric ton of carbon in perpetuity as reported earlier by Nordhaus (1993). Furthermore, compared to crops in northern Ohio, forests have the potential to sequester approximately 100 times as much carbon per hectare. Thus, it pays to store high levels of carbon in forests rather than in croplands. Forest costs would rise, and could become uneconomic if a significant amount of cropland were to be lost to forests, driving up the cost of food, cropland, and forestland.
No-tillage continuous corn was found to be the most profitable crop per acre and per ton of carbon sequestered in the northern Ohio. However, it is less profitable in areas of the Corn Belt having cold, wet, and tight soils in the spring, and in areas troubled by perennial weeds that must be controlled by cultivation. Banded tillage and other technologies are being developed to address such problems. Each resource situation is unique; study is needed of agriculture's potential to profitably sequester carbon under the diverse conditions found around the world.
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