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Is setting aside highly erodible cropland for carbon storage economically viable?

Research has been conducted to estimate the amount of carbon that can be stored in agricultural soils, but less is known about the economic value of that stored carbon. The objective of this study was to estimate the economic value of stored carbon that accumulates when agricultural land is removed from production. A supply curve for carbon storage was developed to demonstrate the relationship between the costs of storing carbon and the amount of carbon that can be stored. This information allows landowners to be aware of a potential income stream from an alternative to traditional crop production and industry to have some idea of the costs of carbon dioxide offsets.

Atmospheric carbon dioxide concentration levels have been increasing since 1850 and increasing rapidly since 1945, which concerns many scientists. According to US Environmental Protection Agency estimates, industry was responsible for 56% (mostly from electricity production) and transportation 32% of total carbon dioxide emissions from the United States in 2004. In the future, industries may be required to reduce their carbon dioxide emissions to help lower the impact on the atmosphere. They will select the least expensive method for achieving these reductions; either through directly reducing their carbon dioxide emissions or by purchasing carbon dioxide credits from other sources.

A potential source of carbon dioxide credits may be from agricultural landowners. Agricultural soils currently store carbon, and this stock of carbon may be increased through changes in agricultural production and management practices. Removing land from crop production and planting it to a perennial crop such as grass and/or legumes has been demonstrated to increase carbon stored in the soil. This type of activity may be warranted on land that is susceptible to soil erosion such as highly erodible land. This study analyzes the economic implications of planting perennial grass to increase stored carbon on the 21.9 million ha (54.1 million ac) of highly erodible agricultural land in the United States used for production of corn, cotton, sorghum, soybean, and wheat in 1997. The amount of carbon that can be stored in soils and the cost of changing management or cropping practices to increase the amount of stored carbon were estimated.

When a landowner removes land from crop production, the income from selling the harvested crop is lost. Since individual landowners may have different costs of production, crop yields, and therefore profit, the land rental rate, adjusted for differences in crop yield to account for higher valued cropland, is used to estimate the value of lost crop income. This represents the opportunity cost (value of the next best alternative to producing and selling a crop) to the landowner of implementing an activity that will increase the amount of stored carbon.

The amount of carbon that may be stored when land is removed from crop production depends on the climate, soil characteristics, and plants that are grown. Soil carbon accumulation was estimated in this study using an approach established by the Intergovernmental Panel on Climate Change (IPCC). For this analysis, an estimation was made based on land being removed from crop production and planted to perennial grass for the period 1997 to 2017.

The analysis indicates that setting aside highly erodible land and planting it to grass could increase the amount of stored carbon by 10 million metric tons (11 million tons) each year. Overall, the marginal cost of the carbon storage activity ranges from $19 per metric ton ($17 per ton) from eliminating cotton production to $1,538 per metric ton ($1,395 per ton) for discontinuing soybean production on sandy soils. The lower cost reflects the soil disturbance and low residue inputs from cotton production on soils that can store significant carbon with different crop and management systems. The higher cost is the result of eliminating a high value crop from a soil that does not accumulate soil carbon well. The overall weighted average marginal cost for removing all production on highly erodible land is $288 per metric ton ($261 per ton) of carbon. The largest increase in soil carbon occurs in the Prairie Gateway, a region in the southern Great Plains from Nebraska to Texas, where 3.6 metric tons (4 tons) per year of carbon could be stored at an average marginal cost of $135 per metric ton ($122 per ton) of carbon.

Setting aside highly erodible land eliminates profits that could be earned through crop production, which increases the cost of the carbon credits that could be generated. The marginal cost of increasing soil carbon by discontinuing crop production is higher than carbon dioxide credits currently trade for in Europe ($47 per metric ton [$43 per ton]).

For more information see the full paper on pages 367-375 of this issue (Sperow 2007).

REFERENCE

Sperow, M. 2007. The marginal costs of carbon sequestration: Implications of one greenhouse gas mitigation activity. Journal of Soil and Water Conservation 62(6):367-375.
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Title Annotation:TECH TRANSFER BRIEFING
Author:Sperow, Mark
Publication:Journal of Soil and Water Conservation
Article Type:Report
Geographic Code:1USA
Date:Nov 1, 2007
Words:814
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