Modeling the Costs and Volumes of
GHG Offsets: Soil C Sequestration
John M. Antle
Professor of Agricultural Economics and Economics
Montana State University
jantle@montana.edu
www.climate.montana.edu
Some sources:
• Paustian, K., J.M. Antle, J. Sheehan, and E.A. Paul. (2006).
Agriculture’s Role in Greenhouse Gas Mitigation. Arlington, VA:
Pew Center on Global Climate Change.
• Consortium for Agricultural Soils Mitigation of GHGs (CASMGS)
RFF/EPA GHG Offsets Workshop, May 12, 2009
Soil C
C0
CC
CV
T0
Begin conventional
land use practice
T1
Adopt
conservation
management
T2
Maximum
sequestration
potential reached
Time
Farm-level decision to enter a C contract
• Opportunity cost of changing practices =
change in returns + other adoption & transaction costs
• For payment P ($/ha), expected sequestration rate C
(MgC/ha), farmer will enter contract if
P > (Opportunity Cost)/C
• Most studies use opp cost principle
Modeling C Rates
• Tillage, fertilization, fallow, rotations, soil
conservation measures
• Established field measurement methods &
models, extensively validated, but
uncertainties remain
• High degree of spatial variability which
averages out in large regions: important
for creating tradable C contracts
Modeling Opportunity Cost of Soil C
• Baseline practice vs CS practice
– Static vs dynamic productivity
– Output & input price uncertainty
– Changes in land allocation among crops
• Transaction costs
– Contracting
– Measuring, verifying C rates & practices
(Antle et al. JEEM 2003, Mooney et al. CJAE 2004)
• Permanence, leakage
US C supply curves from studies of afforestation and crop soils
(from Pew Report)
200
180
What are key
assumptions,
sensitivities causing
these divergent results?
160
Carbon Price ($/MgC)
140
120
100
80
60
40
20
0
0
50
100
150
200
250
300
Carbon (million MgC per year)
ERS Afforestation
ERS Crops
MS Afforestation
MS Crops
SR Afforestation
MS Biofuels
350
Lessons from a Study in the
Central U.S.
Antle, J.M., S.M. Capalbo, K.H. Paustian,
and M.K. Ali. (2007). “Estimating the
Economic Potential for Agricultural Soil
Carbon Sequestration in the Central
United States Using an Aggregate
Econometric-Process Simulation Model.”
Climatic Change 80(1-2):145-171.
C rates for adoption of no-till in
corn-soy (MgC/acre/yr)
Carbon supply curves for adoption of conservation tillage
in the corn-soy-feed system, central US
200
180
160
Carbon Price ($/metric ton)
140
120
100
80
60
40
20
0
0
1000000
2000000
3000000
4000000
Carbon (metric tons/yr)
TC=0
TC=5
Mean C, TC = 0
5000000
6000000
7000000
Comparison of carbon supply curves for adoption of
conservation tillage in the corn-soy-feed system, Iowa
200
180
160
Carbon Price ($/metric ton)
140
120
100
80
60
40
20
0
0
200000
400000
600000
800000
1000000
Carbon (metric tons/yr)
Aggregate EP Model, Century C rate x 2
Feng et al
Aggregate EP Model, Century C rates
1200000
Effect of N2O and Fuel Use on C Sequestration Potential
250
A. Swan and S. Ogle, NREL CSU
Carbon Price ($/MgC)
200
150
100
50
0
0
1
2
3
4
5
Carbon Equivalents (MgC)
C positive
C + N2O pos
C + N2O + Fuel pos
C negative
C + N2O neg
C + N2O + Fuel neg
6
Grazing Lands vs Ag Soils in US Northern Plains
(Preliminary!)
250
Price ($/MgC)
200
150
100
50
0
0
1
2
3
4
5
6
7
Carbon (Million MgC/yr)
Crop Soils
Grazing Management
Legume Interseed
Geologic
8
9
Conclusions
• Large differences in estimates due to C rates, land use
assumptions in GP, other?
• Despite model uncertainties, studies show that soil C is
cheap but small component of GHG mitigation potential
in U.S.
– Near technical potential if U.S. policy aims to
substantially reduce GHG emissions
• N2O a potentially important factor, not clear how Cmarkets would incorporate it
• Environmental co-benefits lower net cost (e.g., water
quality, wildlife), but raise policy design issues
• Institutional, technical capacity to implement in US (e.g.,
CCX) but lacking in other places