agricultural carbon sequestration and poverty john m. antle dept of ag econ & econ, montana...

Agricultural Carbon Sequestration and Poverty

John M. Antle

Dept of Ag Econ & Econ, Montana State U

http://www.tradeoffs.montana.edu/

http://agrss.sherman.hawaii.edu/sm-crsp

Thanks to my colleagues without whose support this research would not be possible:

• Charles Crissman, CIP, Nairobi

• Bocar Diagana, Montana State U

• Kara Gray, Montana State U

• Ibrahima Hathie, ENEA, Senegal

• Andre de Jager, LEI, the Netherlands

• Jetse Stoorvogel, Wageningen UR

• Roberto Valdivia, Montana State U

• Alejandra Vallejo, Wageningen UR

• David Yanggen, CIP, Lima

I. Basic Concepts

II. Linkages to Poverty

III. Evidence from Peru, Senegal and Kenya

IV. Conclusions

I. Basic Concepts

o Land use & management practices increase or decrease ecosystem C (key indicator of soil health)

Soil C

Time

C0

CV

CC

T0 T1 T2

Permanence: What happens after T2?Permanence: What happens after T2?

I. Basic Concepts

o Land use & management practices increase or decrease ecosystem C

o Payments to farmers can create incentives for farmers to change LU & management to increase C until stock is max’ed

o Issues in C seq literature:

• Technical vs economic potential

• Productivity effects & dynamics

• Permanence & leakage

• Adoption costs

• Incentive design

Additionality

Per-hectare vs per-ton payments

Symmetric vs asymmetric incentives

Transaction costs

Contract participation decision (Antle et al, JEEM, 2003):

g > NR + A + TC

For per-ton carbon payment, g = PC, thus

P > (NR + A + TC)/C

Carbon

Price ($/MgC)

Technical Potential

Carbon

Price ($/MgC)

(A + TC)/C

Technical Potential

II. Linkages to Poverty

• Those who benefit most have low opp cost of adoption

Are the poorest farmers on the adoption margin?

Additionality targets non-adopters …

• Fixed cost and trans cost create adoption threshold

These costs have greatest impact at low C prices and where carbon rates are low.

• Opp cost NR may decline over time as C accumulates and system productivity increases

Carbon Permanece as an Emergent Property of Production Systems:

Farmers who lack knowledge of system dynamics can be provided an incentive to learn the benefits of improved soil management. This can lead to permanent adoption of improved practices without permanent external incentives.

(Antle and Diagana, AJAE 2004)

Time

Opportunity cost of adoption

T0 T1

Case 1: Opportunity cost always positive

Case 2: Opportunity cost declines and becomes negative before the end of the contract

III. Evidence from Three Case Studies

o Case studies:

• Terracing and agroforestry in the Peruvian Andes

• Nutrient and crop residue management in Senegal’s peanut basin

• Nutrient management (mineral fertilizer, manure, crop residues) in Machakos district of Kenya

o Methods:

• Case studies based on statistically representative samples of spatially-referenced data

• Bio-physical and econometric-process models simulate site-specific land use and management decisions under base scenario and carbon contract scenarios

• Spatial distribution of contract participation decisions are used to derive carbon supply curves for the population in the region

Tradeoff Analysis: Integrated Assessment of

Agricultural Production Systems

Soils & Climate Data Economic Data

Crop/Livestock Models Economic Model

Land Use &Management

Environmental Process Models

EconomicOutcomes

EnvironmentalOutcomes

YieldDSSAT/Century

Econometric- Process

NUTMON

Spatial Aggregatio

n

The Tradeoff Analysis Software is a GIS-based system designed to

integrate disciplinary data and models for integrated assessment

of agricultural systems.

An on-line course, the software, and applications for Ecuador,

Peru, Senegal and Kenya can be downloaded at www.tradeoffs.nl.

C r o p m o d e l s

E c o n o m i c m o d e l s

L e a c h i n g m o d e l E r o s i o n m o d e l

I n h e r e n t p r o d u c t i v i t y

C a r b o f u r a n u s e P o t a t o i n t e n s i t y

T i l l a g e e r o s i o nC a r b o f u r a n l e a c h i n g

0

2 5 0

5 0 0

7 5 0

1 0 0 0

0 2 4 6 8 1 0

T i l l a g e e r o s i o n ( c m / y r )

Carbofur

an leac

hing (g/h

a/yr)

C r o p m o d e l s

E c o n o m i c m o d e l s

L e a c h i n g m o d e l E r o s i o n m o d e l

I n h e r e n t p r o d u c t i v i t y

C a r b o f u r a n u s e P o t a t o i n t e n s i t y

T i l l a g e e r o s i o nC a r b o f u r a n l e a c h i n g

0

2 5 0

5 0 0

7 5 0

1 0 0 0

0 2 4 6 8 1 0

T i l l a g e e r o s i o n ( c m / y r )

Carbofur

an leac

hing (g/h

a/yr)

Terracing and agroforestry in the Peruvian Andes (Cajamarca)

• Evidence shows terracing and agroforesty are profitable for some farmers but adoption is only about 30%

• Incomplete adoption explained by spatial heterogeneity in bio-physical and economic conditions

• Carbon contracts would provide payments for carbon in soil and above-ground biomass

• In contrast to conservation “projects” that subsidize all farmers, only farmers at the adoption margin would have an incentive to participate

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

0 10 20 30 40 50 60 70 80 90 100

% Subsidy

% P

rofi

tab

le t

erra

ced

fie

lds

Poly. (Inv&Maint Subs High Slope) Poly. (inv&main Sub Low Slope)

Poly. (Inves Subs High Slope) Poly. (Inves Subs Low Slope)Invest . & Maint . Subsidy High SlopeInvestment Subsidy High Slope

Investment Subsidy Low Slope Invest . & Maint . Subsidy Low Slope

Const. & Maint . Subsidy High SlopeConstruction Subsidy High Slope

Construction Subsidy Low Slope Const. & Maint . Subsidy Low Slope

Invest . & Maint . Subsidy High SlopeInvestment Subsidy High Slope








0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80

85

90

95

100

0 10 20 30 40 50 60 70 80 90 100

% Subsidy

% P

rofi

tab

le t

erra

ced

fie

lds

Poly. (Inv&Maint Subs High Slope) Poly. (inv&main Sub Low Slope)

Poly. (Inves Subs High Slope) Poly. (Inves Subs Low Slope)Invest . & Maint . Subsidy High SlopeInvestment Subsidy High Slope




























The importance of heterogeneity: profitability of terracing is a function of site-specific conditions (e.g., slope).

Carbon payments create incentive for additional adoption.

Marg inal C ost C urves C arbon S equestration

0

50

100

150

200

250

300

350

0 200000 400000 600000 800000 1000000 1200000

Carb on (me tr ic to n s)

Pri

ce

($

/me

tric

to

n)

T errace LC

T errace HC

T errace LC + Agro f LC

T errace LC + Agro f HC

T errace HC + Agro f LC

T errace HC + Agro f HC

Terraces Low Carbon (LC) Terraces High Carbon (HC) Terraces LC + Agroforestry LC

Terraces LC +Agroforestry HC Terraces HC +Agroforestry LC Terraces HC +Agroforestry HC


0

50

100

150

200

250

300

350

0 200000 400000 600000 800000 1000000 1200000


Pri

ce

($

/me

tric

to

n)

T errace LC

T errace HC






0

50

100

150

200

250

300

350

0 200000 400000 600000 800000 1000000 1200000


Pri

ce

($

/me

tric

to

n)

T errace LC

T errace HC











Carbon Supply Curves for Terracing and Agroforestry for Low (LC) and High (HC) Carbon Rate Scenarios

0

25000

50000

75000

100000

125000

150000

175000

200000

225000

250000

100 125 150 175 200 225 250 275 300 325 350

Productivity Effect (BATPROD)

Car

bon

(met

ric

tons

)

Terrace LC Terrace HC Terrace LC + Agrof LC Terrace LC + Agrof HC Terrace HC + Agrof LC Terrace HC + Agrof HCTerraces Low Carbon (LC) Terraces High Carbon (HC) Terraces LC + Agroforestry LC


0

25000

50000

75000

100000

125000

150000

175000

200000

225000

250000

100 125 150 175 200 225 250 275 300 325 350


Car

bon

(met

ric

tons

)

Terrace LC Terrace HC Terrace LC + Agrof LC Terrace LC + Agrof HC Terrace HC + Agrof LC Terrace HC + Agrof HC

0

25000

50000

75000

100000

125000

150000

175000

200000

225000

250000

100 125 150 175 200 225 250 275 300 325 350


Car

bon

(met

ric

tons

)

Terrace LC Terrace HC Terrace LC + Agrof LC Terrace LC + Agrof HC Terrace HC + Agrof LC Terrace HC + Agrof HC

0

25000

50000

75000

100000

125000

150000

175000

200000

225000

250000

100 125 150 175 200 225 250 275 300 325 350


Car

bon

(met

ric

tons

)

Terrace LC Terrace HC Terrace LC + Agrof LC Terrace LC + Agrof HC Terrace HC + Agrof LC Terrace HC + Agrof HCTerraces Low Carbon (LC) Terraces High Carbon (HC) Terraces LC + Agroforestry LC




The adoption margin: What conditions favor additional adoption of carbon-sequestering practices?

Nutrient and crop residue management in Senegal’s Peanut Basin

•Field data show very low use of mineral fertilizer, high rates of nutrient depletion, very low SOM

• Carbon contracts would pay farmers to increase mineral fertilizers and incorporate crop residues

Crop residues are the key to increasing soil C in nutrient-deficient systems

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

- 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

Carbon (t)

$US/

t

D E F G H I

Policy: (peanut fert kg/ha, millet fert kg/ha; R=residue incorporation)

D: 0, 0; R=50% G: 0, 0; R=100%

E: 30, 20; R=50% H: 30,20; R=100%

F: 60, 40; R=50% I: 60, 40; R=100%

Note participation

at zero carbon price

Key constraint is opportunity cost of crop residues that are used by small, poor farmers to feed livestock

Transaction costs constrain participation in C contracts at low carbon prices

$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

- 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000

Carbon (t)

$US/

t

F TC=$2 F TC=$10 I TC=$2 I TC=$10

Nutrient management in Machakos, Kenya

• Mineral fertilizer use low in this maize-based, mixed crop-livestock system

• Extensive terracing has reversed catastrophic soil erosion seen in the early-mid 20th Century (Tiffen et al., More People, Less Erosion), but WUR Nutrient Monitoring data show high rates of nutrient depletion

• Carbon contracts would pay farmers to increase use of mineral and organic fertilizers

Technology: Zero-grazing units provide opportunity to improve nutrient management efficiency and livestock

productivity.

LOW C RATEMED C RATEHIGH C RATE

FCARB1110987654321

PC

AR

B19,000

18,000

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Machakos C Supply Curves

for Low, Medium and High Carbon Rates


POVERTY565452504846444240383634

PC

AR

B19,000

18,000

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Machakos: Impact of Carbon Sequestration Payments

on Poverty (% < $1/day)

Machakos: Impact of Carbon Sequestration

on Nutrient Depletion (kg/ha/season)


DEP10W4846444240383634

PC

AR

B19,000

18,000

17,000

16,000

15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Machakos: Impact of Carbon Sequestration

on Poverty and Nutrient Depletion


DEP10W4846444240383634

PO

VE

RT

Y

56

54

52

50

48

46

44

42

40

38

36

34

Importance of Heterogeneity: Impact of C Sequestration on Poverty and Nutrient

Depletion in Machakos, by Village (Medium C Rate)

0

10

20

30

40

50

60

70

80

90

10 20 30 40 50 60 70 80 90

Nutrient Depletion (kg/ha/yr)

Pove

rty (%

< $

1/da

y)

VILLAGE 1 VILLAGE 4 VILLAGE 5 VILLAGE 7 VILLAGE 3 VILLAGE 6

Conclusions

o Evidence shows ag C sequestration has some potential to reduce poverty and enhance sustainability in semi-subsistence systems

However evidence also suggests that disadvantaged areas may benefit less than more productive regions.

o Key issues are:

• System dynamics and heterogeneity

• Opportunity costs of improved practices

• Transaction costs & institutional capability

Can participation in carbon markets help disadvantaged areas overcome constraints on technology adoption?

For example, could a carbon-based rural micro-credit program enhance farmers’ ability to reverse soil nutrient depletion in marginal areas?

This presentation and related publications are available at:

www.tradeoffs.montana.edu

www.climate.montana.edu

www.tradeoffs.nl

agricultural carbon sequestration and poverty john m. antle dept of ag econ & econ, montana...

Documents

tc c slide

lima slide

montana state u slide

management decisions

lu management

low c prices

ecosystem c opayments

carbon permanece