The Value of Accurate, Field-Scale, Soil

Carbon Assessment Technology:

Conservation Tillage in Iowa

Lyubov Kurkalova, Catherine Kling, and Jinhua Zhao

Center for Agricultural and Rural Development

Department of Economics

Iowa State University

Paper presented at USDA Symposium on Natural Resource Management to

Offset Greenhouse Gas Emissions, Raleigh, NC, November 2002

Background

Agricultural practices can sequester carbon

Lots of excitement about potential

• To lower atmospheric concentrations of Carbon

• To provide an additional revenue source for farmers

Policy Possibilities

Carbon markets

• Voluntary, small scale

• US Mandate, akin to SO2 cap & trade

Direct payments of subsidies

• Conservation Security Program

• CRP

Subsidy Programs

Practice – Based

• Pay for adopting new practices

• Easy to observe, but ignores heterogeneity in land and potential C storage

Performance – Based (like a C market)

• Pay for C sequestered

• Either expected or measured

Hybrid: Can target land that yields most C benefits, but pay for practice

Role of Soil Carbon Measurement Technology in Policy Design and Implementation

Carbon Market

• Accurate, field-scale measures of incremental C storage to verify legitimacy of trades

Subsidy Programs

• Practice-based (no targeting) demands less accuracy

• Targeted or performance-based requires more accuracy

Our Paper: What are Cost Savings from Accurate Field Scale Measurements?

Use conservation tillage adoption model combined with EPIC to empirically study alternative targeting strategies in Iowa

Questions:

• What is the marginal cost of sequestering C if adoption occurs in most cost-effective locations first?

• What are the cost savings of having the information needed to identify the cost-effective locations? How much more would a straight practice-based system cost to get the same benefits?

• What are the cost savings of targeting at crop reporting districts, or counties, but not field-level?

Problem Facing Program Designer

Wants to minimize costs of achieving a given level of carbon sequestration

cn = cost of enrolling farm n (bids)

X = ΣXn = total amount of carbon from n farms

Which bids should be accepted? Compute cn/Xn = cost per ton of carbon sequestered

Rank order cn/Xn lowest to highest, enroll fields until you get your desired level of carbon

Performance-based subsidy or C market can achieve this

Simple Numerical Example

Region1 Cost/Ton Region 2 Cost/Ton

Point A 4 Point C 5

Point B 2 Point D 2Mean 3 3.5

Least Cost to Achieve 2 tons: Pt B, Pt D = $4

Cost with only means: Pt A, Pt B = $6

Conservation Tillage in Iowa

Econometric model of adoption of conservation till

EPIC for environmental indicators, including Carbon,

Adoption model and EPIC runs predict at NRI points (~13,000 points in Iowa)

0

50

100

150

200

250

300

0 100 200 300 400 500 600 700 800 900 1000

Carbon, 1,000 Metric Tons

Mar

gin

al C

ost

, $ p

er M

etri

c T

on

Field, median

Field, 2.5 percentile

Field, 97.5 percentile

Marginal Cost Under Field-Level Targeting

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1,000.0

Carbon, 1,000 Metric Tons

Co

st s

avin

gs,

%

State to Field, median

CRD to Field, median

County to Field, median

State to Field, 2.5 percentile

State to Field, 97.5 percentile

CRD to Field, 2.5 percentile

CRD to Field, 97.5 percentile

County to Field, 2.5 percentile

Couty to Field, 97.5 percentile

Cost Savings: From State -, CRD -, and County - Level to Field - Level Targeting

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0 1,000.0

Carbon, 1,000 Metric Tons

Co

st s

avin

gs,

$ p

er M

etri

c T

on

State to Field, median

CRD to Field, median

County to Field, median

State to Field, 2.5 percentile

State to Field, 97.5 percentile

CRD to Field, 2.5 percentile

CRD to Field, 97.5 percentile

County to Field, 2.5 percentile

Couty to Field, 97.5 percentile

Cost savings per ton of Improved Targeting

Final Remarks

Accurate field-scale measurement technology key for policy implementation

Value is high for field-scale measurement