Measuring the opportunity cost of carbon sequestration in tropical agriculture
Abstract
Although a market for carbon sequestration does not yet exist, it is important to assess the cost of sequestering carbon in agricultural systems in anticipation of this market and assess weather such markets might be viable. A method is presented for measuring the opportunity cost of sequestering carbon on tropical farms. Rates of carbon sequestration are derived for timber and agro-forestry systems, and used to compute incentive compatible compensating payment schedules for farmers who sequester carbon. The method is applied to data for an agricultural watershed in the Philippines. Area- and land quality-adjusted total costs are estimated. Furthermore, the effects of these systems on environmental externalities are assessed. The results show that the present value of the opportunity cost of carbon storage via land modification falls between $3.30 and $62.50 per ton. Carbon storage through agroforestry is found to be more cost-effective than via a pure tree-based system.
Degree
Ph.D.
Advisors
Shively, Purdue University.
Subject Area
Agricultural economics
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