Carbon Farming: A Preliminary Economic Analysis of Carbon Credits for No-Till and Cover Crops

Authors

Drew Havens, University of Nebraska-LincolnFollow
Richard K. Perrin, University of Nebraska-LincolnFollow
Lilyan E. Fulginiti, University of Nebraska-LincolnFollow

Date of this Version

3-22-2023

Citation

Cornhusker Economics (March 22, 2023)

Agricultural Economics, University of Nebraska-Lincoln

Abstract

Summary Based on experimental data about the amount of carbon sequestered and estimated implementation costs, our preliminary results show that the average cost of sequestering carbon via no-till (about $22 per ton of CO₂e) appears to be much lower than the $51 per ton social value of sequestering that ton. In contrast, our preliminary results show that the average costs of sequestration via adoption of cover crops is much higher, about $60 per ton. Depending on how accurate soil carbon models are in predicting sequestration on individual fields to qualify them for enrollment, reimbursement costs for planting cover crops could well result in average net social benefit (this is certainly the case for some fields.)

One implication of these results is that if the government were to establish a program to reimburse all farmers for implementing no-till, the social benefits would exceed the estimated average cost of sequestration. But any program to reimburse farmers for adopting cover crops would only be beneficial if carbon models provide sufficient accuracy in predicting which fields to enroll