The business case for carbon farming in the USA

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Jo, Haeun
Wongpiyabovorn, Oranuch
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BioMed Central Ltd
Plastina, Alejandro
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

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  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

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Center for Agricultural and Rural Development

The Center for Agricultural and Rural Development (CARD) conducts innovative public policy and economic research on agricultural, environmental, and food issues. CARD uniquely combines academic excellence with engagement and anticipatory thinking to inform and benefit society.

CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food, and environmental groups; individual decision-makers; and international audiences.

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U.S. agricultural producers are increasingly able to participate in private voluntary carbon initiatives that compensate their efforts to sequester CO2, reduce GHG emissions, and provide ecosystem services through eligible conservation practices. This study examines the potential effects of alternative private payment regimes (per practice vs. per output), prices paid to farmers relative to out-of-pocket costs (low vs. high), and the availability of information on CO2 sequestration (limited vs. full), on the adoption of cover crops and no-till in the United States, the resulting CO2 sequestration, and changes in farmers’ net returns. The analysis relies on a highly stylized model of heterogeneous farms calibrated with county-level agronomic data, and simulated for current estimates of GHG impacts of cover crop planting and no-till under different scenarios. Our results indicate that agricultural carbon markets can be profitable for U.S. farmers, although with substantial geographic variability, and that annual carbon sequestration could range between 17 and 75 million mtCO2e. Payments per output would incentivize higher carbon sequestration than payments per practice, but the former regime would be less favored by farmers as a unified group than the latter (due to lower aggregate net returns). However, if operators of farms with high carbon sequestration potential could decide the payment regime to be implemented, they would choose the payment per output regime (due to higher net returns per enrolled hectare). Total projected net changes in GHGs under payments per practice, based solely on county-average net GHG effects of cover crops and no-till, over-estimate actual total GHG sequestration (based on the entire distribution of net effects by county) by 2.1 and 14.2 million mtCO2e, or 18% and 21%, respectively.
This article is published as Plastina, A., Jo, H. & Wongpiyabovorn, O. The business case for carbon farming in the USA. Carbon Balance Manage 19, 7 (2024). © The Author(s) 2024. This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made.