Relationship Between the Implicit Value of Riverside Property, Environmental Amenities, and Streambank Protection

Land Economics/Use,

EX POST LIABILITY VERSUS EX ANTE BONDING AS INSTRUMENTS FOR ADDRESSING ENVIRONMENTAL IMPACTS OF GENETICALLY MODIFIED CROPS

Crop Production/Industries, Environmental Economics and Policy,

A COST-EFFECTIVENESS ANALYSIS OF ACTIONS TO REDUCE STREAM TEMPERATURE AT THE WATERSHED SCALE

A cost-effectiveness frontier is developed to compare economic and environmental tradeoffs associated with planting a riparian buffer to reduce stream temperature at the watershed scale. Results indicate that total welfare change and its distribution among sectors vary between scenarios. The policy selected may differ if riparian plantings are voluntary rather than mandatory.Environmental Economics and Policy, Land Economics/Use,

OPTIMAL SPATIAL SCALE FOR EVALUATING ECONOMIC AND ENVIRONMENTAL TRADEOFFS

This paper develops a conceptual framework that can provide a scientific foundation for formulating policies that consider environmental and economic tradeoffs. It addresses a critical problem recognized in the environmental sciences, namely, choosing the appropriate spatial scale for measurement and analysis of spatially variable economic and biophysical processes.scale, carbon sequestration, agriculture, economic policy, Environmental Economics and Policy, Industrial Organization,

CONTRACTING FOR SOIL CARBON CREDITS: DESIGN AND COSTS OF MEASUREMENT AND MONITORING

Many firms anticipate that a cap on greenhouse gas emissions will eventually be imposed, either through an international agreement like the Kyoto protocol or through domestic policy, and have started to take voluntary actions to reduce their emissions. If agricultural producers participate in the emerging market for tradable C-credits, it must be possible to verify that actions farmers take do increase the amount of C in soils and this increase can be maintained over the length of the contract. In this paper we develop a prototype measurement and monitoring scheme for C-credits sequestered in agricultural soils and estimate its costs for the small grain-producing region of Montana using an econometric-process simulation model. Three key results emerge from the prototype framework. First, the efficiency of measurement and monitoring procedures for agricultural soil C sequestration depends on the price of C credits. Second, we find that at all price levels, costs of measuring and monitoring are largest in areas that exhibit the greatest heterogeneity in carbon values. Third, in a case study application of our prototype measurement and monitoring scheme, we find that if we assume similar error and confidence levels as forestry contracts, the upper estimate of measurement and monitoring costs associated with a contract that pays farmers per tonne of C sequestered is 3% of the value of a C-credit. This cost is small relative to the estimated net value of the contract. Thus we conclude that measurement and monitoring costs are not likely to be large enough to prevent producers from participating in a market for tradable credits.Environmental Economics and Policy,

Comparisons of Carbon Pools and Economic Profitability for Managed Ponderosa Pine Stands in Wyoming, USA

A forest carbon (C) sequestration project was conducted to evaluate the economic incentives that would be required by landowners to engage in C trading under different management regimes. Costs associated with joint management for C sequestration and timber would be valuable for establishing sound forest C trading systems. In this study, we calculated the C yield and amortized value of three Wyoming, ponderosa pine stands. The management practices examined were, unmanaged, even-aged (regene-ration after clear-cut) and uneven-aged (selectively harvested). Costs and revenues associated with three stands were converted into 2006 real dollars using the all commodity producer price index to facilitate a comparison among the net revenues of three stands. Net revenues were annualized using a conservative annual interest rate of 4.5%. Our even-aged stand had the highest annual average C yield of 2.48 Mg·ha-1·a-1, whereas, the uneven-aged stand had the lowest C accumulation (1.98 Mg·ha-1·a-1). Alternatively, the even-aged stand had the highest amortized net return of $276·ha-1·a-1 and the unmanaged stand had the lowest net return of$64 ha-1a-1. On the plots examined, an annual payment of $22 for each additional Mg of C sequestered would encourage a change from uneven aged management to an unmanaged stand that sequesters additional C, in the absence of transactions costs

Spatiotemporal Analysis of Prior Appropriations Water Calls

A spatiotemporal model is developed to examine prior appropriations–based water curtailment in Idaho’s Snake River Plain Aquifer. Using a 100 year horizon, prior appropriations–based curtailment supplemented with optimized water use reductions is shown to produce a spatial distribution of water use reductions that differs from that produced by regulatory curtailment based strictly on initial water right assignments. Discounted profits over 100 years of crop production are up to 7% higher when allocation is optimized. Total pumping over 100 years is 0.3%, 3%, and 40% higher under 1, 10, and 100 year prior appropriations–based regulatory curtailment, respectively

A cost effectiveness analysis of actions to reduce stream temperature : a case study of the Mohawk watershed

The concept of ecosystem management requires that management prescriptions account for economic and environmental goals that are measured in non-commensurate units. This study examines the economic and environmental trade-offs associated with planting a riparian buffer in trees to reduce stream temperatures in the Mohawk watershed, Oregon. The detrimental effects of high stream temperatures on fish production and survival have received increasing attention from State and Federal agencies. The cost and effectiveness of five riparian buffer scenarios and three tax policies are identified and used to construct a cost-effectiveness frontier. Specifically the study: (i) empirically estimates total welfare changes and their distribution among Mohawk residents; (ii) identifies the effectiveness of alternative buffer prescriptions and (iii) identifies cost-effective policy scenarios. The study adopts a welfare theory framework to examine welfare changes among producers and residential property owners. A mathematical programming model is used to generate empirical estimates of welfare change. The model has two interesting features, (i) a hedonic pricing analysis is used to generate coefficients which determine how residential property prices change in response to riparian plantings and (ii) buffer prescriptions are linked to a stream temperature estimator, Heat Source, to estimate changes in stream temperature. Data for the model are collected using a Geographical Information System, personal interview survey, aerial photograph interpretation, enterprise budgets and other sources. Results indicate that riparian buffers are effective in achieving some reductions in stream temperature. The total cost and distribution of welfare changes across sectors differs between scenarios. Under the efficient scenarios welfare increases in the agricultural sector, decreases in the forestry sector and residential welfare both increases and decreases depending on the scenario. In general, the least efficient agricultural producers will receive the greatest benefits from the proposed scenarios. A progressively wider riparian buffer results in residential property owners bearing a greater percentage of welfare loss. From a policy perspective the efficient scenarios reduce stream temperatures at the expense of collected tax revenues which may affect individuals outside the study area. The choice of which policy to choose from the frontier may differ depending on whether riparian plantings are voluntary or mandatory

ECONOMICS OF AGRICULTURAL SOIL CARBON SEQUESTRATION IN THE NORTHERN PLAINS

Under the Kyoto protocol of the United Nations Framework Convention on Climate Change the United States is charged with reducing emissions of greenhouse gases to seven percent below their 1990 levels by the period 2008-2012. These reductions could be met from many industries including agriculture. In this paper, an economic simulation model is linked to an ecosystem model to quantify the economic efficiency of policies that might be used to sequester carbon (C) in agricultural soils in the Northern Plains region. Simulations with the Century ecosystem model show that long-term soil C levels associated with a crop/fallow system are less than those for grass alone, but that soil C levels for grass-clover-pasture are greater than for continuously cropped grains. The analysis shows that a CRP-style policy is found to be an inefficient means to increase soil C because the per acre payments to convert crop-land to grass-only draw land from both the crop/fallow system and the continuous cropping system, and costs typically exceed $100 per MT (metric ton) of C. In contrast, payments to adopt continuous cropping were found to produce increases in soil C for between$5 to $70 depending on area and degree of targeting of the payments. The most efficient, lowest cost policy is achieved when payments are targeted to land that was previously in a crop/fallow rotation. In this range, soil C sequestration appears to be competitive with C sequestered from other sources.policy design, economic efficiency, soil carbon, sequestration, valuing soil carbon, Great Plains agriculture, Resource /Energy Economics and Policy, Q2,

ECONOMICS OF AGRICULTURAL SOIL CARBON SEQUESTRATION IN THE NORTHERN GREAT PLAINS

Under the Kyoto protocol of the United Nations Framework Convention on Climate Change the United States is charged with reducing emissions of greenhouse gases to seven percent below their 1990 levels by the period 2008-2012. These reductions could be met from many industries including agriculture. In this paper, an economic simulation model is linked to the CENTURY ecosystem model to quantify the economic efficiency of policies that might be used to sequester carbon (C) in agricultural soils in the Northern Great Plains region. Model outputs are combined to assess the costs of inducing changes in equilibrium levels of soil C through three types of policies. The first is a CRP-style policy that provides producers with per-acre payments for converting crop-land to permanent grass; the second is a policy that provides per-acre payments to all farmers that use continuous cropping, regardless of the land's cropping history; the third is a policy that provides per-acre payments for the use of continuous cropping only on land units that had previously been in a crop/fallow rotation. The analysis shows that a CRP-style policy is found to be an inefficient means to increase soil C resulting in costs that typically exceed $100 per MT (metric ton) of C. In contrast, payments to adopt continuous cropping were found to produce increases in soil C for between$5 to $70/MT depending on the geographic area and degree of targeting of the payments. The most efficient, lowest cost policy is achieved when payments are targeted to land that was previously in a crop/fallow rotation. In this range, soil C sequestration appears to be competitive with C sequestered from other sources.policy design, economic efficiency, soil carbon, sequestration, valuing soil carbon, Great Plains agriculture, Environmental Economics and Policy, Q2,