Study Says Kyoto Protocol Could Aid U.S. Farmers

Study Says Kyoto Protocol Could Aid U.S. Farmers

A report released today at the start of global negotiations on the United Nations Framework Convention on Climate Change finds that implementing policies to address climate change will benefit U.S. farmers.

Paul Faeth and Suzie Greenhalgh, authors of A Climate and Environmental Strategy for U.S. Agriculture, say their findings suggest a win-win solution:

"If the Kyoto Protocol of the UNFCCC were combined with the right set of domestic agricultural policies, net farm cash returns could actually increase while protecting the climate and improving water quality,” the authors said.

The report, published by the World Resources Institute, was released at the start of the Sixth Conference of Parties of the UNFCCC in The Hague, Netherlands.

'The Earth Will Warm'

The latest assessment by the world’s climate scientists indicates that the earth will warm by as much as 3 to 11 degrees Fahrenheit over the next century. The Kyoto Protocol aims to slow climate change by reducing greenhouse gas emissions. Although the United States has not yet ratified the treaty, climate change will affect the U.S. economy, including agriculture.

The new WRI report notes that agricultural activities produce a small fraction of U.S. carbon dioxide emissions, the most common of the GHGs. Yet, agriculture accounts for about three-quarters of nitrous oxide emissions, largely from the use of synthetic fertilizers and nitrogen fixation by crops. Nitrous oxide is one of the more damaging GHGs because it traps 310 times more heat than the same amount of carbon dioxide.

To meet new obligations under the Kyoto Protocol, the United States would likely implement a “cap and trade” system under which total GHG emissions would be capped nationally. A corresponding number of “carbon emission rights” would then be auctioned off to American firms. Some studies have suggested that this would severely hurt net farm returns by raising gasoline prices and the cost of fertilizers and pesticides.

Faeth and Greenhalgh say that these studies were based on unlikely worst case scenarios, and failed to consider the adjustments that would occur. For example, farmers have opportunities to avoid paying higher energy bills. From 1974 to 1994 farmers cut fuel use by 28 percent. The WRI report finds that implementing the Kyoto Protocol would most likely produce a decline in net farm cash returns of only 0.5 percent.

The economic policy scenarios tested by the authors demonstrate that if the United States also implemented policies that gave farmers economic incentives to reduce or capture emissions then net farm cash returns could actually increase. Faeth and Greenhalgh looked at programs such as the extension of the Conservation Reserve Program, soil carbon trading, and a nitrogen trading program.

Conservation Reserve

The Conservation Reserve Program pays farmers to take cropland out of production for conservation purposes. These lands are left unplowed, planted with a cover crop, and receive no fertilizer or pesticides. As a result, they add little eroded soil or fertilizer run-off to waterways, produce no GHGs from the use of farm machinery, and can sequester significant amounts of carbon. Such an endeavor, claim Faeth and Greenhalgh, could be useful in reducing GHG emissions, and in boosting net farm cash returns.

Carbon sequestration is a by-product of plant growth whereby carbon dioxide is removed from the atmosphere and trapped by plant residue in the soil.

Soil Carbon Trading

Much of the discussion surrounding agriculture’s role in reducing GHGs has focused on soil carbon trading. In this policy option farmers could sell sequestered soil carbon under the cap and trade system. The authors find that while there is potential for a reduction in GHGs and increases in net farm cash returns with this approach, it is relatively small.

In addition, carbon sequestered in agricultural soils can be easily released into the atmosphere again if a farmer were to revert back to traditional agricultural practices. Thus, the benefits of such an approach may not be permanent.

Nitrogen Trading

Finally, the authors considered the impacts of a nitrogen trading program under the Clean Water Act. Such a program would allow industrial and municipal waste water dischargers to meet their legal environmental obligations by paying farmers to reduce their nitrogen loads to the nation’s waterways. When nitrogen surpluses stemming from agricultural run-off of synthetic fertilizers are reduced, emissions of climate-damaging nitrous oxide are also cut.

The WRI report says that a nitrogen trading program would produce twice the reduction in nutrient emissions than would a soil carbon trading program. This benefits not only the climate but also U.S. waterways. In addition, the authors found that the nitrogen trading option produced increases in net farm cash returns of 2.1 percent, a 50 percent increase over the net farm cash returns generated by a soil carbon trading program.

Faeth and Greenhalgh conclude that nitrogen trading programs produce the best economic outcome for U.S. farmers, result in cleaner waterways, and are one of the most effective means for the United States to address agricultural GHG emissions that could cause climate change.

“Almost every environmental and economic indicator we tested shows much greater improvement with a nitrogen trading program than with any other approach we considered,” concludes Faeth.

“It just makes sense that if we implement programs that take advantage of the synergies between climate protection and water quality, we save money, protect our environment, and boost overall farm returns at the same time.”

As a result of this and other studies it conducted in the Upper Midwest to test nutrient management programs, WRI will soon launch a new Web site, NutrientNet. The site will facilitate online nutrient trading among industry, communities, and farmers.