Carbon mitigation payments can make bioenergy crops more appealing for farmers
IMAGE: FAHD MAJEED (PICTURED, WITH MISCANTHUS) AND MADHU KHANNA, UNIVERSITY OF ILLINOIS, STUDIED THE EFFECT OF CARBON MITIGATION PAYMENTS ON BIOENERGY CROP PROFITABILITY. view more
CREDIT: UNIVERSITY OF ILLINOIS
URBANA, Ill. — Bioenergy crops such as miscanthus and switchgrass provide several environmental benefits, but low returns and profit risks are barriers for investment by farmers. A new study from the University of Illinois Urbana-Champaign shows that carbon mitigation payments could increase net returns and reduce income risk, potentially enticing more farmers to grow these crops.
“We were interested in looking at the returns to farmers and the risks to farm income of adopting bioenergy crops compared to conventional corn and soybean crops. We also wanted to look at the effects of paying farmers for the carbon mitigation services from these crops and how that would impact returns and risks,” said Madhu Khanna, Alvin H. Baum Family Chair and director of the Institute for Sustainability, Energy, and Environment (iSEE). She is also the ACES Distinguished Professor of Environmental Economics in the Department of Agricultural and Consumer Economics (ACE) and co-director of the Center for the Economics of Sustainability (CEOS), part of the College of Agricultural, Consumer and Environmental Sciences (ACES) at the U. of I.
“There are two main carbon mitigation benefits from bioenergy crops: First, bioenergy crops have deep roots that sequester more soil carbon than conventional crops. And second, the harvested biomass can be used to produce cellulosic biofuel to replace fossil fuels,” explained Fahd Majeed, a postdoctoral research associate at iSEE and the U.S. Department of Energy’s Center for Advanced Bioenergy and BioProducts Innovation (CABBI) at the U. of I. Majeed conducted the research as a doctoral student in CEOS.
Potential biomass profitability and return riskiness, along with the subsequent carbon mitigation potential of these crops, varies spatially due to weather-related yield risk and relative returns from conventional crops. Policies aimed at incentivizing farmers to convert cropland to bioenergy crops will need to address return riskiness along with high upfront costs and long establishment periods.
“Some farmers may be risk-averse and prefer lower but more stable profits, while others may be risk-neutral and prefer higher profits regardless of risk; however, this information may not be known to a policymaker,” Majeed noted. “Our analysis allows us to compare and rank risky returns from bioenergy crops and conventional crops when farmer risk preferences are unknown.”
The study, funded by the USDA National Institute of Food and Agriculture and CABBI, employed a biogeochemical model to simulate yields of bioenergy crops (miscanthus and switchgrass) and conventional crops (corn and soybean) under 30 years of randomized weather conditions. The researchers performed the analysis for 2,122 counties in the rainfed region of the United States, on or east of the 100th meridian. For conventional crops, they included corn-corn or corn-soybean rotation and till versus no-till practices.
They combined the yield analysis with an economic model estimating crop prices and carbon mitigation payments to gauge the appeal to different types of farmers across locations.
As both bioenergy and conventional crops vary in returns and riskiness across biomass and carbon prices, the researchers examined bioenergy crop profitability at biomass prices of $40 and $60 per metric ton and carbon payments of $0, $40, and $80 per metric ton of carbon dioxide (CO2). They found that bioenergy crops would not be profitable without carbon payments at lower prices. With carbon mitigation payments, these crops would appeal to risk-averse farmers; that is, farmers who are willing to accept slightly lower but less variable returns relative to conventional crops. At the higher biomass price of $60 per metric ton, carbon mitigation payments increase returns and reduce riskiness such that growing bioenergy crops would appeal to farmers regardless of risk preference.
Further, comparing the two bioenergy crops, the researchers found that miscanthus would be preferred over switchgrass by farmers in the Midwest, while switchgrass would be preferred over miscanthus by farmers in the southern states. This is due to spatial differences in the expected yield, carbon mitigation potential, and costs across bioenergy crops, the researchers said.
Overall, carbon mitigation payments can make bioenergy crops more appealing to farmers, but payments should be adapted to the varying potential yield, carbon mitigation, and riskiness of returns across regions.
“One policy implication from this study is that if you want to reduce risk, carbon credits are a good policy. But the incentives need to be tailored spatially; a uniform payment per acre of land across the whole region is not going to be the most effective. Carbon credits that vary across the region based on carbon mitigated will create differentiated incentives across the region compared to a uniform policy. The former will also be cost-effective in achieving an aggregate target for carbon mitigation,” Khanna said.
Currently, carbon mitigation payments are primarily facilitated through voluntary markets where companies and other organizations can purchase credits to meet their carbon reduction goals. Such markets can be supplemented with government programs to incentivize bioenergy crop production, the researchers noted.
Editor’s Notes:
The paper, “Carbon mitigation payments can reduce the riskiness of bioenergy crop production,” is published in the Journal of the Agricultural and Applied Economics Association [DOI: 10.1002/jaa2.52]. Authors include Fahd Majeed, Madhu Khanna, Ruiqing Miao, Elena Blanc-Betes, Tare Hudiburg, and Evan DeLucia.
Funding was provided by the National Institute of Food and Agriculture, Grant/Award Number: 2017‐67019‐26283; Hatch Project Number, Grant/Award Number: ALA011‐1‐ 17002; and the U.S. Department of Energy,Grant/Award Number: DE‐SC0018420
The College of Agricultural, Consumer and Environmental Sciences (ACES) at the University of Illinois has top-ranked programs, dedicated students, and world-renowned faculty and alumni who are developing solutions to the world’s most critical challenges to provide abundant food and energy, a healthy environment, and successful families and communities.
JOURNAL
Journal of the Agricultural and Applied Economics Association
METHOD OF RESEARCH
Data/statistical analysis
ARTICLE TITLE
Carbon mitigation payments can reduce the riskiness of bioenergy crop production
Holistic management is key to increase
carbon sequestration in soils
Increased carbon sequestration in soil to help mitigate climate change can only be achieved by a more holistic management
Peer-Reviewed PublicationIMAGE: MICROSCALE VIEW ON PARTICULATE ORGANIC MATTER (POM), WITH NICELY VISIBLE PLANT CELL STRUCTURES WHICH REPRESENT THE CARBON STORED IN THE SOILS. view more
CREDIT: CARSTEN W. MÜELLER
Increased carbon sequestration in soil to help mitigate climate change can only be achieved by a more holistic management. This is the conclusion from an opinion paper conceptualized by a team led by researchers from the German Centre for Integrative Biodiversity Research (iDiv), Leipzig University, the Czech Academy of Sciences, and the University of Copenhagen. The authors developed a novel framework that can guide informed and effective management of soils as carbon sinks. The study has recently been published in Nature Communications.
A key question for land management is how to sustain and increase the vast amounts of carbon stored in soil to help mitigate climate change. In this respect, carbon associated with minerals that can persist for centuries to millennia has received specific attention as a potential management target.
Undifferentiated focus on this “mineral-associated” carbon, however, falls short of establishing soils as carbon sinks because various environmental factors, such as related to land use or specific soil types, render management of this carbon inefficient.
“We were puzzled by the overwhelming emphasis on mineral-associated carbon in the literature, whose context-independent valuation certainly hampers informed and targeted management of soils as carbon sinks,” says Dr Gerrit Angst, lead author of the article from iDiv, Leipzig University, and the Czech Academy of Sciences.
The international author team, comprised of researchers from Germany, the Czech Republic, the United States, and Denmark thus developed a framework for the contextualization of management strategies that considers the diversity and complexity of soils.
Synergies with soil health and biodiversity
The framework specifically highlights the relevance of “labile” carbon, which typically remains in the soil for days to a few years, as a management target in various environmental contexts. For example, the capacity of some soils to accumulate rather stable, mineral-associated carbon is very low; some soils also feature conditions that hamper the formation of stabilized carbon but favor the accumulation of labile carbon.
Management that is aimed at increasing and perpetuating labile carbon in such soils will be more effective in increasing carbon sequestration than that focused on stabilized carbon.
“We cannot overemphasize the need to consider context-dependent environmental conditions for an effective management of soils as carbon sinks, which constrain whether management should target labile or stabilized carbon, or both,” explains Angst.
Contextualization of management strategies within the novel framework can be expected to maximize carbon sequestration in soil and generate synergies with related management targets, such as related to soil health, biodiversity, or crop performance. Senior author of the study, Prof Carsten W. Mueller from the University of Copenhagen concludes:
“Only if we see soils as a complex, holistic system with its specific chemical, physical, and biological features, will we be able to successfully manage them in a rapidly changing environment.”
Original publication:
(Scientists with iDiv affiliation in bold)
Angst, G., Mueller, K.E., Castellano, M.J., Vogel, C., Wiesmeier, M., Mueller, C.W. (2023): Unlocking complex soil systems as carbon sinks: multi-pool management as the key. Nature Communications. DOI: https://doi.org/10.1038/s41467-023-38700-5
Contact:
Dr Gerrit Angst
Experimental Interaction Ecology
German Centre for Integrative Biodiversity Research (iDiv) Halle-Jena-Leipzig
Leipzig University
Institute of Soil Biology and Biogeochemistry
Biology Centre of the Czech Academy of Sciences
Phone: +49 341 9739179
Email: gerrit.angst@idiv.de
Web: www.idiv.de/en/profile/1575.html
JOURNAL
Nature Communications
ARTICLE TITLE
Unlocking complex soil systems as carbon sinks: multi-pool management as the key
ARTICLE PUBLICATION DATE
15-Jun-2023
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