ABSTRACT
Introduction Carbon sequestration in agricultural soils in the United States has the potential to remove considerable amounts of carbon from the atmosphere; estimates range from 75 to 208 million metric tons (MMT) annually, representing nearly 8 percent of total US emissions. Studies show that soil sequestration is competitive with other strategies for carbon mitigation, such as afforestation and carbon displacement associated with use of biofuels, but the quantity of carbon sequestered will depend on the price for carbon credits (Antle and McCarl 2002). Several land-use and management practices can be adopted to increase soil carbon sequestration, including conversion from conventionally tilled row crops to conservation tillage to perennial grasses that can be used for forage or for bioenergy production. Two perennial grasses, Switchgrass (Panicum viragatum) and Miscanthus (Miscanthus x giganteus), have been identified as two of the best choices for low-input bioenergy production in the United States (Lewandowski et al. 2003; Heaton et al. 2004). We focus here on the use of biomass as a renewable fuel for electricity generation. The purpose of this chapter is to examine the costs of carbon sequestration in cropland using alternative management strategies and to determine the optimal spatial pattern of land use in a region to achieve given soil carbon sequestration levels. The costs of sequestration depend on the profits foregone and the carbon sequestered by alternative strategies, both of which are expected to vary among those strategies, across space and over time. The potential for soil carbon sequestration varies among strategies with perennial grasses, which have a higher potential to sequester carbon per acre than annual row crops regardless of the tillage applied. Soil carbon sequestration is inherently a dynamic process; the amount of sequestration at any point in time depends on the amount of carbon already present in the soil (West et al. 2004). This amount tends to vary spatially depending on land use history and soil and climatic conditions (Tan et al. 2006). Moreover, there is an upper limit on the amount of carbon that can be stored in soil with any strategy, and the annual sequestration rate is thought to diminish over time as the soil carbon level approaches an equilibrium established by the land use practice applied (Six et al. 2002). Thus accumulation of soil carbon is a
non-linear process. This process is also reversible and asymmetric; stored carbon can be released back to the atmosphere if land is reverted back to conventional uses. In this case, rates of soil carbon loss are much higher than rates of accumulation. The profitability of alternative sequestration-friendly practices relative to the most profitable land use (in the absence of any sequestration considerations) is also likely to vary both spatially (depending on soil conditions, climate and location relative to markets) and temporally (depending on the age of the perennial crops). Additionally, transportation costs can be a significant component of the delivered price of bioenergy and lead to variation in the profitability of growing bioenergy crops across locations depending on their distance from relevant users. In the absence of well-developed markets, the delivered price received by producers is likely to be determined by the price of the fossil fuels they are substituted for and by the policies seeking to promote renewable energy use. Assuming that the price of bioenergy a power plant is willing to pay is the same for all power plants, the farmgate price of biomass is likely to vary spatially, depending on the location of production and the power plant to which the biomass is delivered. We develop a dynamic framework to investigate the socially optimal pattern of land use in a region that seeks to achieve targeted sequestration levels over a finite time horizon and at the least possible cost. Carbon sequestration dynamics are incorporated by assuming a negative exponential time path of sequestration with saturation limits determined by land use. This time path implies that annual rates of sequestration depend on the initial time of switching to a sequestrationfriendly practice. The framework developed here, therefore, incorporates the number of years a land parcel has practiced a sequestration-friendly practice to determine the amount of carbon stored in that parcel. Because landowners have the option to switch in and out of various uses, the soil carbon loss due to a switch from a sequestration-friendly use to a conventional use was also incorporated. We examine the impact of spatial differences in annual sequestration rates on the pattern of land allocation for conservation tillage and bioenergy crops with alternative carbon sequestration targets. The marginal cost of sequestering various levels of soil carbon is determined endogenously and used to develop supply curves for soil carbon sequestration. We use this framework to examine the implications of alternative prices for bioenergy for the marginal cost of carbon sequestration and the optimal allocation of land. As the price of bioenergy increases, the marginal cost of carbon sequestration is expected to decrease. The extent of this decrease depends on the extent to which bioenergy crops contribute to achievement of the carbon sequestration target. We also compare the implications of alternative prices of bioenergy crops and of alternative targets for carbon sequestration for the spatial pattern of land use allocated to either bioenergy crops or conservation tillage practices. We apply this framework using county-level data for Illinois on the costs of producing various crops under alternative rotations and tillage practices and their subsequent contribution to soil carbon sequestration over a 15-year period.
