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Sequestering Carbon On Agricultural Land: Social Cost And Impacts On Timber Markets

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  • RICHARD M. Adams
  • DARIUS M. Adams
  • JOHN M. Callaway
  • CHING‐CHENG Chang
  • BRUCE A. Mccarl

Abstract

Planting trees to sequester carbon has broad political appeal. However, effects of a major tree planting program on the agricultural sector and on timber markets are unclear. This paper examines social costs of sequestering carbon in tree plantations on U.S. agricultural land and investigates harvesting's effects on timber prices and on private timber producers' welfare. The analysis links a model of the U.S. agricultural sector that includes the land base in major production areas with a model of the U.S. softwood economy. Using current data on planting, maintenance, and harvesting costs for tree plantations and carbon sequestration rates, the models estimate the price and welfare effects of alternative carbon sequestration goals. Results indicate a range of outcomes. Consumers pay higher prices for food as farmers divert land from crops to trees. However, wood products consumers gain from falling timber prices if the trees enter commercial markets. Agricultural producers and landowners gain from higher commodity prices, but private forest owners lose. Large tree planting programs imply that policymakers must compensate private commercial tree planting to prevent farmers from displacing present tree plantations.

Suggested Citation

  • RICHARD M. Adams & DARIUS M. Adams & JOHN M. Callaway & CHING‐CHENG Chang & BRUCE A. Mccarl, 1993. "Sequestering Carbon On Agricultural Land: Social Cost And Impacts On Timber Markets," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 76-87, January.
  • Handle: RePEc:bla:coecpo:v:11:y:1993:i:1:p:76-87
    DOI: 10.1111/j.1465-7287.1993.tb00372.x
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    1. Kane, Sally & Reilly, John & Tobey, James, 1990. "An Empirical study of the Economic Effects of Climate Change on World Agriculture," 1990 Annual meeting, August 5-8, Vancouver, Canada 270888, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. DANIEL J. DUDEK & ALICE LeBLANC, 1990. "Offsetting New Co2 Emissions: A Rational First Greenhouse Policy Step," Contemporary Economic Policy, Western Economic Association International, vol. 8(3), pages 29-42, July.
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