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Measuring the Opportunity Cost of Carbon Sequestration in Tropical Agriculture

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  • Charles A. Zelek
  • Gerald E. Shively

Abstract

We present a method for measuring the opportunity cost of sequestering carbon on tropical farms. We derive the rates of carbon sequestration for timber and agroforestry systems and compute incentive compatible compensating payment schedules for farmers who sequester carbon. The method is applied to data for an agricultural watershed in the Philippines. Area- and land quality-adjusted total costs are estimated. The present value of the opportunity cost of carbon storage via land modification falls between $3.30 and $62.50 per ton. Carbon storage through agroforestry is found to be less costly than via a pure tree-based system.

Suggested Citation

  • Charles A. Zelek & Gerald E. Shively, 2003. "Measuring the Opportunity Cost of Carbon Sequestration in Tropical Agriculture," Land Economics, University of Wisconsin Press, vol. 79(3), pages 342-354.
    • Handle: RePEc:uwp:landec:v:79:y:2003:i:3:p:342-354
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    References listed on IDEAS

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    1. Zeuli, Kimberly A. & Skees, Jerry R., 2000. "Will Southern Agriculture Play a Role in a Carbon Market?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(2), pages 235-248, August.
    2. Darius M. Adams & Ralph J. Alig & DBruce A. McCarl & John M. Callaway & Steven M. Winnett, 1999. "Minimum Cost Strategies for Sequestering Carbon in Forests," Land Economics, University of Wisconsin Press, vol. 75(3), pages 360-374.
    3. Zeuli, Kimberly A. & Skees, Jerry R., 2000. "Will Southern Agriculture Play A Role In A Carbon Market?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(2), pages 1-14, August.
    4. Nissen, T. M. & Midmore, D. J. & Keeler, A. G., 2001. "Biophysical and economic tradeoffs of intercropping timber with food crops in the Philippine uplands," Agricultural Systems, Elsevier, vol. 67(1), pages 49-69, January.
    5. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
    6. Peter J. Parks & Ian W. Hardie, 1995. "Least-Cost Forest Carbon Reserves: Cost-Effective Subsidies to Convert Marginal Agricultural Land to Forests," Land Economics, University of Wisconsin Press, vol. 71(1), pages 122-136.
    7. repec:phd:pjdevt:pjd_2002_vol__xxix_no__1-e is not listed on IDEAS
    8. S. Rama Chandra Reddy & Colin Price, 1999. "Carbon Sequestration and Conservation of Tropical Forests Under Uncertainty," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 17-35, January.
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    Cited by:

    1. van Kooten, G. Cornelis & Laaksonen-Craig, Susanna & Wang, Yichuan, 2007. "Costs of Creating Carbon Offset Credits via Forestry Activities: A Meta-Regression Analysis," Working Papers 37039, University of Victoria, Resource Economics and Policy.
    2. Jean-Sauveur Ay & Jean-Marc Brayer & Jean Cavailhès & Pierre Curmi & Mohamed Hilal & Marjorie Ubertosi, 2012. "La valeur des attributs naturels des terres agricoles de Côte-d'Or," INRA UMR CESAER Working Papers 2012/1, INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux.
    3. van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 237-269, September.
    4. van Kooten, G. Cornelis & Eagle, Alison J. & Manley, James G. & Smolak, Tara M., 2004. "How Costly Are Carbon Offsets? A Meta-Analysis Of Carbon Forest Sinks," Working Papers 18166, University of Victoria, Resource Economics and Policy.
    5. Hitayezu, Patrick & Wale, Edilegnaw & Ortmann, Gerald, 2015. "Assessing Agricultural Land Use Change in the Midlands Region of KwaZulu-Natal, South Africa: Application of Mixed-Multinomial Logit," 2015 Conference, August 9-14, 2015, Milan, Italy 211736, International Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General

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