You have to give environmental extremists credit: They are persistent. The best available science says the world isn’t really getting any warmer. Economists say the cost of reducing our “greenhouse gas” emissions would be many times greater than any possible benefit. Still, the global warming crowd doesn’t quit.
Now they’re trying to entice farmers into joining the global warming bandwagon by offering to pay them to manage their soil to increase the amount of carbon it stores or “sequesters.” From a distance this offer looks pretty tempting … but closer examination exposes a trap farmers should stay clear of.
Emit Less or Store More?
The theory of global warming holds that carbon dioxide and other greenhouse gases produced by human activity are trapping heat in the atmosphere, causing a slow but potentially catastrophic warming of the Earth’s climate. If the theory were true, we should be trying to emit less greenhouse gas or find a way to trap and store the gas we emit or emitted in the past.
The first option–forcing electric utilities and other significant emitters to reduce emissions–would bankrupt the country. Carbon sequestration looks like an attractive option by comparison. Farmers can increase the amount of carbon in their soil by switching to low-till and no-till systems, converting annual cropland into permanent pastures, and planting cover crops in the fall to avoid exposing fallow fields to the elements. These practices have other benefits: They reduce soil erosion, increase the water-holding capacity of soil, improve yields, and reduce the cost of labor and other inputs.
A “win-win” strategy, right? Wrong.
An Invitation to Regulate
Paying farmers and livestock producers to sequester carbon would lead to heavy-handed and potentially ruinous regulation of farms and ranches.
According to the latest government data, farmers in the U.S. currently sequester about 15.2 million metric tons carbon dioxide equivalent (mmtCO2e) per year. But farming–and especially dairy farms and cattle ranches–is also a significant source of greenhouse gases. The Environmental Protection Agency estimates agricultural emissions in 2001 totaled 526 mmtCO2e. Emissions, in other words, were 35 times as great as net sequestration.
If farmers want to be paid to store carbon, they had better expect to be charged for emitting carbon. They would be huge net losers under such a system.
Having to pay for their emissions is only one possible downside facing farmers. Myriad regulations–including limitations on production per acre for some crops, mandatory fallowing of crop land, limits on livestock production, and restrictions on the use of fertilizer–could be imposed on them in the name of fighting global warming. All of these regulations, and others, were actively considered by the Clinton administration as part of its global climate change program.
Here Comes “Cap and Trade”
Endorsing sequestration may mean endorsing “cap and trade” programs, which means higher energy costs and lower farm profits.
Without a government-imposed cap on greenhouse gas emissions, few emitters would need to buy the emission permits farmers would earn by sequestering more carbon. But a cap and trade program would have the same effect as an energy tax, and such a tax would have to be set high–the equivalent of $0.50 a gallon of gasoline or more–in order to reduce emissions enough to make a difference.
Higher energy prices would dramatically reduce profits in the U.S. agricultural sector. Research I conducted with the American Farm Bureau Federation in 1998 found farmers would see net profits fall as much as 84 percent, and typically 50 percent, if gasoline taxes are raised by 50 cents per gallon. Total annual U.S. farm production expenses would rise more than $20 billion. Since it is difficult for farmers to pass cost increases along to consumers, a cap and trade greenhouse gas program could cause a 48 percent decrease in net farm income.
These new costs and reduced profits are virtually certain to come about under a cap and trade system for greenhouse gases. Any income farmers might earn for sequestration is almost certain to be much less than new costs imposed on them. You don’t need to be John Deere to see this is a bad deal.
Too Little to Matter?
Even if a carbon sequestration program benefitted farmers, it would do little to offset U.S. (let alone global) greenhouse gas emissions. Agricultural soils in the U.S. today capture only one-twentieth of 1 percent of total annual U.S. greenhouse gas emissions, according to EPA, or 1 percent according to USDA. Once saturation levels were reached, there could be no more gains on cropland with known farming systems, meaning agricultural sequestration is not a long-term greenhouse gas management tool.
Low- and no-till cultivation methods have spread rapidly in the U.S. in recent years and are now used on some 200 million acres. Yet the amount of carbon sequestered in agricultural soils rose only 14 percent from 1990 to 2001 (again according to EPA). It is beyond the powers of imagination to expect we could suddenly increase carbon sequestration by 100 percent, 1000 percent, or even more as some sequestration advocates believe.
The biggest gains in carbon storage occur when cropland is returned to forests. According to EPA, forests in the U.S. sequestered 759 mmtCO2e in 2001, 50 times as much as agricultural soils. Should we pay farmers to stop growing food and plant trees instead?
Subsidizing tree-planting would reduce U.S. farm exports and prompt more farm output in countries where there are no artificial constraints on farming. This would lead to more clearing of forests in Third World countries, where deforestation is already a major problem. Since U.S. farmers get dramatically higher yields from their cropland than farmers in other countries, at least two or three acres of forests in Third World countries would be cleared for every acre of trees planted in the U.S. More carbon, not less, would be released into the atmosphere.
Emissions Trading to the Rescue?
Emissions trading is often proposed as a “market-oriented” solution to the problem of reducing greenhouse gas emissions. Farmers would sell emissions credits to manufacturers and utilities with high emissions-reduction expenses, enabling them to meet their emissions caps. In this way, the lowest-cost opportunities to reduce or store emissions get funded and we all benefit.
Emissions trading, though, is more problematic than its advocates admit. The ubiquitous presence of carbon dioxide in the air makes it very difficult to associate emissions with any specific source. Unlike sulfur dioxide, there are potentially hundreds of thousands or even millions of sources of carbon dioxide and other greenhouse gases.
To avoid participants “gaming the system,” complex and probably unenforceable rules would be needed to determine that emissions reductions are genuine, entity-wide, and net of any increases in emissions caused by higher energy use or other emissions-generating activity in some other division of a plant or company, either concurrently or at some later time.
Existing emissions trading programs are characterized by few traders and few trades, government over-regulation that kills innovation, changing rules that leave investors high and dry, verification problems, and government meddling. Heavy regulations under a program in California, for example, killed a successful project that involved buying and crushing older, heavily polluting automobiles. The federal government shut down an emissions trading program in New Jersey for failing to validate emissions reductions and other irregularities. Now, companies that participated in the program in good faith are facing compliance reviews and possible criminal action by EPA.
All this uncertainty will, and quite rightly should, discourage participation in a greenhouse gas emissions trading program by farmers and other businessmen and -women. The new Sarbanes-Oxley Act, which criminalizes even minor accounting mistakes, could hold the chief executive officer liable if a restatement of the value of permits earned or purchased becomes necessary. Who wants to face the risk of huge fines and even prison by participating in a speculative and uncertain scheme?
Avoid This Trap
Carbon sequestration by farmers and ranchers in the U.S. is a false hope for those seeking to be paid to do what they would do anyway. It is a false dream for environmentalists who see it as a major part of the solution to global warming. And it is a poor strategy for an industry that should know better than to join a movement composed of groups and individuals who have been among its most strident critics.
