Agricultural Carbon Sequestration and Poverty

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Agricultural Carbon Sequestration and Poverty
John M. Antle Dept of Ag Econ Econ, Montana
State U
Presented at the Workshop on Environmental
Services for Poverty Reduction and Food Security,
Food and Agriculture Organization, 30-31 May
2005.
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• Thanks to my colleagues without whose support
  this research would not be possible
• Charles Crissman, CIP, Nairobi
• Bocar Diagana, Montana State U
• Kara Gray, Montana State U
• Ibrahima Hathie, ENEA, Senegal
• Andre de Jager, LEI, the Netherlands
• Jetse Stoorvogel, Wageningen UR
• Roberto Valdivia, Montana State U
• Alejandra Vallejo, Wageningen UR
• David Yanggen, CIP, Lima

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• Basic Concepts
• Linkages to Poverty
• Evidence from Peru, Senegal and Kenya
• Conclusions

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• I. Basic Concepts
• Land use management practices increase or
  decrease ecosystem C (key indicator of soil
  health)

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• I. Basic Concepts
• Land use management practices increase or
  decrease ecosystem C

• Payments to farmers can create incentives for
  farmers to change LU management to increase C
  until stock is maxed
• Issues in C seq literature
• Technical vs economic potential
• Productivity effects dynamics
• Permanence leakage
• Adoption costs
• Incentive design
• Additionality
• Per-hectare vs per-ton payments
• Symmetric vs asymmetric incentives
• Transaction costs

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Contract participation decision (Antle et al,
JEEM, 2003) g gt ?NR A TC For per-ton
carbon payment, g P??C, thus P gt (?NR A
TC)/?C
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• II. Linkages to Poverty
• Those who benefit most have low opp cost of
  adoption
• Are the poorest farmers on the adoption margin?
• Additionality targets non-adopters
• Fixed cost and trans cost create adoption
  threshold
• These costs have greatest impact at low C prices
  and where carbon rates are low.
• Opp cost ?NR may decline over time as C
  accumulates and system productivity increases

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Carbon Permanece as an Emergent Property of
Production Systems Farmers who lack knowledge
of system dynamics can be provided an incentive
to learn the benefits of improved soil
management. This can lead to permanent adoption
of improved practices without permanent external
incentives. (Antle and Diagana, AJAE 2004)
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• III. Evidence from Three Case Studies
• Case studies
• Terracing and agroforestry in the Peruvian Andes
• Nutrient and crop residue management in Senegals
  peanut basin
• Nutrient management (mineral fertilizer, manure,
  crop residues) in Machakos district of Kenya
• Methods
• Case studies based on statistically
  representative samples of spatially-referenced
  data
• Bio-physical and econometric-process models
  simulate site-specific land use and management
  decisions under base scenario and carbon contract
  scenarios
• Spatial distribution of contract participation
  decisions are used to derive carbon supply curves
  for the population in the region

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Tradeoff Analysis Integrated Assessment of
Agricultural Production Systems
DSSAT/Century
Econometric- Process
NUTMON
Spatial Aggregation
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The Tradeoff Analysis Software is a GIS-based
system designed to integrate disciplinary data
and models for integrated assessment of
agricultural systems. An on-line course, the
software, and applications for Ecuador, Peru,
Senegal and Kenya can be downloaded at
www.tradeoffs.nl.
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• Terracing and agroforestry in the Peruvian Andes
  (Cajamarca)
• Evidence shows terracing and agroforesty are
  profitable for some farmers but adoption is only
  about 30
• Incomplete adoption explained by spatial
  heterogeneity in bio-physical and economic
  conditions
• Carbon contracts would provide payments for
  carbon in soil and above-ground biomass
• In contrast to conservation projects that
  subsidize all farmers, only farmers at the
  adoption margin would have an incentive to
  participate

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The importance of heterogeneity profitability of
terracing is a function of site-specific
conditions (e.g., slope). Carbon payments create
incentive for additional adoption.
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Carbon Supply Curves for Terracing and
Agroforestry for Low (LC) and High (HC) Carbon
Rate Scenarios
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The adoption margin What conditions favor
additional adoption of carbon-sequestering
practices?
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• Nutrient and crop residue management in Senegals
  Peanut Basin
• Field data show very low use of mineral
  fertilizer, high rates of nutrient depletion,
  very low SOM
• Carbon contracts would pay farmers to increase
  mineral fertilizers and incorporate crop residues

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Crop residues are the key to increasing soil C
in nutrient-deficient systems
Note participation at zero carbon price
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Key constraint is opportunity cost of crop
residues that are used by small, poor farmers to
feed livestock
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Transaction costs constrain participation in C
contracts at low carbon prices
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• Nutrient management in Machakos, Kenya
• Mineral fertilizer use low in this maize-based,
  mixed crop-livestock system
• Extensive terracing has reversed catastrophic
  soil erosion seen in the early-mid 20th Century
  (Tiffen et al., More People, Less Erosion), but
  WUR Nutrient Monitoring data show high rates of
  nutrient depletion
• Carbon contracts would pay farmers to increase
  use of mineral and organic fertilizers

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Technology Zero-grazing units provide
opportunity to improve nutrient management
efficiency and livestock productivity.
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Machakos C Supply Curves for Low, Medium and
High Carbon Rates
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Machakos Impact of Carbon Sequestration
Payments on Poverty ( lt 1/day)
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Machakos Impact of Carbon Sequestration on
Nutrient Depletion (kg/ha/season)
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Machakos Impact of Carbon Sequestration on
Poverty and Nutrient Depletion
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Importance of Heterogeneity Impact of C
Sequestration on Poverty and Nutrient Depletion
in Machakos, by Village (Medium C Rate)
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• Conclusions
• Evidence shows ag C sequestration has some
  potential to reduce poverty and enhance
  sustainability in semi-subsistence systems
• However evidence also suggests that disadvantaged
  areas may benefit less than more productive
  regions.
• Key issues are
• System dynamics and heterogeneity
• Opportunity costs of improved practices
• Transaction costs institutional capability
• Can participation in carbon markets help
  disadvantaged areas overcome constraints on
  technology adoption?
• For example, could a carbon-based rural
  micro-credit program enhance farmers ability to
  reverse soil nutrient depletion in marginal
  areas?

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This presentation and related publications are
available at www.tradeoffs.montana.edu www.clima
te.montana.edu www.tradeoffs.nl