A scenario-based analysis of the effect of carbon pricing on organic livestock farm performance: A case study of Spanish dehesas and rangelands

Abstract

The current livestock farm production model is being questioned due to its excessive use of resources and impacts on the environment, and it has played a major role in climate change due to the excessive level of greenhouse gas (GHG) emissions. A valid tool in the reduction of such emissions is the imposition of a tax on CO2 emissions that can act as an economic and financial instrument. Additionally, livestock production based on grazing animals is proposed as a more sustainable model that involves improved environmental practices and provides society with various ecosystem services, including carbon sequestration. The main purpose of this paper is to estimate the maximum price per tonne of CO2 equivalent (eq) that could be borne by the various models of organic livestock farms in the dehesas and rangelands of southwestern Spain. With this purpose in mind, we have made a scenario-based estimation of the environmental-economic balance in three different scenarios considering farm emissions and CO2 sequestration levels. The results show that the maximum price that farms can bear is within a range of € 0.20 to € 792/tn of CO2 eq depending on the scenario analysed and the production model. In the cases in which carbon sequestration balances GHG emissions, the implementation of carbon pricing implies additional economic income for farm accounts.