Carbon Market Impacts on Farm Management Practices on Mount Kilimanjaro

Abstract

Soil carbon sequestration projects have been promoted as a win-win strategy for agriculture in Africa to curb the global emission of greenhouse gases (GHG). Agriculture accounts for an estimated 10–14 % of total GHG emissions, so it has the potential of playing an important role in mitigating global warming. The large gap between soil maximum carbon sink capacity and current carbon stock levels could allow carbon sequestration projects to sequester more carbon while rapidly improving agricultural productivity and food security. This paper approximates the marginal cost of soil carbon sequestration and analyzes its implications for food security using the case of Mt. Kilimanjaro in Tanzania. We develop and calibrate a dynamic optimization model that maximizes the Net Present Value (NPV) of farm profit by allowing the farmer to choose optimal farm management practices subject to crop yield, soil carbon stock, and carbon price. The model is then simulated using various carbon prices to measure their impact on farm management choices. The results show farmer responsiveness to carbon prices but the resulting change in farm productivity is relatively modest.