Does carbon farming provide a cost‐effective option to mitigate GHG emissions? Evidence from China

Abstract

In this study, we apply a whole farm bioeconomic analysis to explore the changes in land use, farm practices and on‐farm greenhouse gas (GHG) emission under varying levels of agricultural greenhouse gas abatement incentives in the form of a carbon tax for a semi‐arid crop‐livestock farming system in China's Loess Plateau. Our results show that the optimised agricultural enterprises move towards being cropping‐dominated reducing on‐farm emission since livestock perform is the major source of emission. Farmers employ less oats‐based and rapeseed‐based rotations but more dry pea‐based rotations in the optimal enterprise mix. A substantial reduction in on‐farm greenhouse gas emission can be achieved at low cost with a small increase in carbon incentives. Our estimates indicate that crop‐livestock farmers in China's Loess Plateau may reduce their on‐farm GHG emission between 16.6 and 33 per cent with marginal abatement costs <￥100/t CO2e and ￥150/t CO2e in 2015 Chinese Yuan. The analysis implies that reducing greenhouse gas emission in China's semi‐arid crop‐livestock agriculture is potentially a low‐cost option.