Ex-ante assessment of the cost-effectiveness of public policies to sequester carbon in soils

Abstract

Soil organic carbon stocks have been declining for more than a century, mostly in the tropics. Maintaining soil organic matter is critical to tackling climate change and controlling soil health. One way to address this problem is to encourage farmers to improve soil carbon on their farms. We provide an ex-ante assessment of the cost-effectiveness of innovative Agri-Environmental Measures (AEM) that subsidize the use of compost. To do so, we ran a choice experiment in Guadeloupe, in the northeastern Caribbean, where there is an urgent need to preserve soil organic matter levels. The 305 farmers who participated were asked to choose one of several AEM that offer financial support in exchange for using compost in their farming activities, as well as free technical assistance, a collective financial bonus, and the possibility of combining chemical fertilisers with composts. We found that offering free technical assistance increases the participation rate by 30 percentage points and offering a collective bonus increases it by 14 percentage points. In contrast, including a requirement on the reduction of chemical fertilization would decrease the probability of participation by only two percentage points. We then estimated the amount of carbon that would be sequestered in the soil using compost as prescribed under each of the AEM proposed. We found that the most effective AEM would sequester up to 25,000 teqCO2 per year at the territory level and that the most cost-effective scheme would reach this target at a cost of about 500 euros per teqCO2. Finally, we find that the so-called 4 per 1000 target could be reached through AEM under a variety of scenarios.