Abstract
Drained agricultural peatlands emit significantly higher amounts of greenhouse gas (GHG) emissions per hectare than mineral soils. GHG abatement costs for representative cereals (CF) and dairy (DF) farms in southwestern Finland were estimated by integrating an emission-based tax together with an option to invest in a subsidized adjustable drainage system on peat soils in a farm-level dynamic optimization model. With an average 10% share of peat soils from overall farm area, emissions tax rates over 15 (CF) and 19 (DF) €/tCO2e triggered adjustable drainage investments with a significant reduction in GHG emissions per ha, when assuming no crop-yield effect from the adjustable drainage. Abatement costs for emissions tax rates €12–50/tCO2e/ha were €16–44/tCO2e (CF) and €26–51/tCO2e (DF) for whole farm-soil emissions, depending on the share of peatlands on the farm, on the yield effects of adjustable drainage, and on crop prices. High emissions tax rates imply higher abatement costs since farms have a limited capability to adjust their production and land use. Thus, emissions reductions from peatlands can be achieved at reasonable costs when investing in adjustable drainage on peatlands. The income losses due to emissions tax, however, are high, but they can be compensated for farmers by lumpsum payments independent of their production decisions. Since existing agricultural policies such as the EU CAP system may have limited effectiveness on GHG emissions, the emissions tax and adjustable drainage on peatlands could promote GHG abatement significantly on farms and areas with abundant peatlands.
Highlights
In Finland, agricultural production and its land use produce approximately 16 Mt CO2e/year greenhouse gas (GHG) emissions, which account 20% of total emissions (Statistics Finland 2021a)
Considering emissions tax levels €0–15/tCO2e, the higher the emissions tax is, the higher the share of set-aside land on the organic soil parcel is since GHG emissions from setasides in organic soils are considerably lower than emissions from cereals
About 16% reduction is implied in GHG emissions and a sizable 32% reduction in the net present value (NPV) representing the farm income, while the GHG abatement cost drops from €80/tCO2e down to €22/tCO2e
Summary
In Finland, agricultural production and its land use produce approximately 16 Mt CO2e/year greenhouse gas (GHG) emissions, which account 20% of total emissions (Statistics Finland 2021a). Reducing agricultural GHG emissions from current levels is important for meeting a national target of climate neutrality by 2035 (Koljonen et al 2020). The potential of peatlands in GHG emissions mitigation has gained attention globally. Peatlands provide ecosystem services such as water provision, nutrient cycling, food and fiber production, recreation, habitats, and biodiversity, and are of interest to countries that aim for significant GHG emissions reductions (Bonn et al 2016). The UK GHG National Inventory has recently included emissions from degraded peatlands in to the inventory (UK Government 2021). This would lead to higher GHG emissions in the baseline but would provide more opportunities for emissions reductions, for example, through peatland restoration
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