Abstract
Understanding the effects of payments on the adoption of reforestation in agricultural areas and the associated food-carbon trade-offs is necessary to inform climate change policy. Economic viability of reforestation under payment per hectare and payment per tonne schemes for carbon sequestration was assessed in a region in southern Australia supporting 6.1 Mha of rain-fed agriculture. The results show that under the median scenario, a carbon price of 27 A$/tCO2-e could make one-third of the study area (nearly 2 Mha) more profitable for reforestation than agriculture, and at 58 A$/tCO2-e all of the study area could become more profitable. The results were sensitive to variation in carbon risk factor, establishment costs, and discount rates. Pareto-optimal land allocation could realize one-third of the potential carbon sequestration from reforestation (16.35 MtCO2-e/yr at a carbon risk factor of 0.8) with a loss of less than one-tenth (107.89 A$M/yr) of the agricultural production. Both payment schemes resulted in efficiencies within 1% of the Pareto-optimum. Understanding food-carbon trade-offs and policy efficiencies can inform carbon policy design.
Highlights
Land clearance and agricultural production have increased emissions of climate-changing atmospheric greenhouse gases from agroecosystems (Foley et al 2005)
Economically viable areas and carbon supply curves have four inflection points that occur at similar prices and levels of sequestration under the median scenario (Fig. 3)
One-third (32.63%) of the land in the study areas becomes more profitable under reforestation than under agriculture at 27 $/tCO2-e
Summary
Land clearance and agricultural production have increased emissions of climate-changing atmospheric greenhouse gases from agroecosystems (Foley et al 2005). Reforestation of agricultural land can mitigate climate change through sequestration of carbon in biomass and soils, or through the production of bioenergy (Obersteiner et al 2010). Policies designed to mitigate climate change by promoting reforestation can put upward pressure upon food prices (Wise et al 2009) with subsequent implications for global human nutrition. To avoid these adverse outcomes, climate policy needs to consider potential food-carbon tradeoffs between agricultural and reforestation land uses in rural landscapes
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