Incentives for reforestation of agricultural land: What will a market for carbon sequestration credits contribute?

Abstract

Reforestation of frequently flooded, marginally productive agricultural lands may provide environmental benefits. However, for reforestation to occur private landowners must earn enough revenues from forestlands to offset both the costs of reforesting as well as any forgone agricultural income. Among the possible revenue sources is the sale of carbon sequestration credits earned from reforestation. We simulate the financial feasibility of reforestation and the contribution of carbon sequestration credit sales to the net income possible from reforestation in a case study area of frequently flooded soybean fields in the Mississippi Alluvial Plain (the Delta). Under current market conditions, reforestation appears to be financially feasible on only the most marginally productive agricultural lands. Markets for carbon credits may contribute to positive financial returns of reforestation, but other policies and market opportunities will be necessary for a positive return to be realized.