Davis, California September 22-23, 2003 Carbon baseline for California agriculture and the economic approach to estimating the cost of carbon offsets Sandra Brown, Ye Qi, and Jonathan Winsten Winrock International sbrown@winrock.org jwinsten@winrock.org
Research Team � Sandra Brown – WI � Aaron Dushku – WI � John Kadyszewski – WI � Timothy Pearson – WI � Ye Qi – formerly of WI � Jonathon Winsten – WI 2 Winrock International
Measurement, Classification, and Quantification of Carbon Market Opportunities in the United States— California � Goals of this module: • To quantify the baseline of changes in carbon stocks in the agricultural sector of California for the decade 1987 to 1997 (non-CO 2 greenhouse gases were not included) • To identify and quantify opportunities for enhancing sinks and reducing sources of carbon in the agriculture sector • Similar work is being done in the forestry and rangelands sector but not presented here 3 Winrock International
General approach: � Two types of data were used: • the total area of agricultural land by each major land- use types—data from the National Resource Inventory (NRI) database for the period 1987-1997 • the carbon stocks in vegetation of each land use derived from the literature and experience • changes in soil carbon were not included as it was assumed they have been under cultivation long enough that changes are minimal to non-existent under current practices � The analysis is conducted for the entire State of California and by county. 4 Winrock International
High and Low Carbon Density Crops Divided crops into two main classes based on carbon densities Broad land use Specific land use Low carbon density crops Row and small grain crops Hay/Grass/Legume Summer Fallow Other, Set Aside etc. High carbon density crops Horticulture/Fruit Horticulture/Nut Horticulture/Vineyard Horticulture/Bush fruit Horticulture/Berry Horticulture/other 5 Winrock International
Area of agricultural land in California – 1000 ha Agricultural High carbon Low carbon Year land density land density land 1987 4,115 1,040 3,075 1992 4,063 1,008 3,055 1997 3,883 1,013 2,870 Overall loss of 88% of 232,000 ha or total loss 5.3% of 1987 area 6 Winrock International
Percent of county area in high and low density carbon cropland in 1997 High C cropland Low C cropland proportion (%) proportion (%) 1997 1997 14.61 - 19.59 38.76 - 56.76 11.2 - 14.6 28.38 - 38.75 8.32 - 11.19 14.93 - 28.37 6.11 - 8.31 10.22 - 14.92 5.22 - 6.1 8.19 - 10.21 3.44 - 5.21 4.45 - 8.18 2.7 - 3.43 3.83 - 4.44 1.76 - 2.69 2.79 - 3.82 1.62 - 1.75 2.17 - 2.78 1.12 - 1.61 1.43 - 2.16 0.6 - 1.11 0.85 - 1.42 0.49 - 0.59 0.31 - 0.84 0.28 - 0.48 0.16 - 0.3 0.07 - 0.27 0.07 - 0.15 0 - 0.06 0 - 0.06 7 Winrock International
Change in area by land use Area of land use (1000 ha) 1200 1987 1000 1992 800 1997 600 400 200 0 Hort/Fruit Hort/Nut Hort/Vineyard Hort/Berry/other Row/Corn Row/otherVeg/truck Row/Cotton Row/others Small Grains Hay 8 Winrock International
Change in area of high carbon density croplands 1987-1997 9 Winrock International
Change in area of low carbon density croplands 1987-1997 10 Winrock International
Carbon density estimates of agricultural land used in the analysis � Fruit / Nut Orchards – 25 to 30 t C/ha � Vineyards – 10 to 12 t C/ha � Berries / Other Horticulture – 10 t C/ha � Cultivated Crops and Hay – 5 t C/ha 11 Winrock International
Carbon stocks by land use 1987 1992 1997 Millions Horticulture/Fruit 8.79 8.50 8.55 of tons Horticulture/Nut 7.95 7.42 7.68 of Horticulture/Vineyard 4.82 4.78 4.91 Carbon Horticulture/Berry/other 0.37 0.41 0.25 Row/Corn 0.81 0.44 0.55 Row/Cotton 2.67 2.69 2.71 Row/otherVeg/truck 1.78 1.41 1.25 Row/others 0.40 0.71 0.64 Small Grains 5.95 4.43 4.28 Hay 3.59 5.41 4.74 Total on agricultural land 37.13 36.20 35.57 12 Winrock International
Change in carbon stocks through time Carbon stock (x 1000 t C) 24 -3.74% 22 +1.33% 20 High Carbon 18 Low Carbon 16 -0.72% 14 -6.10% 12 1987 1992 1997 Year 13 Winrock International
Change in carbon stocks in high carbon density croplands 1987-1997 14 Winrock International
Change in carbon stocks in low carbon density croplands 1987-1997 15 Winrock International
Conclusions for carbon baseline for agriculture � Total area of agricultural land in the 1990s was about 4 million ha � About 2/3 of agricultural lands are low- carbon-density crops (such as row crops and small grains), and 1/3 are high-carbon- density crops (such as vineyards and orchards). � Area of agricultural land decreased by 232,000 ha (or 5.6%) from 1987 to 1997, almost exclusively from the loss in area of low carbon density crops (88% of loss). 16 Winrock International
Conclusions for carbon baseline for agriculture (cont:) � Total carbon stock in agricultural vegetation was about 36 million tons (21 million in high and 15 million in low carbon density crops) � During the period 1987 to 1997, the carbon stock on agricultural land decreased by 1.6 million tons (or 5.9 million t CO 2 equivalents) • 66% of the loss was from low carbon density croplands (1.03 million t C) • 34% of the loss was from high carbon density croplands (0.54 million t C) 17 Winrock International
Opportunities for ameliorating carbon loss from CA agriculture � No-till and conservation tillage practices on cropland � Aforestation and productivity improvements on rangeland 18 Winrock International
Estimating the Supply of Carbon Offsets Goal: � To estimate the supply of carbon offset credits at various carbon credit prices. Methods: � Use available data and economic theory to identify and quantify likely projects on individual land parcels. � Prepare information in a GIS platform • Identify areas for low cost offsets • sum estimated carbon offset supply at various prices 19 Winrock International
Estimating the Supply of Carbon Offsets Categories of Costs: � Opportunity costs of producing carbon � Conversion costs � Measuring and monitoring costs � Land management costs � Contract costs 20 Winrock International
Estimating the Supply of Carbon Offsets Total estimated costs per hectare � Calculate value of future cost stream (based on length of carbon project) � Discount future cost stream to current dollars � Allow for cost adjustment based on a risk aversion factor • Farmers may prefer a guaranteed income stream to uncertain agricultural returns 21 Winrock International
Conservation Tillage (CT) on California Cropland • Currently <1% of CA cropland is farmed using CT (Mitchell et al. 2002) • Potential of 1.73 million ha of cropland • Increase soil C by 0.2 ton/ha/year • 50% adoption rate • 1.73 million tons C over 10 years • Experiments show 5 MT C/ha over 12 years of CT – 36% increase in soil C (Horwath and Doane, 2002) 22 Winrock International
Conservation Tillage on California Cropland • Possibly very low cost carbon • CT is not costly to farmer (Rominger, 2002) • Reduces number of field operations (Klonsky and DeMoura, 2002) • Reduces GHG emissions from machinery use • Additional ecosystem benefits from CT • Reduces nutrient and sediment runoff (Reickosky, 1998) • Reduces dust and air quality problems (Baker et al., 2002) • May reduce the cost of carbon offsets by having income streams from co-benefits 23 Winrock International
Rangeland management in California • 52% (5.8 million hectares) of CA agricultural land is pasture and range • Well managed perennial rangeland can increase C sequestration (Follet et al., 2001) • Several management strategies are likely to increase soil C • Re-seeding to deep-rooted perennial grasses • Developing water supplies for livestock • Intensive grazing management 24 Winrock International
Rangeland management in California • Initial investments required to improve rangeland and management • Improvements will benefit CA livestock industry (Beardsley, 2001) • Ranchers interested in additional revenue sources to enhance profit margin (Coehlo, 2002) • Vast potential for low cost C credits 25 Winrock International
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