One of the more unfortunate developments in the debate over cap-and-trade has been the refusal of the agriculture lobby to sit down at the table and work toward a good compromise with policy makers and business leaders on climate-change law.
The pressure has worked. The Waxman-Markey bill passed this summer conspicuously leaves out the farm industry, which is a significant contributor to the climate problem, from fertilizer-emitted nitrous oxide (a greenhouse gas 296 times more powerful than carbon dioxide) to livestock emissions to the distortionary impact of ethanol on land use. But despite Congress’s concessions to the powerful agriculture industry, the farm lobby continues to fight efforts to pass cap-and-trade, as farmers express fears that putting a price on carbon — which is, of course, the key to slowing emissions — would be too burdensome for them. The resistance to cap-and-trade among farmers was illustrated by an Economist article this week that featured a Montana farmer named Bruce Wright, whom the article reported “cannot see how he could run his farm without cheap fossil fuels.”
The refusal to engage on the issue is unfortunate — and, it turns out, misguided. Never mind that the American heartland would suffer some of the worst effects from climate change (the most dire models see a repeat of the Dust Bowl). According to a new study by 25x’25 Alliance, an advocacy group spearheaded by volunteer leaders in the agriculture, forestry, and renewable energy communities, cap-and-trade could end up being a net plus for farmers’ bottom line. The study (PDF here) found that a properly structured cap-and-trade scheme could bring in an additional $13 billion in annual revenues for agriculture and forestry, as income from offsets more than compensate for higher input costs for energy and fertilizer. (Among the offsets considered include methane capture, bioenergy crop production, and grassland sequestration.)
Moreover, the study also modeled a scenario in which emissions are regulated by the Environmental Protection Agency (in accordance with the 2007 Supreme Court decision finding that the agency was responsible for regulating greenhouse gases under the Clean Air Act) instead of through cap-and-trade legislation. The study found a considerably worse outcome for farmers: “Agriculture is subject to higher input costs with no opportunity to be compensated for the GHG [greenhouse gas] reduction services the sector provides.”
A press release announcing the 25x’25 study underscores the point that farmers have more to lose by stonewalling on climate change legislation. “Farmers and ranchers want to be a part of the climate change solution and this study illustrates the significant role they can play,” says Roger Johnson, president of the National Farmers Union. “Failing to address climate change through legislation, and instead subjecting producers to EPA regulations, would be a huge mistake.”
As I’ve written before, cap-and-trade will lead to a higher cost burden to some, but also create a new revenue opportunity for others. According to this study, a cap-and-trade system with a decent offsets mechanism would actually be a boon to farmers who are moved to change their ways by new market incentives. Here’s hoping the Bruce Wrights of America catch on.
Tags: Agriculture, Climate change, Environment
This was interesting to me. The flooding in recent years in the Midwest and other unpredictable weather may help bring farmers to the table. There have been some very tangible ‘proof points’ of climate change, such as 100-year floods occurring multiple times in the past decade, which have impacted farmers and will hopefully encourage cooperation with legislation.
Would be interested to hear more about the “offsets mechanism” concept in a comment or a future post.
[...] studies of cap-and-trade’s impact on the agriculture sector. The report confirms what we’ve written in the past: that the farm industry is actually going to come out well if cap-and-trade as currently designed [...]