Agricultural & Forestlands: U.S. Carbon Policy Strategies

Agricultural and forestlands can play a key role as part of a comprehensive strategy to slow the accumulation of greenhouse gas emissions in the atmosphere. Much of the public discussion about using these lands as part of an overall strategy to address climate change results from the beliefs that forest and agriculture land-use and management options will be relatively low cost, and that biomass can play an important role in reducing the use of fossil fuels. In the near term, these lands can be managed to increase the quantity of carbon stored in soils and plant matter, thereby reducing net emissions of the primary greenhouse gas, carbon dioxide. In many cases the changes in land-use management that increase carbon storage provide multiple benefits—such as erosion control, water quality protection, and improved wildlife habitat—that by themselves justify the new practices. Over longer time horizons, agricultural and forestlands can produce biomass-based substitutes for fossil fuels, thereby further reducing emissions.

This report examines the wide array of ways in which forest and agricultural lands can be managed to store or “sequester” carbon and reduce net emissions (hereafter we use the term “sequestration” for the process by which carbon is removed from the atmosphere by plants and stored in soils and trees). It discusses a range of policies and programs that would promote this objective and evaluates them in terms of their cost, environmental effectiveness, and other considerations. The results of this analysis suggest that, by carefully designing and implementing a large-scale forest and agricultural carbon sequestration strategy, the United States could substantially reduce its net carbon dioxide emissions. A successful strategy is likely to encompass a variety of initiatives at the national, state, and local levels, and to involve both government and private parties. No single approach will suffice.

Much of the infrastructure needed to increase carbon sequestration on agricultural and forestlands is already in place. To capitalize on sequestration opportunities, the federal government will need to address the full range of practices available for conserving existing carbon stocks and for promoting additional carbon uptake and storage on forest, crop, and grazing lands. A successful national strategy will also need to be responsive to the different types of land and landowners involved, to draw on the existing network of organizations, and include a variety of policy tools. On public lands, for example, government agencies, personnel, and resources can be directly deployed to pursue sequestration goals. On private land, the federal government has typically had to rely on incentives to influence land management and use. Regulatory approaches have been used on private forestlands, but have been carried out by states because of historically stiff political resistance to federal intervention in state powers to regulate land use.

There are three basic ways in which forest and agricultural lands can contribute to greenhouse gas reduction efforts: conversion of non-forestlands to forests, preserving and increasing carbon in existing forests and agricultural soils, and growing biomass to be used for energy. The costs and potential contributions associated with these three strategies vary widely. Conversion of an estimated 115 million acres of marginal agricultural lands in the United States to forests could sequester an additional 270 million metric tons (MMT) of carbon per year over a period of 100 years, at marginal costs in the rangeof $50 per metric ton of carbon ($45 per short ton1). 270 MMT of carbon stored in forests would offset nearly 20 percent of current emissions of carbon dioxide from U.S. combustion of fossil fuels. However, 115 million acres equals nearly 1/3 of currently cultivated cropland and, even though some of this conversion might be economic, conversion on this scale would require a significant federal effort and likely meet with resistance from agricultural business and rural communities. Initial national studies also suggest that up to 70 MMT could be sequestered annually on agricultural lands through modification of agricultural practices if moderate incentives were available (up to $50 per metric ton of carbon; $12.50 per metric ton CO2). In addition, with yield improvements and cost reductions in the technologies, it may be possible to offset as much as 9 to 24 percent of current emissions through use of biofuels produced at costs competitive with fossil fuels.

In a perfect world the most cost-effective practices—both source control and carbon sequestration—would be adopted first, with more costly approaches implemented successively as net emission reduction goals require. In practice, many approaches may be used simultaneously for a combination of practical, programmatic, and political reasons.

Carbon sequestration programs will not be implemented in a policy vacuum. New program design will need to take existing programs, regulations, and resources into consideration, including the large and sophisticated infrastructure that supplies the nation’s many forest and agriculture landowners with educational, technical, and financial support. A key asset that the government has at its disposal is the resourcefulness of many of these landowners. Given practical and political considerations, incentive-based approaches combined with technical assistance are the most effective and feasible policy tools the federal government will have to begin implementing a domestic carbon sequestration strategy. Moreover, the structure needed to deliver incentives for sequestration is already in place in the form of numerous programs contained in the 2002 Farm Bill, including the Conservation Security Program, the Conservation Reserve Program, the Environmental Quality Incentives Program, and the Wildlife Habitat Incentives Program.

The government has a great deal of experience with these programs, and, although each was designed to promote specific activities or land management practices, many of the targeted practices also sequester carbon. The practice-based approaches incorporated in these programs have received broad political support. Indeed, it may well be possible to achieve substantial gains in carbon conservation and sequestration simply by relying on existing institutions and programs. In many cases, greater gains could be achieved by increasing budgets and expanding programs. Thus, the federal government should provide substantial and sustained funding for Farm Bill programs that have been successful in promoting carbon sequestration.

An alternative to providing incentives for specific activities or management practices is to employ results-based approaches that provide rewards to landowners in proportion to the actual amount of additional carbon sequestration they achieve. This approach is foreshadowed in the domestic 1605(b) voluntary reporting program. It is also reflected in the Clean Development Mechanism of the Kyoto Protocol at the international level. The advantage of a results-based approach is that it encourages private landowners and project developers to develop innovative land-management practices that are adapted to local conditions. Rather than prescribing the sequestration practices for which the government will pay, the results-based approach frees the landowner to take whatever steps are appropriate to increase carbon stocks, and the reward is directly proportional to the accomplishment.

Incentives or rewards in a results-based program could take several forms. Two leading candidates are subsidy payments and carbon credits. A subsidy payment would take the form of an announced price—in dollars per ton—that the government would pay for carbon sequestration. This approach could be implemented by modifying existing government incentive-based programs. Alternatively, carbon credits could be established in conjunction with a “cap-and-trade” program. Large point sources such as power plants could be allowed to meet their caps, at least partially, by purchasing emission credits awarded for increasing sequestration on forest and agricultural lands. This approach would allow private landowners to receive income for sequestering carbon and would assist entities subject to emission caps to meet their targets at lower costs.

However, results-based approaches are less familiar to the agricultural and forest communities than existing programs that provide incentives for specific practices. Moreover, if credits are allocated to individual landowners under a results-based approach, the government will have to insure that there are adequate methods to provide consistent, reliable, quantified estimates of the greenhouse gas impacts of changes in land management and use. If the government can gain broad acceptance for a results-based approach, and develop the estimation protocols needed to gauge the appropriate rewards, it may be possible to unleash substantial creativity among the broad range of landowners in the United States in achieving increased carbon sequestration.

The government can employ all of the approaches described in this report—providing educational programs through its extension services, enhancing sequestration on government land, urging states to adopt regulations that encourage carbon sequestration, providing incentives for sequestration-promoting practices, and developing results-based programs—to achieve the greatest effect.