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USDA Resource Economics Division
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Economics of Sequestering Carbon in the U.S. Agricultural Sector

Jan Lewandrowski, Mark Peters, Carol Jones, Robert House, Mark

The analysis employs the ERS U.S. Agricultural Sector Model to evaluate whether farmers adopt three types of sequestering activities – afforesting croplands and pasture, shifting cropland to permanent grasses, and increasing the use of production practices (particularly no-till) and rotations that raise soil-carbon levels. Model simulations were run reflecting 15-year sequestration contracts for four alternative payment designs and six alternative payment levels for additional sequestered carbon.

The report finds that: agriculture can provide low-cost opportunities to sequester additional carbon in soils and biomass; different sequestration activities studied become economically feasible at different carbon prices; and the estimated economic potential to sequester carbon is lower than previously estimated technical potential.

Further, the report finds that an incentive system with both payments for carbon sequestration and charges for carbon emissions may be much more cost effective than a system with payments only.

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