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GTAP Resource #6520

"Does Carbon Pricing Benefit Conservation Agriculture?"
by Liu, Jing, Maksym Chepeliev, Dominique van der Mensbrugghe and Thomas Hertel

Carbon pricing is a market-based strategy to lower global carbon emissions and combat climate change. Although the policy is not intentionally designed to target the emissions from agriculture, it can indirectly affect other Sustainable Development Goals (SDGs) associated with agriculture. One of the pathways is by changing Nitrogen (N) fertilizer application decisions. N fertilizer production shows high sensitivity to energy prices, especially natural gas that accounts for 75-90% of operating cost in the production. Carbon price will certainly raise the production cost and ultimately the price of N fertilizer. Crop sectors that intensively use N fertilizer may have to consider cutting back their applications to stay profitable. Of course, the level of profitability depends on a variety of factors beyond fertilizer price itself, including crop prices, marginal product of N fertilizer, and the existence of other policies that could interfere with the fertilization decision. Less fertilizer application saves input cost but can also adversely affect crop yields. Declined crop output tend to drive up food prices thereby endangering the SDG of strengthening food security. However, reduced commercial N fertilizer application also implies less nutrient loss. Nitrate (NO3) leaching to the waterways and nitrous oxide (N2O) emissions to the atmosphere cause severe environmental problems like global warming, groundwater contamination, and eutrophication. Many of these processes vary spatially due to variations in local climate, soil quality, and topographical conditions. Understanding the impacts of carbon pricing on sustainable agriculture requires a multi-scale analysis framework to capture these local conditions and the potential aggregated feedback to the global food market.

Resource Details (Export Citation) GTAP Keywords
Category: 2022 Conference Paper
Status: Not published
By/In: Presented during the 25th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2022
Created: Liu, J. (4/12/2022)
Updated: Liu, J. (6/8/2022)
Visits: 1,294
- Climate change policy
- Environmental policies
- Water availability
- North America

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