Files
Abstract
Agriculture’s impact on climate change is unambiguous although its role is multifaceted as
it is a source of greenhouse gases but also a sink. It’s feasibility to mitigate climate change
has raised interest, but thorough studies about the net benefits of the mitigation practices
are needed. The aim of this paper is to analyse the social net benefits of barley cultivation
on three different soil types in Finland (clay, silt and organic) by using an integrated
economic and ecological model. We ask whether it would be privately or socially
profitable to allocate some of barley cultivation permanently for alternative land uses or
cultivation systems, when production costs, GHG emissions and surface water quality
impacts are taken into account. We compare the profitability of barley cultivation under
conventional tillage (mouldboard ploughing) to conservation tillage (no-till), green and
bare fallow and afforestation. We develop a theoretical framework for climate policies in
agriculture. A comparison of the socially and privately optimal input use and land
allocation choices allows us to derive optimal carbon tax and payments for climate and
water quality friendly tillage practices. The empirical application of the model uses Finnish
data to define the social welfare created by alternative soil type and tillage combinations
and optimal policy instruments. GHG emissions are assessed on the basis of the whole life
cycle of the production comprising also CO2 emission from soils. To assess the net social
benefits related to alternative land use options monetary environmental valuation estimates
are used in order to find the socially most profitable land allocation as regards soil type.