Current climate policy focuses disproportionately on carbon dioxide emissions but recent developments have begun to recognize the important role of other gases, including methane. As a result, anaerobic digesters (ADs) on dairy farms present an opportunity to reduce greenhouse gas emissions. We quantify the social and private costs and benefits of ADs that have been adopted in California and find that despite high initial costs, large reductions in GHG emissions bring significant social benefits and represent good social investments given a $36 per-ton carbon price. Subsidies that lower the initial private investment cost can help align socially and privately optimal adoption decisions.


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