Profitability of Carbon Sequestration in Western Rangelands of the United States

Abstract

Concerns over climate change have increased interest in carbon sequestration in agricultural lands. While the per-hectare carbon capture potential of rangelands is less than either cropland or forests, existing research suggests modest changes in carbon storage on rangelands can potentially alter the global carbon cycle. This paper examines the potential firm-level revenues from voluntary carbon offset programs, such as the Chicago Climate Exchange (CCX) Rangeland Soil Carbon Offset program. We estimate revenues for short-term voluntary offsets given historical prices and prices projected with potential cap-and-trade legislation. We also estimate revenues assuming 100-yr offsets are required to meet international sequestration standards. Simulation results indicate a relatively wide range of modest revenues from recent CCX contracts and carbon prices. The analysis suggests that recent carbon prices or low-end projected prices from cap-and-trade legislation are not likely to encourage producer participation. Medium and high carbon price projections for cap-and-trade legislation may make carbon sequestration a more attractive option for rangeland managers, but given potential requirements for projects to meet international guidelines for greenhouse gas offset projects, many issues remain before range managers may be interested in carbon sequestration as an enterprise. Resumen La preocupación sobre el cambio climático ha aumentado el interés en el secuestro de carbono en tierras de uso agropecuario. Mientras que el potencial de captura de carbono en pastizales es menor que en tierras agrícolas y bosques, investigaciones sugieren que cambios modestos en el almacén de carbono en pastizales potencialmente alteran el ciclo global del carbono. Este artículo examina el ingreso potencial a nivel de empresa en programas voluntarios para la compensación de carbono tales como el programa de Compensación de Carbono en Pastizales del Chicago Climate Exchange (CCX). Estimamos ingresos en el corto plazo por compensaciones voluntarias dado precios históricos y precios proyectados con potencial con legislación de tope y compra-venta. También estimamos ingresos asumiendo 100 años de compensación tal como es requerido para cumplir los está ndares internacionales de captura. Resultados de simulaciones indican relativamente amplio margen de modestos ingresos de contratos recientes del CCX y precios del carbono. El aná lisis sugiere que los precios recientes del carbono o proyectos de menor importancia de la legislación tipo tope y compra-venta no tienen posibilidad de encontrar la participación de los productores. La proyección de precios medianos y altos del carbono de la legislación tope y compra-venta podría hacer má s atractiva la opción de captura de carbono para los manejadores de pastizales pero, dado los requerimientos potenciales para proyectos que cumplan con los lineamientos internacionales para la compensación de proyectos de gases de efecto invernadero, muchos aspectos está n presentes antes de que los manejadores de pasti...

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