Benefits of pollution monitoring technology for greenhouse gas offset markets
AbstractEnvironmental economists have shown that tradable emission permit markets can reduce the costs to society of pollution reduction. However, when emissions are difficult to monitor and verify, offset credits from pollution reductions may be subject to price discounts that reduce social welfare. In this paper, we estimate the extent to which social welfare could be improved by using new technology to increase the accuracy with which pollution flows from agricultural fields can be monitored. We use a hypothetical case study of a situation in which farmers can reduce nitrous oxide (N2O) emissions from Midwest agricultural land parcels and sell the resulting offset permits in a greenhouse gas tradable permit market. We simulate market outcomes with and without an inexpensive technology that increases the accuracy of emission estimates, reduces the discount to which agricultural offset permits are subject, and improves the performance of tradable permit system. We find that the benefits from such technology range as high as $138 for a 100 acre field if N2O emissions are an exponential function of nitrogen application rates. However, variation in the benefits to farmers of eliminating price discounts may mean efficient technology adoption is not uniform across space.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 1 ()
Contact details of provider:
tradable permit; greenhouse gases; uncertainty; technology;
Find related papers by JEL classification:
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
- Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Stephane De Cara & Martin HouzÃ© & Pierre-Alain Jayet, 2005.
"Methane and nitrous oxide emissions from agriculture in the EU : a spatial assessment of sources and abatement costs,"
156815, Institut National de la Recherche Agronomique, France.
- Stéphane Cara & Martin Houzé & Pierre-Alain Jayet, 2005. "Methane and Nitrous Oxide Emissions from Agriculture in the EU: A Spatial Assessment of Sources and Abatement Costs," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(4), pages 551-583, December.
- Glenn Sheriff, 2005. "Efficient Waste? Why Farmers Over-Apply Nutrients and the Implications for Policy Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(4), pages 542-557.
- Golub, Alla & Hertel, Thomas & Lee, Huey-Lin & Rose, Steven & Sohngen, Brent, 2009. "The opportunity cost of land use and the global potential for greenhouse gas mitigation in agriculture and forestry," Resource and Energy Economics, Elsevier, vol. 31(4), pages 299-319, November.
- Lyubov A. Kurkalova, 2005.
"Carbon Sequestration in Agricultural Soils: Discounting for Uncertainty,"
Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie,
Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(4), pages 375-384, December.
- Lyubov A. Kurkalova, 2005. "Carbon Sequestration in Agricultural Soils: Discounting for Uncertainty," Center for Agricultural and Rural Development (CARD) Publications 05-wp388, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
- Antle, John M. & Capalbo, Susan M. & Mooney, Sian & Elliott, Edward T. & Paustian, Keith H., 2001. "Economic Analysis Of Agricultural Soil Carbon Sequestration: An Integrated Assessment Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(02), December.
- Kim, Man-Keun & McCarl, Bruce A., 2009. "Uncertainty Discounting for Land-Based Carbon Sequestration," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(01), April.
- Bruno Vermont & Stephane De Cara, 2010.
"How costly is mitigation of non-CO2 greenhouse gas emissions from agriculture?: A meta-analysis,"
34004, Institut National de la Recherche Agronomique, France.
- Vermont, Bruno & De Cara, Stéphane, 2010. "How costly is mitigation of non-CO2 greenhouse gas emissions from agriculture?: A meta-analysis," Ecological Economics, Elsevier, vol. 69(7), pages 1373-1386, May.
- Lyubov Kurkalova & Catherine Kling & Jinhua Zhao, 2004.
"Value of agricultural non-point source pollution measurement technology: assessment from a policy perspective,"
Taylor & Francis Journals, vol. 36(20), pages 2287-2298.
- Kurkalova, Lyubov A. & Kling, Catherine L. & Zhao, Jinhua, 2004. "Value of Agricultural Nonpoint Source Pollution Measurement Technology: Assessment from a Policy Perspective," Staff General Research Papers 12328, Iowa State University, Department of Economics.
- Brink, Corjan & van Ierland, Ekko & Hordijk, Leen & Kroeze, Carolien, 2005. "Cost_effective emission abatement in agriculture in the presence of interrelations: cases for the Netherlands and Europe," Ecological Economics, Elsevier, vol. 53(1), pages 59-74, April.
- Richard D. Horan, 2001. "Differences in Social and Public Risk Perceptions and Conflicting Impacts on Point/Nonpoint Trading Ratios," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(4), pages 934-941.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (John P. Conley).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.