Afforestation for carbon sequestration in the Lower Mississippi River Basin of Arkansas, USA: Does modeling of land use at fine spatial resolution reveal lower carbon cost?

We use optimization of a structural dynamic model to evaluate the cost of carbon sequestration when afforestation subsidies are used to encourage private landowners to switch from cropland to forestry. Our model allows for the planting of either softwood or hardwood forest types with flexible rotation lengths, in addition to irrigated crops. We apply the model to a portion of the Lower Mississippi River Basin in Arkansas where groundwater overdraft lowers the profitability of irrigated crops. In our baseline model with a 5% discount rate, a subsidy for afforestation from $1000 to $4500 per acre increases pine plantings, aquifer volume, and carbon sequestration above the levels without a subsidy. The average cost to sequester a ton of carbon increases from $13 ($3.55 per ton CO2eq) at the lowest subsidy to $36 ($9.84 per ton CO2eq) at the highest. Lower costs are achievable when soybeans are prominent on the landscape and high costs result when rice and corn dominate. Reducing the discount rate from 5% to 2% changes the afforestation type from fast growing softwoods to slow growing hardwoods, and this substantially lowers the cost of carbon sequestration. Delaying the implementation of an afforestation subsidy until irrigation costs rise from groundwater scarcity will increase the costs of carbon sequestration because many landowners will choose forest types with longer rotations without a subsidy. A carbon credit scheme leads to only afforestation by no harvest hardwoods.