Opportunity costs of rewetting agriculturally used organic soils in Germany

Rewetting organic soils used in agriculture to lower GHG emissions makes current land use practices impossible, leading to costs that go beyond the technical aspects of rewetting. Farmers have to forgo the profits that could be achieved with the drained use of organic soils. We estimate these costs at the municipal level based on a crop-type map generated using remote sensing technologies, combined with short-term standard gross margins and long-term tenure fees. We estimate the maximum of average short-term opportunity costs of rewetting one hectare of organic soil to range from €674 in Brandenburg to €2726 in Lower Saxony. Relating the maximum short-term opportunity costs to the GHG mitigation potential of rewetting organic soils yields mitigation costs ranging from €24 to €91 per t CO2eq among federal states. This is substantially below the estimated economic welfare losses of €237 per ton of CO2 emitted (UBA, 2023), even if additional costs of rewetting, such as engineering and management costs, are accounted for. Recently introduced federal state-specific interventions for peatland protection measures under the second pillar of the “Common Agricultural Policy" (CAP) can cover the average short-term opportunity costs of rewetting if combined with other CAP second pillar interventions. However, the interventions do not capture the high variability in opportunity costs across a federal state and have a reliable time horizon of only 7 years. Our results can inform the design of region- and farm-type-specific compensation measures to make rewetting attractive to farmers. Furthermore, they are relevant for a cost-benefit analysis of rewetting agriculturally used organic soils. Finally, they can inform debates on rewetting organic soils in other EU member states.