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Measuring the Opportunity Cost of Carbon Sequestration in Tropical Agriculture

  • Charles A. Zelek
  • Gerald E. Shively

We present a method for measuring the opportunity cost of sequestering carbon on tropical farms. We derive the rates of carbon sequestration for timber and agroforestry systems and compute incentive compatible compensating payment schedules for farmers who sequester carbon. The method is applied to data for an agricultural watershed in the Philippines. Area- and land quality-adjusted total costs are estimated. The present value of the opportunity cost of carbon storage via land modification falls between $3.30 and $62.50 per ton. Carbon storage through agroforestry is found to be less costly than via a pure tree-based system.

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File URL: http://le.uwpress.org/cgi/reprint/79/3/342
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 79 (2003)
Issue (Month): 3 ()
Pages: 342-354

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Handle: RePEc:uwp:landec:v:79:y:2003:i:3:p:342-354
Contact details of provider: Web page: http://le.uwpress.org/

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  1. Peter J. Parks & Ian W. Hardie, 1995. "Least-Cost Forest Carbon Reserves: Cost-Effective Subsidies to Convert Marginal Agricultural Land to Forests," Land Economics, University of Wisconsin Press, vol. 71(1), pages 122-136.
  2. Robert N. Stavins, 1999. "The Costs of Carbon Sequestration: A Revealed-Preference Approach," American Economic Review, American Economic Association, vol. 89(4), pages 994-1009, September.
  3. Nissen, T. M. & Midmore, D. J. & Keeler, A. G., 2001. "Biophysical and economic tradeoffs of intercropping timber with food crops in the Philippine uplands," Agricultural Systems, Elsevier, vol. 67(1), pages 49-69, January.
  4. Darius M. Adams & Ralph J. Alig & DBruce A. McCarl & John M. Callaway & Steven M. Winnett, 1999. "Minimum Cost Strategies for Sequestering Carbon in Forests," Land Economics, University of Wisconsin Press, vol. 75(3), pages 360-374.
  5. S. Rama Chandra Reddy & Colin Price, 1999. "Carbon Sequestration and Conservation of Tropical Forests Under Uncertainty," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(1), pages 17-35.
  6. Zeuli, Kimberly A. & Skees, Jerry R., 2000. "Will Southern Agriculture Play A Role In A Carbon Market?," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(02), August.
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