A bioeconomic model of carbon trading in an Alberta grazing business – Working paper

 Abstract

Biosequestration of carbon on agricultural land has been confirmed as a source of offsets under international greenhouse gas emission agreements.  Technical studies have identified the biological potential supply from different practices but not the economically efficient level of supply.  From a landholders’ perspective the decision to participate in a carbon trading scheme will be dependent on the relative profitability of carbon trading compared to their status quo enterprise as well as their perception of the risks involved.  Integral to this decision is the extent to which variation in opportunity costs, transaction costs and other variables will affect relative returns.  Bioeconomic modelling has successfully been applied to many agricultural problems and it is also becoming a more commonly used tool in environmental conservation decisions.  The capacity of the method to apply sensitivity analysis on both ecological and economic variables is particularly useful in cases such as carbon trading where historical data is not available and substantial uncertainty exists.  This study uses a case study of beef production in Alberta to test the relative profitability of two alternative means of producing carbon offsets under a range of input variables.  

 Bioeconomic model of carbon trading in Canada - Working paper (2441)