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Image: Natural Resources & Environment


Agriculture has a potential role to play in the removal of carbon dioxide from the atmosphere. Land managers can change production practices or land uses to increase the carbon stored in soil or vegetation. Land managers can use other changes in production practices and land uses to reduce emissions of methane and nitrous oxide. In addition, agriculture can produce biofuels, which can substitute for fossil fuels and thereby potentially reduce greenhouse gas emissions. All of these actions are considered forms of mitigation.

Research underway at ERS will assess the costs of these options. This information can then show the potential role for these options in any U.S. efforts to offset or reduce greenhouse gas emissions. Agricultural landowners may have the option to participate in greenhouse gas markets, which may be established by Federal or State policies or by private groups. Economic research can assess the likely extent of participation in those markets and the amount of greenhouse gas reductions that might be expected at different market prices and can show how the economic opportunities from participation might be distributed across commodities and regions.



The above figure illustrates the potential increase in carbon sequestration under a hypothetical example in which farm-level use of mitigating practices increases by 50 percent. Research underway at ERS will estimate the actual adoption rates that might occur at any given carbon price, beyond this across-the-board scenario. Economic research can further show how farmer participation, costs and benefits would be affected by different policy approaches.

Several of the activities that count as mitigation have additional environmental benefits, such as providing wildlife habitat or reducing nonpoint water pollution. ERS conducts research on the economic value of these benefits. This value may complement the value of carbon markets. An ERS report (see The Use of Markets To Increase Private Investment in Environmental Stewardship, ERR-64, September 2008) examined the environmental services farmers could provide, identified impediments to market formation, and explored potential roles for government action. Case studies examined in the report include carbon markets, as well as water quality trading, wetland restoration, and recreation on Conservation Reserve Program lands.

Carbon Sequestration

Agriculture and forestry play significant roles in reducing atmospheric greenhouse gas concentrations through carbon storage in soils and vegetation. Several recent studies indicate that farm, ranch, and forest lands could increase sequestration by adjusting land uses and production systems. A large proportion of this additional sequestration is believed to be achievable at lower cost than emissions reductions from other sectors.

On the other hand, some land use and management changes can cause stored carbon to be released. Furthermore, land-use changes are linked across time and space through market effects. This linkage means that a wide range of changes in stored carbon must be accounted for in determining the effects of carbon policies. ERS is using its knowledge about land markets, commodity markets and market interactions, including possible international market effects, to provide critical information on these issues.

For more information, see The Use of Markets To Increase Private Investment in Environmental Stewardship (April 2008), Economics of Sequestering Carbon in the U.S. Agricultural Sector (April 2004), and the Amber Waves summary article.


Bioenergy refers both to biofuels, which are transportation or heating fuels such as ethanol and biodiesel that are derived from plant matter, and to raw plant biomass used to generate electricity. Bioenergy may play a role in addressing climate change because it can, in some circumstances, substitute for other energy sources such as gasoline or coal that are sources of carbon dioxide emissions.

Federal and State laws and volatile energy prices have created a domestic market for the crops from which bioenergy is derived. The Energy Independence and Security Act of 2007 16x16 - PDF requires that the U.S. use 11.1 billion gallons of renewable fuels in 2009. This mandate increases to 36 billion gallons by 2022. Roughly half of the States have laws requiring a portion of the State's electricity to be generated from renewable sources, some of which will be plant-based sources. Mandates for renewable electricity are also being discussed at the Federal level.

The demand for bioenergy has implications for U.S. and world agricultural markets. ERS provides analysis of these market effects. The production of biomass may affect soil carbon storage, either positively or negatively, according to the same pathways described for carbon sequestration. ERS provides analysis of where and how bioenergy and related crops are grown, which helps researchers determine their effects on the carbon balance.

ERS is approaching bioenergy issues in several ways (see the ERS Bioenergy topic page):

  • Monitoring the state of the agricultural system and rural communities
  • Providing market analyses
  • Developing projections of commodity supply, demand, and retail food prices
  • Conducting indepth research on policy-relevant topics

For more information, see Increasing Feedstock Production for Biofuels: Economic Drivers, Environmental Implications, and the Role of Research 16x16 - PDF, released by the interagency Biomass Research and Development Board. The report presents an economic assessment of feedstock production from agriculture and forestry sources and analyzes the likely greenhouse gas implications of various policy and economic scenarios. It concludes that farm-sector greenhouse gas emissions of increasing corn ethanol production from 12 to 15 billion gallons a year are likely to be modest. It also shows that a 50 percent increase in corn productivity can reduce greenhouse gas emissions associated with increasing biofuel production by 7.7 million metric tons (CO2 equivalent). This latter finding shows how increased commodity productivity acts as a kind of greenhouse gas mitigation strategy. Many uncertainties remain in this analysis, especially the possible indirect land use changes resulting from biofuel policy.

Energy Conservation and Efficiency

Agricultural producers, like other producers in the economy, use fossil fuels as part of the production process. Farmers can undertake energy conservation and efficiency improvements to reduce their use of these fuels. They can improve their operations' energy efficiency by installing new technology, purchasing new machinery, or using different production methods that can decrease fuel use.

Farms can reduce emissions from machinery by switching to alternative fuels like ethanol, biodiesel, or natural gas that emit fewer greenhouse gases.

The Rural Energy for America Program provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

Non-Carbon Dioxide Emissions: Soil Management, Manure Management, and Enteric Fermentation

Livestock production and the application of fertilizer to fields contribute to non-carbon greenhouse gas emissions. Belching, primarily from cattle and sheep, formally known as enteric fermentation, emits methane, a powerful greenhouse gas. Animal waste, from all species, also releases methane unless steps are taken to "capture" this gas. The application of synthetic fertilizers and other agricultural soil management practices emits nitrous oxide, another greenhouse gas.

Agricultural producers can reduce methane and nitrous oxide emissions through changes in production practices. Changes in livestock feed have been found to reduce the amount of methane produced in the animals' digestive systems. Changes in the timing and method of fertilizer application can reduce nitrous oxide emissions. The use of anaerobic methane digesters on dairy and hog farms captures methane produced during manure storage so that it is not released to the atmosphere. Producers can use the captured methane to generate electricity for use on the farm or for sale to electric utilities, where feasible, which reduces reliance on fossil fuels and provides an additional source of income.

Federal policy can provide incentives to farm operations to adopt practices that reduce these non-carbon greenhouse gas emissions. However, in some cases, producers may face tradeoffs between reduced greenhouse gas emissions and improved water quality when making decisions about manure and nutrient management. For example, open lagoons and other liquid containment facilities store manure that might otherwise contaminate water bodies, but in doing so create conditions for manure decomposition that releases methane. Further actions can be taken by producers to capture the methane gas emissions generated by manure decomposition.

For more information, see Managing Manure To Improve Air and Water Quality (September 2005) and "No-Till" Farming Is a Growing Practice (November 2010).

See also the ERS topic on Chemical Inputs.

Policy Design

Federal policy can play an important role in determining greenhouse gas emissions from agriculture and in providing incentives for landowners to reduce emissions through various mitigation activities. Numerous Congressional, Administration and stakeholder proposals call for a nationwide greenhouse gas cap-and-trade system that would allow farmers to obtain and sell credits for carbon storage and other greenhouse-gas mitigation activities, also called offsets. For example, up to 1 billion tons of offsets from domestic activities including from agriculture would be allowed under the Waxman-Markey American Clean Energy and Security Act (H.R. 2454) passed by the House of Representatives June 26, 2009. The exact format that these offset credits would take, should this bill become law, has yet to be determined. An alternative approach, following the model of existing conservation programs, would be for government programs to reward landowners directly for undertaking emission-reducing or offsetting activities.

The design of these programs will play an important role in the level and type of participation, and thus in the cost of reducing greenhouse emissions from agriculture and from regulated sectors.

Multiple ERS research reports (see below) have shown the importance of policy design in achieving environmental benefits from USDA's conservation programs in a cost-effective manner. Because many of the practices supported by those programs sequester carbon as well as providing other environmental benefits targeted by the current programs, insights from that research provide a strong foundation and "lessons learned" for considering the potential implications of alternative approaches to greenhouse gas mitigation policy design.

The manner in which climate policies and conservation programs interact may have important implications for both. For example, the Conservation Reserve Program (CRP) retires environmentally sensitive cropland from production and pays farmers to plant conservation cover under 10- to 15-year contracts. Current CRP enrollment by average cost and vegetation type is shown below.


Download higher resolution chart (500 pixels by 400 pixels, 762 dpi)


The CRP does not currently preclude participants from also receiving payments for sequestering carbon. Therefore, a national cap-and-trade system for greenhouse gases that includes credits for agriculture could make participation in both a carbon market and the CRP more attractive. On the other hand, if "stacking" of credits is not allowed, carbon markets and conservation programs may compete for the same land. Thus, coordination between conservation programs and carbon markets is an important policy consideration.

For more information, see The Use Of Markets To Increase Private Investment in Environmental Stewardship (September 2008).

Other related ERS reports include:

Last updated: Saturday, May 26, 2012

For more information contact: Elizabeth Marshall