Environmental Valuation & Cost-Benefit News

Link: http://www.ifpri.org/sites/default/files/publications/ifpridp00900.pdf

Executive Summary
By some estimates, agricultural practices account for 20 percent of India’s total greenhouse gas (GSG) emissions; thus, cost-effective reductions in agricultural emissions could significantly lower India’s overall emissions.

Gerald C. Nelson, Richard Robertson, Siwa Msangi, Tingju Zhu, Xiaoli Liao and Puja Jawajar explore mitigation options for three agricultural sources of GHGs—methane (CH4) emissions from irrigated rice production, nitrous oxide (N2O) emissions from the use of nitrogenous fertilizers, and the release of carbon dioxide (CO2) from energy sources used to pump groundwater for irrigation. The authors also examine how changes in land use would affect carbon sequestration. Although livestock-based methane emissions may be significant, we do not include them here, both because the data on livestock numbers and emissions are inadequate and technologies to reduce emissions are in early stages of development. They find great opportunities for cost-effective mitigation of GHGs in Indian agriculture, but caution that their results are based on a variety of data sources, some of which are of poor quality.
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The production effects vary greatly across crops. Production of high-value crops such as cotton, groundnuts, maize, potatoes, and sugarcane is relatively little affected (production declines less than 10 percent), even under our highest-payment scenarios. Production of low-value crops such as millet, low-input and subsistence rice, and sorghum see declines of more than 50 percent in the high-payment scenarios. However, we also see large declines in production of high-input rainfed and irrigated rice, soybeans, and wheat. These unexpected results arise from a combination of our mechanism for location-specific price determination, which does not include border measures and does not handle non-traded goods well, and issues with the allocation algorithms to identify locations for individual crop production. [There are] dramatic differences in cost of the different payment mechanisms.
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Deep wells powered by electricity are the largest single source of CO2 emissions. They account for 65 percent of the total in 2000 and 87 percent in 2050. The 38 million mt of CO2 emitted from deep-well pumping accounts for more than 5 percent of total Indian greenhouse gas emissions from all sectors of the economy in 2000 (1,559.1 million mt CO2e) (World Resources Institute 2009). The growth in emissions actually peaks in 2040 with the peak in irrigation water use and drops through 2050 as irrigation water demand declines.

As expected, both higher transmission losses and deeper wells result in more CO2 emissions. The increase in transmission losses raises CO2 emissions by about 11 percent. Deeper wells increase emissions by 33 percent.

Pump efficiency has the most dramatic effect on the estimates of carbon emissions. If pumps are only 20 percent efficient instead of the 30 percent assumption of the baseline, carbon emissions increase by 50 percent over the baseline.
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Perhaps the most important result is that the cost per mt of carbon sequestered is small over a large range of payments and additions to the carbon pool—well under $1 per mt. However, this result is based on strong assumptions and should be considered preliminary until better data are made available. Depending on the payment instrument and the amount spent, our estimates of annual sequestration range from about 8 million mt ($1 million spent annually with the opportunity cost instrument) to more than 500 million mt with expenditures of less than $100 million per year. Production of high-value crops would be only slightly affected, but production of some low-value crops would see declines of more than 50 percent of 2000 production under high-payment scenarios.

by Gerald C. Nelson 1, Richard Robertson 1, Siwa Msangi 1, Tingju Zhu 1, Xiaoli Liao 2 and Puja Jawajar 3
1. International Food Policy Research Institute
2. University of Illinois at Urbana-Champaign, PhD student, Department of Agricultural and Consumer Economics
3. Independent Consultant
International Food Policy Research Institute www.IFPRI.org
Environment and Production Technology Division
IFPRI Discussion Paper 00900, September 2009
via REPEC Research Papers in Economics www.REPEC.org