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Poverty, risk, and the supply of soil carbon sequestration

Published online by Cambridge University Press:  01 June 2008

JOSHUA GRAFF-ZIVIN  and
LESLIE LIPPER
JOSHUA GRAFF-ZIVIN
Affiliation:
Department of Health Policy and Management, Mailman School of Public Health and SIPA, Columbia University
LESLIE LIPPER*
Affiliation:
Agricultural and Development Economics Division, Food and Agriculture Organization of the UN, Viale delle Terme di Caracalla, 00100 RomeItaly. Tel. 39 06 5705 5342. Fax 39 06 5705 5522. Email: leslie.lipper@fao.org
*
*Corresponding author.
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Abstract

We explore poor farmers' incentives to adopt production systems that increase soil carbon sequestration, focusing on the impact of risk. A dynamic optimization model of conservation agriculture adoption is presented, where farmers optimize over expected utility of profits from agriculture and carbon sequestration. Adoption impacts on agricultural productivity are modeled as a combination of the technological effects of the new system, and productivity effects of changes in soil carbon on agricultural output. Comparative static results indicate increases in soil carbon sequestration price and the discount rate have unambiguous impacts on equilibrium soil carbon levels; the former leading to higher, and the latter to lower, carbon levels. Increases in the price of agricultural output and risk aversion have ambiguous impacts, depending on the relative strength of the productivity and technology effects. The paper concludes with a discussion of designing soil carbon payment mechanisms to benefit low income farmers.

Type
Research Article
Information
Environment and Development Economics , Volume 13 , Issue 3: Payment for ecosystem services , June 2008 , pp. 353 - 373
Copyright
Copyright © Cambridge University Press 2008

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