Relative Efficiency of Sequestering Carbon in Agricultural Soils Through Second Best Instruments
The total expected cost of sequestering carbon in agricultural soils is estimated under different government-based and market-based policies. A possible government-based EQIP programme offering a per-acre subsidy to adopt conservation tillage and a market-based carbon credit programme where producers are given carbon credits to sell in an external market are examined. It was shown that by varying the distribution of carbon credits given to producers, a market-based carbon credit programme can be equivalent to any type of government-based EQIP subsidy programme. The relative efficiency of programmes consisting of a single subsidy or carbon credit is then discussed.