Benefits and Costs to U.S. Agriculture

Depending upon the form of the policy implemented, U.S. agricultural producers stand to gain financially from programs that effectively promote GHG reductions. For many farmers, climate-friendly practices and land use make good financial sense, independent of policies to promote them. Providing more and better information might lead more of these farmers to adopt such practices. Other farmers find that climate-friendly practices do not make financial sense for them, and would only increase their use of climate-friendly practices if financial inducements were available. These farmers would adopt new practices if the payments were large enough to cover all costs associated with switching practices, including:

• Direct costs. These include the cost of new equipment, lower crop yields, or loss in profits caused by crop-switching.
• Indirect costs. For example, experience indicates that six years may be needed to successfully switch from conventional tillage to no-till, a period during which farmers may experience increased risks and workloads.

Even though agriculture may be a low-cost provider of GHG emission reductions, a full cost analysis needs to include the costs of monitoring and verifying those reductions, regardless of who bears those costs.

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