Implications of a carbon-based energy tax for U.S. agriculture

Schneider, U.A. & McCarl, B.A. (2005). Implications of a carbon-based energy tax for U.S. agriculture. Agricultural and Resource Economics Review 34 (2) 1-14.

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Policies to mitigate greenhouse gas emissions are likely to increase energy prices. Higher energy prices raise farmer costs for diesel and other fuels, irrigation water, farm chemicals, and grain drying. Simultaneously, renewable energy options become more attractive to agricultural producers. We consider both of these impacts, estimating the economic and environmental consequences of higher energy prices on U.S. agriculture. To do this we employ a price-endogenous agricultural sector model and solve that model for a range of carbon-tax-based energy price changes. Our results show mostly positive impacts on net farm income in the intermediate run. Through market price adjustments, fossil fuel costs are largely passed on to consumers. Additional farm revenue arises from the production of biofuels when carbon taxes reach $30 per ton of carbon or more. Positive environmental benefits include not only greenhouse gas emission offsets but also reduced levels of nitrogen leaching.

Item Type: Article
Research Programs: Forestry (FOR)
Bibliographic Reference: Agricultural and Resource Economics Review; 34:1-14 [2005]
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 02:17
Last Modified: 27 Aug 2021 17:37

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