Conference Agenda

Abstract

Biochar application on agricultural land is a potential greenhouse gas emission mitigation strategy and is advocated for the high permanence of biochar as a carbon sink compared to other sequestration measures. This study conducts a cost-benefit analysis of carbon sequestration using biochar in the EU countries. A dynamic partial equilibrium model is employed to examine the optimal carbon sequestration with and without biochar application to agricultural land to reduce carbon dioxide emissions between 2020 and 2050. We evaluate the net present value of carbon sequestration policies, which is dependent on the carbon price, anticipated to rise over time. We also assess the optimal combination of different carbon sequestration measures. The findings indicate that an optimal soil carbon sequestration policy would generate a value of 192 billion euro between 2020 and 2050. Of this, the utilization of biochar in agricultural land contributes with a net present value of 16 billion euros. For the given carbon price trajectory, carbon sequestration could offset an additional 1340 million metric tonnes of CO2e between 2020 and 2050, compared to business-as-usual.

Keywords: Agriculture, biochar, bioenergy, cost effectiveness, nonpermanence, soil carbon sequestration.

Planning for climate change adaptation is challenging due to the inherent uncertainty associated with future climate changes. Despite this uncertainty, many adaptation decisions need to be made now to effectively reduce future vulnerability to climate change. Flexibility is an important characteristic when making decisions in an uncertain future. Real Options Analysis (ROA) is an economic appraisal method that allows flexibility to be incorporated and explicitly valued in investment decisions. In this paper we apply a form of Real Options Analysis (ROA) to water storage for agricultural irrigation in a location in New Zealand. We develop a novel method to assign probabilities to future scenarios of water availability. Combining hydrological and economic analysis, we identify the most cost-effective storage size to build in the current time period to maintain current levels of production, and the most cost-effective level of expansion in 2050 to maintain production levels out to 2090. We find that the smallest storage size in both time periods is the most economically efficient if future scenarios are assumed equi-probable. This decision changes if different probabilities are considered, and is sensitive to the choice of discount rate and cost and benefit parameters.

Given their geographic location and vulnerable agricultural sector, countries in the Middle East have consistently regarded hydro-climate conditions as a critical and enduring concern. This research explores the potential variations in agricultural productivity across the counties of Iran in response to climate change. It also assesses the benefits of implementing long-term agricultural adaptations, serving as a pertinent example for the broader Middle East region. Utilizing two distinct panel frameworks which vary in their fixed-effect specifications but with the same

variables, one with state-by-year fixed effects and one with county fixed effects, we regress land rental price—a reliable proxy for productivity—on GDD as the key independent variable and its quadratic form associating with socio-economic and land geographic characteristics variables, while also controlling for spatial dependence. The predicted end-of-century impact calculations

suggest that the implementation of agricultural long-term adaptations could result in a remarkable 33.32% increase in productivity compared to scenarios devoid of adaptation, based on the medium scenario RCP4.5 from the CESM1-CAM5 model.

Forest stands typically share borders with other stands. As a result, the stands are not independent, but a stand is affected by what happens in the neighboring stands. This becomes particularly important when natural disturbances, such as windthrow are considered. Here, we expand the classic Reed (1984) framework by focusing on a border effect, i.e., the increase of wind disturbance risk due to the clear felling of a neighboring stand. Since the stands develop in time, so does the border effect. Hence, the optimal harvest decision will depend on the current state of the neighboring stand. We show that the optimal timing of clear-felling depends on the state of the neighboring stand in a complicated way. In the efficient single forest owner case the dependence is different from the inefficient case of Markov perfect equilibrium between non-cooperative forest owners. The differences arise when the neighboring stand is relatively mature, and the efficient solution extends the rotation time of the older stand. In the non-cooperative equilibrium, it is not optimal to adjust the harvest age from the optimal single-stand Reed rotation. We extend the basic model in several directions and perform thorough sensitivity analyses.