Measurement of Greenhouse Gas Emissions from Agriculture: Economic Implications for Policy and Agricultural Producers

19 Pages Posted: 9 Apr 2013

See all articles by Tas Thamo

Tas Thamo

The University of Western Australia

Ross Kingwell

The University of Western Australia

David J. Pannell

University of Western Australia

Date Written: April 2013

Abstract

If agriculture were to be included in Australia’s carbon price scheme, a key decision for government would be how to estimate greenhouse gas emissions. We explore the consequences of three different methods for measuring on‐farm emissions: national accounting methods, an amended version of those methods and use of best‐available local data. Estimated emissions under the three methods can vary widely; for example, on a case study farm in Western Australia, local data indicated 44 per cent lower emissions than did the national accounts method. If on‐farm emissions are subject to an emissions price, the impact on farm profit is large and varies considerably with different measurement methods. For instance, if a price of $23/t of CO2‐e applies then farm profit falls by 14.4–30.8 per cent depending on the measurement method. Thus, the choice of measurement method can have large distributional consequences. On the other hand, inaccurate measurement results in relatively minor deadweight losses. On‐farm sequestration through reafforestation may lessen the impact of an emissions price on farm businesses, although it will require a high carbon price to be viable, especially if sequestration rates are underestimated or low.

Keywords: economic modelling, emissions measurement, greenhouse gas accounting methodology, nitrous oxide, sequestration

Suggested Citation

Thamo, Tas and Kingwell, Ross and Pannell, David J., Measurement of Greenhouse Gas Emissions from Agriculture: Economic Implications for Policy and Agricultural Producers (April 2013). Australian Journal of Agricultural and Resource Economics, Vol. 57, Issue 2, pp. 234-252, 2013. Available at SSRN: https://ssrn.com/abstract=2247209 or http://dx.doi.org/10.1111/j.1467-8489.2012.00613.x

Tas Thamo (Contact Author)

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

Ross Kingwell

The University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
Australia

David J. Pannell

University of Western Australia ( email )

35 Stirling Highway
Crawley, Western Australia 6009
AUSTRALIA
(08) 9844 8659 (Phone)
(08) 9844 8659 (Fax)

HOME PAGE: http://www.general.uwa.edu.au/u/dpannell/welcome.html

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