3:30 pm - 5:00 pm
GSB 500, 9007 116 St NW, Edmonton AB
Title: Harvesting Benefits: Exploring the Effects of Second-Best Policies on Enhancing Soil Organic Carbon Stocks in Agriculture
Speaker: Dr. Devin Serfas, Assistant Professor, RDAR Chair in Applied Agricultural Economics and Risk Management, University of Alberta
Date: Friday, October 11, 2024
Time: 3:30pm – 5:00pm
Location: GSB 550
Abstract:
Targeted agricultural subsidies can be an effective policy tool to enhance soil organic carbon (SOC) sequestration. This paper assesses the effectiveness of a second-best hypothetical policy which subsidizes additional canola hectares optimally for each soil zone in Saskatchewan in an effort to increase SOC. I develop a simulation model that includes on-farm acreage response and a novel field-level dataset from the Saskatchewan Crop Insurance Crop Corporation to measure changes in SOC stocks attributable to changes in crop choice. I find that a policy offering optimal subsidies specific to each soil zone for additional hectares of canola, implemented in 2019 and continuing indefinitely for all insured fields in Saskatchewan, generates an external social benefit worth 15.2 billion CAD when the subsidy is set to maximize the net external social benefit, and 30.4 billion CAD when it is set to maximize the change in total welfare. This paper highlights the potential environmental and social benefits of second-best policies as a cost-effective alternative to traditional first-best policies. It also shows how economic and scientific models can be combined to estimate soil characteristics, thereby avoiding the high cost of direct measurement.
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