When discussing agriculture alongside potential carbon markets and regulations, many assume it involves “an environmental fringe group and will never affect agriculture,” said Lanier Nalley, agricultural economist with the University of Arkansas Division of Agriculture. However, “it isn’t just environmentalists that care about carbon. We’ll all start caring about carbon in the near future.”
As an example of how mainstream carbon talk has become, Nalley said Wal-Mart is considering the introduction of a “sustainability index” with carbon as a part.
“Whether they go through with it, or not, is a different matter,” said Nalley at the recent Rice Research and Extension Center field day in Stuttgart, Ark. “Essentially, the index has three parts and they’ve sent it out to all their vendors.”
A question directly off the possible index: what is your total annual greenhouse gas emissions reported in the most recent year?
Wal-Mart is “asking vendors, ‘Are you taking a proactive role in measuring the greenhouse gas emissions you have? Have you set publicly available greenhouse gas reduction targets yet? If so, what are they?’
“So, this will probably affect us as an industry and will trickle down to producers.”
Wal-Mart might also ask vendors “if they are measuring water and how much they use. Again, that could affect the rice industry.”
The second part of the Wal-Mart sustainability index — and what Nalley is most concerned with as regards the rice industry — deals with “carbon footprinting.”
What Wal-Mart may want to do “is give their consumers an index … to allow consumers to make up their minds … what products to buy based on a series of environmental factors.”
Those factors could affect agriculture.
“Many businesses — Wal-Mart included — are attempting to obtain a ‘green’ advantage by marketing products as environmentally friendly.”
Starbucks, Nalley pointed out, “has all sorts of logos on their cups for all sorts of environmental groups: the panda bear representing the World Wildlife Foundation, a frog for the National Rainforest Alliance. This is a signal that there’s a consumer demand for this. Consumers are demanding more environmentally-friendly products.”
Government efforts are being considered, as well.
“The Waxman-Markey bill failed but, essentially, it would have put in place a cap-and-trade policy on the amount of carbon specific industries could release.
“You don’t have to be an economist to realize that if we have consumer demand, industry pressure and government pressure, this isn’t a fringe topic anymore. Even if only one or two of the factors” gain traction, carbon policy “might be here to stay.”
How might the Mid-South prepare for that?
“Maybe the government cares about this but why should a producer care about carbon? The simple fact is the areas where the most carbon is released are also the areas where, if you reduce carbon, you increase economic profit.”
The two major components of rice’s carbon footprint, excluding methane emissions, are diesel fuel use for irrigation and nitrogen fertilizer application.
Nalley pointed to “great work” done by Trent Roberts and Nathan Slaton (both University of Arkansas Division of Agriculture researchers), who have been researching nitrogen efficiency testing. “By becoming efficient, you might use less nitrogen. If that’s the case, you’d lower your carbon footprint. It’s a cause-and-effect thing. That’s something the industry as a whole could put forward as being more efficient with carbon emissions release.”
The same is true for on-farm reservoirs. “You reduce the carbon released because water isn’t being pumped from such a great depth. You won’t build an on-farm reservoir to gain carbon credits. But that’s possibly something you could gain revenue from in the form of an offset program.”
The good news: lowering your carbon footprint typically “runs parallel with increasing economic profit. That’s really good news whether you’re a producer or an environmentalist.”
Nalley and Michael Popp, a fellow agricultural economist at the university, co-authored a study (with much help from graduate student Brandon McFadden) that “took a good Extension budget … and carbon foot-printed it. This is on conventional rice on silt loams in east Arkansas.
“To flood rice takes 30.66 gallons, on average, of diesel fuel per acre. Well, with a carbon equivalent of 7.01 — which means if you burn 1 gallon of diesel fuel, you’ll release 7.01 pounds of carbon in the atmosphere — just by flooding alone, you release 214 pounds of carbon into the atmosphere per acre of rice. When you account for nitrous oxide, per acre of rice we’re releasing, roughly, 757 pounds of carbon.”
What if an on-farm reservoir is being used?
“Everything is the same, except we reduce (carbon output) to approximately 667 pounds. You’d save about 81 pounds of carbon per acre.
“Again, you won’t build a reservoir to save carbon. But if the government sets up a carbon offset program, this could be a nice supplemental income. You won’t get rich off it but, more importantly, you could say the industry as a whole is moving forward to reduce its carbon footprint.”
During their research, Nalley and Popp carbon footprinted rice varieties in Arkansas County. Compiling the amount of carbon released when growing one acre of a certain variety is “a function of how susceptible (the varieties) are to blast and sheath blight. We calculated the carbon equivalent of having to go out and spray.”
Also part of the calculation “is how much fertilizer and water is needed for each variety.” The figures obtained were for conventionally-planted rice.
If a carbon offset program was introduced — and carbon traded at $40 per ton — “you could get a rough payment of approximately $1.60 per acre for using a 50 percent on-farm reservoir (versus) using all wells.
“Agriculture is one of the few industries where you actually sequester carbon in the ground. We take CO2 out of the atmosphere and put it in the ground. Most other industries can’t do that.”
As for the net footprint for each variety, Nalley showed a chart illustrating net sequesterers and net emitters of carbon.
Each county and farm will be different, Nalley reminded. “But what this means is if there is a carbon offset program, you could potentially get payments for CL151, 723 and 729. That’s because up to the farm gate, you’re taking more carbon in than you’re releasing. This says carbon could be our friend and get us some money. But I should add this (calculation) doesn’t take methane emissions into account, which are very important.
“So, here are carbon footprints for diesel, fungicide, pesticide, fertilizer, nitrous oxide and emissions. Hybrids fare well in emissions because they don’t require as much fertilizer and typically yield more per acre. Hybrids are net sequesterers because, on average, they have a high biomass and high harvest index.”
Rush to plant hybrids?
That doesn’t mean everyone should rush to plant hybrids.
“There isn’t a carbon market and you wouldn’t get any carbon benefits from doing that. Plus, that (calculation) is just for one county. In other counties, Wells (a conventional variety) is the highest sequesterer.”
As for the politics of carbon, “we often talk about cap-and-trade and carbon offset payments. The big difference is one is a carrot and one is a stick.”
Cap-and-trade “says you can only release X amount of carbon. If you release more, you’ll get slapped on the hand.”
Meanwhile, an offset program “says if you’re a net sequesterer, I’ll actually pay you to reduce the amount of carbon. Or, you can switch crops and I’ll pay you.”
As an example, Nalley pointed to the rice variety Wells. “Its net emissions in Arkansas County are estimated at about 790 pounds. That would be the figure we’d be interested in for cap-and-trade.
“Under a carbon offset payment we’d take into account sequestration, which is very important because all rice takes in CO2 and greenhouse gases and stores it underground.
“It seems to me the agriculture industry, as a whole, should be pushing for the carrot rather than the stick. It looks like there are more opportunities (with an offset program) and agriculture is one of the few industries where carbon is sequestered.”
Given the “three-headed monster” of government, consumer demand and industry pressure, Nalley believes carbon concerns will remain and future programs are coming.
“It’s here to stay. What form it’ll take is to be determined.
“But the take-home message is this: you can either be an environmentalist who happens to increase economic profits or you can be a profit-maximizing producer who happens to be improving the environment.”