WASHINGTON (Reuters) - Overall, the U.S. farm sector will gain more than it would lose under the House-passed climate bill, a Kansas State University review of six studies of the legislation said on Thursday.
All of the studies said that costs of production would rise and in the short run per-acre profitability may decline, but, for the most part, the declines will be modest.
On the plus side, the bill exempts agriculture from emission caps, has provisions to ease the transition to higher fertilizer prices and offers the chance of revenue from development of a carbon offset market.
In such markets, polluters who find it too pricey to cut their own emissions could pay farmers to store carbon in soil or by growing trees.
Revenue from carbon contracts “could be substantial,” the review said, depending on which practices are eligible.
The House passed its climate bill on June 26. It would reduce emissions of carbon dioxide and other gases associated with global warming by 17 percent by 2020 from 2005 levels.
Democratic leaders in the Senate say floor debate on their version of a climate bill is not expected before April.
“While on a national level agriculture appears to be positively affected, on a farm level some sub-sectors, such as rice production, appear worse off,” said the KSU review, which was funded by a farmland preservation foundation.
“The economic impact will vary regionally and by crop and livestock sub-sector. The impact will depend on cultural and management practices and the farm-specific ability to sequester carbon and receive offset income.”
Included in the KSU review were studies by think tanks at Texas A&M University, the University of Tennessee, the University of Missouri, Iowa State University, Duke University and the Agriculture Department.
The Texas A&M study found wheat, feed grain and soybean farmers in the Midwest and Plains would see higher net income while cotton and rice growers in the South and ranchers in the West would see a decline, for example.
Tennessee researchers said a cap-and-trade system to control greenhouse gases “could have dramatically different outcomes,” depending on its structure. They say biofuels production could be part of cap-and-trade and not take farmland out of production. The Duke study foresees large shifts to woodland.
At a House Agriculture subcommittee hearing last week, a panel of researchers agreed analysis of the climate bill involved more variables and longer time spans than usual. They said their work showed the likely outcome but perhaps not the specific results.
Reporting by Charles Abbott; Editing by Walter Bagley.