Document Type
Thesis - Open Access
Award Date
2023
Degree Name
Master of Science (MS)
Department / School
Economics
First Advisor
Tong Wang
Keywords
Adoption decision, Carbon credit, carbon market, climate-smart practices, willingness-to-accept
Abstract
Net-zero pledges and carbon credit systems have gained momentum due to the growing urgency to address climate change and limit global warming to below 2°C above preindustrial levels. Agricultural carbon credits can be a potentially win-win mechanism by providing extra income for farmers while helping to reduce greenhouse gas emissions. Nevertheless, there is a paucity of understanding about farmers’ willingness to accept carbon credit incentives and adopt climate-smart practices that sequester carbon. To address this, we analyzed 309 responses from a South Dakota producer survey conducted in 2021. We estimated probit and interval regression models to ascertain the level of carbon credit incentives farmers are willing to accept and adopt climate-smart practices and the factors affecting farmers’ willingness to accept carbon credit incentives, and based on our results, about half of farmers would consider adopting climate-smart practices to sequester carbon at a given carbon credit price of about $50/ton. The results indicate that farmers’ perceptions of the co-benefits of climate-smart practices such as reduced soil erosion, reduced nutrient runoff, enhanced wildlife habitat, etc., positively affect their willingness to accept carbon credit incentives and adopt climate-smart practices. Also, farmer previous experience with weather extremes had a significant but mixed effect on their willingness to accept carbon credit incentives and adopt climate-smart practices. Other factors, such as the younger age of the farmer, higher gross sales, a higher slope of land, and the importance of webinars and SDSU extension service as information sources, make the farmer more likely to adopt the practices at a given carbon credit value. We suggest that besides financial incentives, higher adoption rates of climate-smart practices might be realized if carbon credit payments are accompanied by information dissemination on the co-benefits of climate-smart practices such as reduced soil erosion, reduced nutrient runoff, enhanced wildlife habitat, and climate change adaptability via university extension programs and webinars.
Publisher
South Dakota State University
Recommended Citation
Cheye, Stephen, "The Role of Carbon Credits on Farmers’ Adoption of Climate-Smart Practices in South Dakota" (2023). Electronic Theses and Dissertations. 579.
https://openprairie.sdstate.edu/etd2/579