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

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