Selected Paper prepared for presentation at the 2023 Agricultural & Applied Economics Association Annual Meeting, Washington DC; July 23-25, 2023
Potential carbon taxes will have spatially heterogeneous impacts on agriculture. The magnitude of impacts depends on 1) the direct and indirect share of energy in production costs, 2) the responsiveness of agricultural markets to price changes, and 3) the degree of possibility of reallocation of resources. This study introduces a theoretical economic framework for the analytical evaluation of a carbon policy. Then the parameters of the model are empirically estimated. Finally, the impacts of three scenarios of carbon policies are computed and uncertainty in the results is discussed. The focus of this study is on irrigation and nitrogen fertilizer as energy-intensive inputs. Then the consequences for land and labor markets are analyzed.
Acknowledgment. The author acknowledges support from the National Science Foundation INFEWS award #1855937: “Identifying Sustainability Solutions through Global-Local-Global Analysis of a Coupled Water-Agriculture-Bioenergy System”, and the National Science Foundation HDR award # 2118329: “NSF Institute for Geospatial Understanding through an Integrative Discovery Environment (I-GUIDE).
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