Net Farm Income and Land Use under a U.S. Greenhouse Gas Cap and Trade

During recent years, the U.S. agricultural sector has experienced high prices for energy-related inputs and commodities, and a rapidly developing bioenergy market. Greenhouse gas emissions mitigation would further alter agricultural markets and increase land competition in forestry and agriculture by shifting input costs, creating an agricultural greenhouse gas abatement market and expanding bioenergy demand. The potential effects of these events on the agricultural sector are being hotly debated. We use a multisector model (FASOM-GHG, Adams et al, 2009) to estimate the potential implications of these developments on net farm income and the U.S. agricultural sector.