Could Climate Bill Turn Farms to Forests?

As Congress continues to mull climate legislation, it seems increasingly likely that some form of offsets program will be included.

Allowing polluters to purchase credits that would offset a portion of their emissions would dramatically reduce the overall cost of a cap and trade program. But it could also reshape the country’s farmland, turning some farmers into forest managers.

In a hearing before the House Agriculture Committee last week, the Department of Agriculture’s chief economist told the panel that the House climate bill could lead to large swaths of agricultural land being converted into forests.

Joseph Glauber cited a couple of studies to say that by 2050, trees could cover nearly 60 million acres of what is now cropland and pasture. Once carbon prices near $10 per metric ton, he said, some landowners may start to plant trees on their lands to take advantage of the offset market. One EPA estimate has the price of carbon at around $13 per metric ton in 2015 and rising from there.

If it were to occur, this massive shift in land use could have ripple effects across our food economy, according to the opening statement of Patrick Westhoff, co-director of the Food and Agricultural Policy Research Institute at the University of Missouri. Westhoff testified on Dec. 2, the first of two days of hearings on the agricultural impacts of the American Clean Energy and Security (ACES) Act.

“Higher crop prices would increase feed costs for the livestock industry. These higher feed costs, in turn, would result in reduced production and higher prices of meat and dairy products. Consumer food prices would increase, not just for products made from grains and vegetable oils, but also for beef, pork, poultry and milk," he said.

"All else equal, higher crop prices would reduce the quantity of agricultural products exported by the United States. Forestry uses of land result in different patterns of rural employment and economic activity than result from current crop production patterns.”

While these changes are significant, their impacts on food prices would be limited. Glauber said the consumer price index for food would likely be no more than 2.1 percent higher in 2050 under ACES than in their baseline scenario.

But the effect on land use could be substantial. Estimates by Iowa State’s Food and Agricultural Policy Research Institute, an affiliate of the Missouri unit, looked at a model based on a carbon price of $30 per metric ton. The study found that between 20-25 percent of lands in the Corn Belt could be turned into forests. In an interview, the Iowa State program co-director Dermot J. Hayes said this could have international effects.

“Other countries will see higher food prices and they’ll grow more crops,” he said. This could mean that whatever carbon sequestration occurs here because of afforestation could be lost elsewhere from the spread of cropland, undermining whatever cap the United States puts on its carbon emissions.

But whether these shifts would actually occur or their extent is unclear.

“The shape of final legislation and implementing rules will set the terms under which landowners get paid for afforestation efforts,” Westhoff wrote in an email. “Exactly how much a landowner will get for one acre of a particular type of trees given a particular carbon price is something we do not know for certain. Payments might be less than commonly assumed for any variety of reasons.”

Westhoff is doubtful that afforestation would be as widespread as Glauber or Hayes predicted. Planting trees requires significant, upfront costs, he said, and represents a much longer-term investment than with crops. If crop prices were to increase, it would make forestry less attractive.