When cap-and-trade was last discussed, both the USDA and the U.S. Environmental Protection Agency indicated that the proposed legislation would have a modest impact on agriculture. Yes, fuel prices would rise along with energy costs related to fertilizer production and the manufacture of crop protectants, says Stu Ellis, editor of the farm gate blog. But, he adds, advocates also said farmers would be paid for their no-till practices, planting cover crops and making other efforts to return carbon to the soil.

However, a report from the Congressional Research Service says that, “When assessing climate change legislation such as a cap-and-trade program, it is difficult for economic models to forecast costs and associated impacts several decades into the future, much less beyond.”

The analysts think that regulatory requirements that would be imposed now would become fragile in the future, there would be technology developments, and it is impossible to predict public behavior on such issues as climate change, notes Ellis.

In defense of USDA and the EPA, the CRS says the economic impact estimates of the pending legislation are not unique, but CRS is not willing to agree with the estimates, he adds. Regarding the USDA’s and EPA’s conclusion that “carbon offsets revenue could yield net economic gains for the U.S. agricultural sectors,” CRS says, “These conclusions are rife with uncertainty. However, the uncertainty does not necessarily suggest that the economic impacts would turn out to be dramatically different than predicted, simply that they are unknowable.”

More information.

Source: the farm gate blog