Practice- or results-based subsidies: balancing the direct costs for soil carbon sequestration and transaction costs for farmers and monitoring agencies
This analysis reveals that results-based subsidies improve net benefits and sequestration in agriculture, suggesting more effective monitoring costs are key to outcomes.
Key Points
This study aims to evaluate the cost-effectiveness of practice- versus results-based subsidies for soil carbon sequestration.
Developed a numerical model assessing total costs and sequestration effects
Analyzed income effects alongside private and public transaction costs
Considered regional and farm type heterogeneity in the analysis
Results-based subsidies provide higher net benefits and sequestration
Practice-based monitoring costs must be significantly lower than results-based to outperform based on carbon pricing
Sensitivity analysis indicates that higher carbon prices further necessitate reduced monitoring costs for practice-based schemes