Pannell Discussions

No. 127, 7 July 2008

Sequestering carbon in agricultural soils

With the release of the Garnaut Report on climate change policy in Australia this week, there has been a lot of talk about the impact of any emissions trading scheme on agriculture. Here I argue that farmers are unlikely to benefit from one of the management options being discussed: carbon sequestration in soils.

Agriculture looks like it may be included in Australia's emissions trading scheme, although probably not immediately, due in part to difficulties in reliably measuring emissions and levels of sequestration.

Its eventual inclusion is likely to affect agriculture adversely, particularly due to the need to pay for emissions from livestock. To moderate this impact, people have been looking at the potential benefits to agriculture from sequestration of carbon. This PD discusses one of the sequestration options that has had some attention: sequestration in agricultural soils.

Firstly, what is it?

"Soil carbon sequestration is the process of transferring carbon dioxide from the atmosphere into the soil through crop residues and other organic solids, and in a form that is not immediately reemitted. This transfer or “sequestering” of carbon helps off-set emissions from fossil fuel combustion and other carbon-emitting activities while enhancing soil quality and long-term agronomic productivity. Soil carbon sequestration can be accomplished by management systems that add high amounts of biomass to the soil, cause minimal soil disturbance, conserve soil and water, improve soil structure, and enhance soil fauna activity. Continuous no-till crop production is a prime example." (Sundermeier et al., undated),

Under an emissions trading scheme, farmers who increase their soil carbon above the existing level would, in principle, be able to sell emission permits to other emitters, or use them to offset their own emissions elsewhere on the farm. There has been some optimism about this prospect. For example, in relation to agriculture, Garnaut says, "The most significant opportunities may be in the area of improved carbon sequestration through better management of soil carbon." (p. 355).

Unfortunately, in my judgment, payments for extra carbon sequestration in soils from changes in land management will result in little, if any, benefit to Australian farmers. There are several reasons for this.

1. It is difficult to increase the amount of carbon stored in most cropped soils in Australia, even with zero till and when large amounts of stubble are retained (Chan et al., 2003).

2. Soil sequestration is a once-off process. Once farmers change their management to increase soil carbon, it increases up to a new equilibrium level and then stops. After that, there are no net additions of carbon to the soil each year. This means that a properly designed emissions trading scheme would pay the farmers for their extra sequestration once, but only once. The carbon would not be a source of annual income. The annual financial benefit would be the value of the carbon sequestered times the interest rate, which means it is small relative to other economic drivers of farm management. The farmers would need to maintain their soil carbon at the new higher level in order to avoid having to pay for emissions permits.

3. It is difficult to measure the amount of carbon stored in soils. To do so in a convincing way would involve regular and ongoing costs, which would eat away at the modest once-off benefits.

4. John Passioura (2008) has pointed out a crucial and under-recognised problem: increasing humus in the soil (e.g. from reduced tillage) does tie up carbon, but it also ties up other valuable nutrients: nitrogen, phosphorus and sulphur  (Williams and Donald, 1957; Passioura, 2008) which would otherwise be available to increase crop yields. He estimates that in Australian cropping conditions, the cost of replacing these nutrients using additional fertilizer would be sufficient to wipe out any benefits from carbon sequestration even if the CO2 price was as high as $80 per tonne. He acknowledges that the error margin around this estimate is large, but even so there is clearly likely to be little or no net benefit at the sort of CO2 price currently being discussed: $20 to $40 per tonne.

This combination of  issues means that farmers who are looking for opportunities to benefit from climate change policy should probably look at other options.

Note: A number of responses to this article are included below.

Also note that I am not referring in this piece to the idea of storing carbon as biochar, only to attempts to increase soil carbon through changes in land-management. At this stage I am not for or against biochar.

David Pannell, The University of Western Australia,

Further Reading

Chan, K.Y.; Heenan, D.P., and So, H.B. (2003). Sequestration of carbon and changes in soil quality under conservation tillage on light-textured soils in Australia: a review, Australian Journal of Experimental Agriculture 43(4): 325-344.

Passioura, J. (2008). The hidden costs of sequestering carbon in the soil, GRDC Groundcover, (forthcoming).

Sundermeier, A., Reeder, R., Rattan Lal, R. (undated) Soil Carbon Sequestration—Fundamentals,

Williams, C.H. and Donald, C.M. (1957). Changes in organic matter and Ph in a podzolic soil as influenced by subterranean clover and superphosphate. Australian Journal of Agricultural Research 8(2): 179-189 .

p.s. This PD generated a big response. It flushed out some defenses of the benefits of soil carbon, but also some additional reasons not to get too excited about it. Here's a selection.


Interested in your piece on soil carbon. Aside from the issues you raised is the issue of Kyoto Protocol accounting rules. Soil carbon sequestrations or emissions are covered under Article 3.4, and accounting methodology for that article was developed as part of the Marrakech Accords. Basically it made soil carbon optional for inclusion in a nation’s greenhouse accounts, and established three ‘rules’ for accounting in the event that a nation opted to include matters under Article 3.4 These were:

1. All a nation’s agricultural soils need to be included, or none.

2. Accounting has to be on a net-net basis – i.e what matters is the difference between the net rate of change in soil carbon at the start, and the net rate of change in soil carbon at the conclusion of the relevant period (for Kyoto Protocol 1 that means net rate of change in 1990 compared with net rate of change over 2008-2012 period)

3. There is no distinction made between anthropogenic and natural (drought, bushfire) changes in soil carbon, so a nation with large natural variations in soil C (such as Australia) runs the risk of having a very big emissions liability at the end of any specified commitment period, depending on the season.

Because of the risks inherent in this for Australia, the decision was made NOT to include soil C in Australia’s national greenhouse inventory for the first commitment period (to 2012). A decision on this for any subsequent commitment period would be very much dependent on changes in greenhouse accounting rules AND whatever rules are agreed around KP#2 (noting that greenhouse accounting rules under the UNFCCC and the Kyoto Protocol are different – hence Australia provides two different sets of accounts). At this stage the message form DCC personnel seems to be that they are not optimistic that better accounting rules will be agreed.

Basically it boils down to this – “physical movements of greenhouse gases through an agricultural system (as might be identified through a Life Cycle Assessment) are NOT the same as greenhouse accounts for agriculture under the Kyoto Protocol.” What matters in terms of Australia’s ratification of the Kyoto Protocol and any potential future greenhouse liability for the government is Kyoto Protocol compliant greenhouse emission accounts, not actual greenhouse emission changes.

Mick Keogh
Executive Director,
Australian Farm Institute


Hi Dave

Interesting PD. I have done lots of work on carbon uptake in terrestrial ecosystems and have come to the conclusion that this is a fruitless thing to do. ... Note that, in one of my studies, I did a meta-analysis of costs of carbon uptake in soils, comparing no-till vs conventional till. I did not compare reduced till with conventional till as Gregg Marland and colleagues showed that, when everything is said and done (in terms of CO2 emissions related to chemical production, etc, etc), reduced/minimum till offers no carbon offset benefits relative to conventional till.

G Cornelis van Kooten
Professor and Canada Research Chair
Department of Economics
University of Victoria
Victoria, Canada


Julia Fry alerted me to this article: Li, C., Frolking, S. and Butterbach-Bahl, K. (2005). Carbon sequestration in arable soils is likely to increase nitrous oxide emissions, offsetting reductions in climate radiative forcing, Climatic Change 72(3): 321-338. Abstract: Strategies for mitigating the increasing concentration of carbon dioxide (CO2) in the atmosphere include sequestering carbon (C) in soils and vegetation of terrestrial ecosystems. Carbon and nitrogen (N) move through terrestrial ecosystems in coupled biogeochemical cycles, and increasing C stocks in soils and vegetation will have an impact on the N cycle. We conducted simulations with a biogeochemical model to evaluate the impact of different cropland management strategies on the coupled cycles of C and N, with special emphasis on C-sequestration and emission of the greenhouse gases methane (CH4) and nitrous oxide (N2O). Reduced tillage, enhanced crop residue incorporation, and farmyard manure application each increased soil C-sequestration, increased N2O emissions, and had little effect on CH4 uptake. Over 20 years, increases in N2O emissions, which were converted into CO2-equivalent emissions with 100-year global warming potential multipliers, offset 75–310% of the carbon sequestered, depending on the scenario. Quantification of these types of biogeochemical interactions must be incorporated into assessment frameworks and trading mechanisms to accurately evaluate the value of agricultural systems in strategies for climate protection.

David Thompson pointed out that some of the practices that are encouraged to enhance soil carbon in cropping (minimum tillage, controlled traffic, stubble incorporation) also result in reduced runoff of water into waterways, which is a big concern in parts of Australia given very low rainfall levels over a number of years now.

Andrew Bathgate emphasised the importance of the principle of additionality, meaning that farmers only get paid to do extra sequestration than was otherwise in their interest to do. This is really important to understand, and it underlies my wording in several parts of the article ("extra sequestration"). Judging from other responses, there is a fair bit of confusion out there about this. One respondent thought that farmers would be paid for all of the carbon in their soil, not just the increase. This will not happen, at least in Australia. Several others emphasised the range of benefits to soil fertility that can arise from practices that increase carbon sequestration in soils. This is fine, but it also misses the point about additionality. If those benefits are so large, farmers would probably adopt them without the need for carbon payments. The carbon trading scheme, if it ever was applied to soils, would be used to push farmers to go to a level of carbon sequestration that is beyond their best interest without some extra financial support. If the additional private benefits to soil fertility, etc. are so large that farmers should be adopting the practices even without considering carbon, then the appropriate policy response would be extension, rather than a carbon credit.

Some have pointed out that the potential to increase soil carbon is larger than I've indicated in some circumstances, e.g. under pastures dominated by native perennial grasses or C4 grasses, in pasture cropping systems in NSW, and in some high-rainfall conditions. Fair enough. My point 1 is probably not sufficiently nuanced. 

David Bennett commented that: You should write another one on sequestration in above-ground biomass.  All you need to do is to change a few words: "Once farmers change their management to increase soil above-ground carbon, it increases up to a new equilibrium level and then stops. After that, there are no net additions of carbon to the soil each year. This means that a properly designed emissions trading scheme would pay the farmers for their extra sequestration once, but only once. The carbon would not be a source of annual income. The annual financial benefit would be the value of the carbon sequestered times the interest rate, which means it is small relative to other economic drivers of farm management. The farmers would need to maintain their soil above-ground carbon at the new higher level in order to avoid having to pay for emissions permits."

Michael Kiely from the Carbon Coalition sent me quite a few emails and lots of reading. His optimism is impressive, and he has a very nice style. (a). He argues that the amount of carbon sequestration in soils can be large. I accept that it may be in some situations. It's a matter for the scientists to sort out. (b). He argues that efficient and low-cost measurement of C is possible. Maybe so. However, it's important to keep in mind that the monitoring process has to satisfy the policy people and investors. If they're not convinced you either won't get the payment, or it will be discounted. Also, the actual testing is not the only cost. Garnaut's issues paper points out that there will be transaction costs in baseline setting, accreditation, monitoring, measurement and reporting, ensuring additionality, and preventing double counting. This is obviously more than just the testing costs. (c) In response to Mick Keogh he argues that Australia may unilaterally depart from Kyoto or the next agreement. Well, I guess there is a chance of that. (d) He seems unconcerned about additionality and hopes that government will not enforce it too strictly. Through the various discussions that this PD has generated, I've come to the view that this is possibly the biggest issue. It's very hard to determine what farmers would have done without a carbon payment, but there seems to be a pretty common view that the required practices are widely attractive even without carbon payments. This would rule them out of a rational carbon trading scheme. You never know, though. Government may make a political decision to pay farmers for non-additional carbon in some situations, but this would be a very poor decision in my view. 

Pannell Discussions are brief pieces on issues and ideas in economics, science, the environment, natural resource management, politics, and agriculture.

 126. Sensitivity analysis with economic models  23 Jun 2008

128. Compensation to carbon emitters  28 Jul 2008

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