Carbon Prices and the Adoption of Methane Digesters on Dairy and Hog Farms

Biogas recovery systems collect methane from manure and burn it to generate electricity or heat. Burning methane reduces its global warming potential, thereby reducing greenhouse gas (GHG) emissions. Climate change mitigation policies that eff ectively put a price on GHG emissions could allow livestock producers to “sell” these reductions to other greenhouse gas emitters who face emissions caps or who voluntarily wish to off set their own emissions. Depending on the direction and scope of future climate change legislation, income from carbon off set sales could make methane digesters profi table for many livestock producers. By modeling the main determinants of producers’ decisions to adopt biogas recovery systems, we illustrate how the price of carbon infl uences this decision and the potential supply of carbon off sets from the livestock sector.