THE OPTIMAL CHOICE OF RESIDUE MANAGEMENT, CROP ROTATIONS, AND THE COST OF SOIL CARBON SEQUESTRATION

This paper develops a dynamic model of land, crop, and residue management choices in a typical Midwestern farm region. Carbon renting policy is implemented with alternative assumptions about relative crop prices. Model results show following results. First, crop choice between corn and soybean within a scenario does not appear to be sensitive to carbon prices. Second, residue management and carbon storage depend on crop prices and total carbon storage in soil is the greatest when more land is maintained in soybean. Third, there would be 4-7% increase in carbon per hectare with $3 per ton carbon price, 13-23% increase with $10 per ton carbon price, and 31-55% increase in carbon storage with $40 per ton carbon price.