Does carbon farming provide a cost-effective option to mitigate GHG emissions? Evidence from China

In this study, we apply a whole farm bioeconomic analysis to explore the changes in land use, farm practices and on-farm greenhouse gas (GHG) emission under varying levels of agricultural greenhouse gas abatement incentives in the form of a carbon tax for a semi-arid crop-livestock farming system in China's Loess Plateau. Our results show that the optimised agricultural enterprises move towards being cropping-dominated reducing on-farm emission since livestock perform is the major source of emission. Farmers employ less oats-based and rapeseed-based rotations but more dry pea-based rotations in the optimal enterprise mix. A substantial reduction in on-farm greenhouse gas emission can be achieved at low cost with a small increase in carbon incentives. Our estimates indicate that crop-livestock farmers in China's Loess Plateau may reduce their on-farm GHG emission between 16.6 and 33 per cent with marginal abatement costs <￥100/t CO2e and ￥150/t CO2e in 2015 Chinese Yuan. The analysis implies that reducing greenhouse gas emission in China's semi-arid crop-livestock agriculture is potentially a low-cost option.