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Cap and Trade Study Released

During his testimony Wednesday on climate change before the Senate Agriculture Committee, Secretary of Agriculture Tom Vilsack announced the results of USDA economic analysis showing that the economic benefits to agriculture from the cap and trade legislation will likely outweigh the costs in the short term, and that the economic benefits from offsets markets will easily outpace increased input costs over the long term.

USDA has analyzed the House-passed climate legislation, H.R. 2454, and examined the cost and benefits for agriculture. According to this study the economic opportunities for farmers and ranchers can exceed the costs caused by the legislation.

"The agriculture sector will benefit directly from allowance revenues allocated to finance incentives for renewable energy and agricultural emissions reductions during the first five years of the H.R. 2454 cap and trade program," said Vilsack. "Funds for agricultural emissions reductions are estimated to range from about $75 million to $100 million annually from 2012-2016."

Vilsack said opportunities for agriculture will be created through the bill's establishment of an offset market. In the years 2015-20 to 2040-50 annual net returns to farmers range from about $1 billion per year to almost $15-20 billion not accounting for the costs of implementing offset practices.

"So, let me be clear about the implications of this analysis," Vilsack said. "In the short term, the economic benefits to agriculture from cap and trade legislation will likely outweigh the costs. In the long term, the economic benefits from offsets markets easily trump increased input costs from cap and trade legislation."

Vilsack did say that different landowners will be affected in different ways by the climate legislation, but USDA can help smooth the transition through conservation programs set forth by the Farm Bill.