Economic welfare is the sum of producer and consumer surplus in the agricultural sector

There are several methodologies developed in the last few years that can provide more accurate estimates of GHG emissions in California . These methods incorporate the impact of diet, accounting for, as an example, the fact that fiber content is positively associated with methane emissions while lipid content is negatively correlated. About half of California’s livestock GHG emissions comes from enteric fermentation and half from manure in concentrated beef cattle and dairy operations. The largest opportunities for changes in livestock practices center on feed and manure management. California offers a uniquely diverse range of crop byproducts for use as dairy cow feeds, and research has improved our understanding of the impacts of different feeds on productivity, economics and GHG emissions . For example, grape pomace, a byproduct of the wine industry, has been shown to reduce methane emissions when fed to dairy cattle in pelleted form without reducing milk production . A shift towards solid manure management practices may result in reduced GHG emissions by reducing the anaerobic digestion that occurs when water is used to flush manure into storage lagoons. However, Owen and Silver indicated solid manure management can produce substantial GHG emissions; thus, minimizing manure storage time is important to mitigating emissions. One caution: there is a risk that focusing on one climate pollutant, such as methane,large plastic pots for plants could lead to practices that have negative trade-offs, such as increased N2O emissions , and nutrient loading in soil and water .

A recent report submitted to the California Air Resources Board suggests it may be technically feasible for California to achieve a 50% reduction in methane emissions from dairy manure management by 2030 if supportive policies are created . This would require capturing or avoiding methane generated from manure storage on dairies from an estimated 60% of dairy cows in California, particularly the largest dairy operations where cost-benefit considerations are most favorable . If successful, a gallon of California milk may be the least GHG intensive in the world. The report outlines several alternative manure management practices and technologies. A diversity of practices is needed to reflect the range of dairy sizes and layouts in California. For example, lagoon storage systems, which can emit large amounts of methane, lend themselves to the use of covers or engineered anaerobic digestion systems for bio-methane collection. Potential trade-offs of these practices with respect to air quality, crop management, nutrient use efficiency and cost, however, require further analysis. Pasture systems are used in coastal areas where farms have less crop land available than in the Central Valley; pasture requires significantly more land and water for feed production compared to current dairy systems that rely on corn silage, grass silage and alfalfa . Comprising more than two-thirds of California’s agricultural acreage , these working lands provide ecosystem services in addition to supporting production of livestock. Grasslands have higher levels of total soil carbon compared to cultivated lands , and similar amounts to California forests. There are numerous options for increasing carbon storage in rangelands. Modeling analyses project that restoration of native oaks could increase carbon storage in wood biomass and litter . In a study of riparian revegetation in Marin, Sonoma and Napa counties, modeled soil carbon sequestration rates averaged 0.8 tons C per acre per year, while modeled results of restored woody riparian areas demonstrated ecosystem carbon storage potential of 16.4 tons C per acre per year over a 45-year period . Cultivation and re-seeding to restore native perennial grasses also shows promise.

Native grasses may sequester carbon in slightly deeper soil levels due to perennial root systems . Rangelands with native grasses and oaks have lower soil carbon losses and higher nitrogen cycling rates . Approaches to verifying carbon sequestration on rangelands requires a long-term approach. Soil carbon can take decades to build to a measurable level: rangelands rarely receive intensive management and these systems are much more exposed than irrigated agriculture to annual variations in moisture. On average, California’s grasslands lose carbon, but the net C gain or loss depends on precipitation, with net losses of carbon in years when the timing of precipitation causes a short growing season, and gains when the timing of rains lead to a longer growing season . The use of composted materials in rangelands may reduce N2O emissions in comparison to those materials entering waste streams and being subject to the standard manure and green waste management practices . One study on California’s coastal and valley grasslands showed that use of compost above standard application rates could boost net ecosystem carbon by 25% to 70%, sequestering carbon at a rate of 0.2063 tons C to 0.2104 tons C per acre over the 3-year study or a rate of 0.0688 tons C to 0.0701 tons C per acre per year, largely by decreasing the amount of C that is being lost from these grasslands . Researchers using the DAYCENT model to look at different compost amendments and project over longer time frames found that the net climate mitigation potential ranges from 0.5261 to 0.6394 tons CO2 equivalent per acre per year in the first 10 years , and declines by approximately half of that by year 30. Applying organic materials to rangelands in Southern California demonstrated co-benefits: stabilizing soil nitrogen stocks, improved plant community resilience and productivity, and increased soil organic matter after 1 year of application . However, due to the very limited number of studies and the need to demonstrate sustained carbon sequestration, long-term studies that span California rangelands are needed to validate these results and provide long term policy recommendations. Climatic variation across the state may enhance or diminish observable carbon sequestration benefits.

Further, it will be important to ensure that rangeland compost application practices do not lead to undesired plant species shifts and do not create negative trade-offs for water quality through nutrient run-off or leaching; it will also be important to track emissions associated with fossil fuel use for transportation and distribution of compost across rangeland sites. Additional practices that have shown benefit elsewhere and should be examined in California include planting of legumes, fertilization, irrigation and grazing management. In particular, grazing management may significantly impact rangeland carbon sequestration. While heavy grazing that leads to erosion can degrade carbon storage, there is conflicting evidence in California and elsewhere on specific grazing practices that can benefit soil carbon . Most studies in California that have assessed the effects of grazing on soil carbon compared only grazed versus ungrazed , without assessing the effects of grazing duration, intensity, frequency and rest periods. The USDA Natural Resources Conservation Service provides cost-share programs for range managers to split the cost of implementing improved management techniques. Currently, only 30% to 40% of California ranchers participate in these programs . The research above points to the magnitude of opportunity from alternative rangeland practices and the need to identify socioeconomic opportunities and barriers to greater participation in range management incentive programs.The most recent assessment of biomass in California details the availability of resources, including agricultural biomass, among others,plant pots with drainage that could support generation of three to four times the current biomass-based renewable energy being produced, depending on policies and regulations affecting biomass use . Biomass use for energy, however, has declined in recent years, as it is generally more expensive than alternative fuels. In addition, interconnection issues between biomass facilities, such as anaerobic digesters, and utilities complicate and increase the cost of new facilities. Research and policy actions to reduce barriers and incentivize co-benefits from the use of biomass for power and fuel will be required to expand this sector sustainably. Current biomass energy production from agricultural residues in California is largely based on combustion of nut shells and woody biomass from orchards and vineyards. While one grower has installed a successful on-farm small-scale gasification systems for nut shells and wood chips, larger scale facilities that convert woody biomass to electricity are typically more than 40 years old, and the power produced is more expensive than other forms of alternative energy. Many plants are now idle or closed, leaving tree and vine producers with few or more expensive options for disposal of biomass. Other underutilized agricultural biomass includes rice straw and livestock manures suitable for anaerobic digestion technology . Manure alone is not a high biogas-yielding feed stock.

Supplementing manure with fermentable feed stocks such as crop or food processing residues can improve the energy and economic return from anaerobic digesters , but this practice currently faces regulatory and practical obstacles, like managing an additional source of organic materials and additional nutrients and salts. Nonetheless, there is limited, but real potential for some crop-based bio-fuels and bio-energy in California based on locally optimal feed stocks and bio-refineries .Twenty-five years after the publication of the first IPCC Assessment Report, it is instructive to step back and ask what we have learned about the economic impacts of climate change to the agricultural sector, not just from a technical standpoint, but from a conceptual one. California is an ideal focus for such an analysis both because of its strong agricultural sector and proactive climate policy. After passing the 2006 Global Warming Solutions Act, the state has sponsored research to complete three climate change assessments, with the fourth assessment report in progress at the time of submitting this paper. This effort to study adaptation appears to be relatively more prolific than in many other global sub-regions, particularly over the past decade . Assessing adaptation potential — the institutional, technological, and management instruments for adjusting to actual or expected climatic change and its effects — represents an important turning point in the climate impacts literature. The important role of responsive decision-making by farmers and institutions is recognized for the first time as the key ingredient to dampening the effects of climate change . Adaptation was simply mentioned as an optimistic afterthought in earlier studies, which suggested that agriculture would fully or mostly adjust in the long term — although there was sparse detail on how it would do so . When adaptation was directly included in the modeling framework, economists found that the estimated welfare damages from climate change documented in previous studies declined . In colloquial terms, this is a shift from modeling the “dumb” farmer to modeling one with reasonable economic agency. There are four key concepts linked to the idea of adaptation: vulnerability, adaptive capacity, economic welfare, and economic efficiency. In the IPCC literature, adaptation is connected to the foundational concept of vulnerability, defined as the propensity for agricultural systems to be affected by future climatic changes . Vulnerability can also be defined endogenously as the ability of farmers and institutions to respond and adapt to, and recover from such changes . This latter definition is synonymous with the concept of adaptive capacity, or the ability of a system to moderate potential damages and take advantage of adaptation and mitigation opportunities to reduce vulnerability of the system to climatic changes .Adaptation dampens welfare losses caused by climate change. The relationship of adaptation with vulnerability is more complex, and better represented as that of trade-offs. For example, changing the crop mix in favor of high value crops may reduce vulnerability to water scarcity, but it may increase vulnerability to heat tolerance. Finally, the concept of efficient adaptation has been defined as a situation where the costs of effort to reduce climate-induced damages is less than the resulting benefits from adapting . Given the central role of farmer and institutional responsiveness, how do recent agro-economic assessments suggest that specific adaptations may improve economic welfare and reduce vulnerability? What is economically efficient adaptation in the short and long-run? What are the limits to the agricultural sector’s adaptive capacity? This is certainly not the first review of climate impact assessments to California agriculture. Smith and Mendelsohn highlighted the importance of regional climatic impacts to several economic sectors in California , integrating across range of modeling approaches . The agricultural impacts are calculated by the Statewide Agricultural Production model under wet and dry scenarios. The results echo those of more recent SWAP studies, suggesting that field crop usage will decline by the end of the century under a dry scenario, though the decline in revenues will be partially offset by increased production of high-value crops.