Carbon incentives and farm economics: A study of peatland drainage optimization
Natural, waterlogged peatlands are recognized as the most efficient carbon storage ecosystems, playing a critical role in climate regulation. However, in Europe, agriculture on drained peat soils — although comprising only 2.5 % of the agricultural area — contributes disproportionately, generating a...
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| Format: | Article |
| Language: | English |
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Elsevier
2025-06-01
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| Series: | Agricultural Water Management |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S0378377425002264 |
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| author | Janne Rämö Domna Tzemi Antti Miettinen Henrik Wejberg Heikki Lehtonen |
| author_facet | Janne Rämö Domna Tzemi Antti Miettinen Henrik Wejberg Heikki Lehtonen |
| author_sort | Janne Rämö |
| collection | DOAJ |
| description | Natural, waterlogged peatlands are recognized as the most efficient carbon storage ecosystems, playing a critical role in climate regulation. However, in Europe, agriculture on drained peat soils — although comprising only 2.5 % of the agricultural area — contributes disproportionately, generating approximately 25 % of the EU’s total agricultural greenhouse gas emissions. This study examines the potential of drainage optimization and rewetting as strategies to reduce emissions from peatlands while balancing agricultural productivity. We quantitatively analyse the production, land use, and economic implications for farmers in two different farm scenarios using economic modelling and dynamic optimization. Our analysis evaluates the impact of carbon subsidy pricing on crop diversity and farmer income. Results indicate that while carbon subsidy prices have minimal influence on crop rotation diversity, they significantly affect farmers' income. With a subsidy price of 30€ per ton of CO2 equivalent, or 80€ per ton in the case of high-value crops, farmers transition into ''carbon farmers'', obtaining higher share of total net present value from carbon subsidies rather than traditional agricultural income. Furthermore, the majority of climate benefits, including GHG reduction, are realized already at the 30€/tCO2e subsidy threshold. The findings suggest that carbon subsidies could offer a viable financial incentive for farmers to adopt peatland rewetting practices, which could reduce GHG emissions substantially. However, subsidy designs need careful calibration to ensure they do not distort agricultural practices or reduce crop diversity, while still delivering significant climate benefits. |
| format | Article |
| id | doaj-art-ebeec1f8e2574f15b093002e5dbda5d9 |
| institution | Kabale University |
| issn | 1873-2283 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Elsevier |
| record_format | Article |
| series | Agricultural Water Management |
| spelling | doaj-art-ebeec1f8e2574f15b093002e5dbda5d92025-08-20T03:47:34ZengElsevierAgricultural Water Management1873-22832025-06-0131410951210.1016/j.agwat.2025.109512Carbon incentives and farm economics: A study of peatland drainage optimizationJanne Rämö0Domna Tzemi1Antti Miettinen2Henrik Wejberg3Heikki Lehtonen4Natural Resources Institute Finland, Latokartanonkaari 9, Helsinki 00790, Finland; Corresponding author.Natural Resources Institute Finland, Latokartanonkaari 9, Helsinki 00790, FinlandNatural Resources Institute Finland, Yliopistokatu 6 B, Joensuu 80100, FinlandNatural Resources Institute Finland, Latokartanonkaari 9, Helsinki 00790, FinlandNatural Resources Institute Finland, Latokartanonkaari 9, Helsinki 00790, FinlandNatural, waterlogged peatlands are recognized as the most efficient carbon storage ecosystems, playing a critical role in climate regulation. However, in Europe, agriculture on drained peat soils — although comprising only 2.5 % of the agricultural area — contributes disproportionately, generating approximately 25 % of the EU’s total agricultural greenhouse gas emissions. This study examines the potential of drainage optimization and rewetting as strategies to reduce emissions from peatlands while balancing agricultural productivity. We quantitatively analyse the production, land use, and economic implications for farmers in two different farm scenarios using economic modelling and dynamic optimization. Our analysis evaluates the impact of carbon subsidy pricing on crop diversity and farmer income. Results indicate that while carbon subsidy prices have minimal influence on crop rotation diversity, they significantly affect farmers' income. With a subsidy price of 30€ per ton of CO2 equivalent, or 80€ per ton in the case of high-value crops, farmers transition into ''carbon farmers'', obtaining higher share of total net present value from carbon subsidies rather than traditional agricultural income. Furthermore, the majority of climate benefits, including GHG reduction, are realized already at the 30€/tCO2e subsidy threshold. The findings suggest that carbon subsidies could offer a viable financial incentive for farmers to adopt peatland rewetting practices, which could reduce GHG emissions substantially. However, subsidy designs need careful calibration to ensure they do not distort agricultural practices or reduce crop diversity, while still delivering significant climate benefits.http://www.sciencedirect.com/science/article/pii/S0378377425002264Peatland rewettingCarbon subsidyGHG emissionsAgricultural economicsCrop rotationCarbon farming |
| spellingShingle | Janne Rämö Domna Tzemi Antti Miettinen Henrik Wejberg Heikki Lehtonen Carbon incentives and farm economics: A study of peatland drainage optimization Agricultural Water Management Peatland rewetting Carbon subsidy GHG emissions Agricultural economics Crop rotation Carbon farming |
| title | Carbon incentives and farm economics: A study of peatland drainage optimization |
| title_full | Carbon incentives and farm economics: A study of peatland drainage optimization |
| title_fullStr | Carbon incentives and farm economics: A study of peatland drainage optimization |
| title_full_unstemmed | Carbon incentives and farm economics: A study of peatland drainage optimization |
| title_short | Carbon incentives and farm economics: A study of peatland drainage optimization |
| title_sort | carbon incentives and farm economics a study of peatland drainage optimization |
| topic | Peatland rewetting Carbon subsidy GHG emissions Agricultural economics Crop rotation Carbon farming |
| url | http://www.sciencedirect.com/science/article/pii/S0378377425002264 |
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