The Role of Global Land Use in Determining Greenhouse Gases Mitigation Costs

This paper develops a CGE model with unique regional land types and detailed non-CO2 GHG emissions which it uses to analyze the potential for reductions in land-based greenhouse gas emissions as well as forest sequestration. In our global, general equilibrium analysis of carbon taxation, we find that forest carbon sequestration is the dominant means for global GHG emissions reduction in the land using sectors. However, when compared to the rest of the world, emissions abatement in the US comes disproportionately from agriculture, and, within agriculture, disproportionately from reductions in fertilizer-related emissions (primarily in maize production). In the world as a whole, agriculture-related mitigation comes predominantly in reduced methane emissions from ruminant livestock, which is followed in relative importance by reductions in methane emissions from paddy rice. We also find significant linkages between emissions in one region and mitigation in another (i.e. leakage). For example, in the US agriculture, abatement potential is cut in half when we move from a national tax to a global carbon tax. This is a consequence of the strong export orientation of US agriculture, which responds to reduced production in the rest of the world by increasing its own production and hence emissions. JEL: Q15, Q54.