The food system is a major source of greenhouse gas (GHG) emissions, with agriculture, forestry, and other land uses (AFOLU) accounting for a substantial portion. The urgency of climate action in this sector is paramount to meet climate stabilization targets. Despite cost-effective abatement potentials, there's reluctance to adopt mandatory mitigation policies, driven by concerns about food security, food prices, and poverty, particularly in the Global South. Climate-smart agricultural practices, such as improved fertilizer and tillage management, cover cropping, biochar application, and agroforestry, offer promising mitigation options and potential economic viability. However, these options haven't been comprehensively considered in global mitigation pathways, and their economic implications for farmers and market effects remain under-researched. This study uses an economic land-use model to assess these implications and identify cost-effective mitigation portfolios for agriculture, considering market feedbacks and spillover effects.

Existing literature highlights the significant GHG emission reduction potential within agriculture. Studies have explored the technical and economic mitigation potential of climate-smart agricultural practices in isolation. However, research on the economic implications for farmers, market rebound effects across various options, and the interaction between agricultural CO2 sequestration and other sectors remains limited. This lack of comprehensive analysis hinders the effective integration of these mitigation options into broader climate policy and Integrated Assessment Models (IAMs).

This research employs the Global Biosphere Management Model (GLOBIOM), enhanced with new CO2 sequestration options on agricultural land, linked with a forest sector model (Global Forest Model, G4M). Three agricultural CO2 sequestration practices were assessed: soil carbon (SOC) enhancement, biochar application, and silvo-pastural systems expansion. The baseline scenario is based on the Shared Socio-Economic Pathway 2 (SSP2). The study evaluates cost-effective mitigation potentials considering market feedbacks across regions, sectors, and options. Two key scenario elements were used: different GHG price trajectories with and without agricultural CO2 sequestration, and scenarios with enhanced biomass demands for bioenergy compatible with the 1.5 °C target. A sensitivity analysis assessed the robustness of the results by testing alternative parameterizations for costs, adoption levels, time to equilibrium, tree density in silvo-pastures, and livestock product demand. The 3-PGmix model was used to simulate silvopasture productivity and carbon sequestration, while soil carbon sequestration coefficients were based on Roe et al. (2021) for cropland and pastures. The model incorporates data on carbon sequestration coefficients, economic costs, and impacts on crop and pasture productivity. Economic impacts on producers were assessed via ex-post calculations, comparing scenarios with and without CO2 sequestration.

The study found that enhanced CO2 sequestration practices on agricultural land could generate a global carbon sink of up to 2.8 GtCO2e per year by 2050 at a GHG price of 160 USD2022 tCO2e. The largest potential is located in Sub-Saharan Africa, followed by Latin America. SOC enhancement on cropland and grasslands accounted for 39% of the potential, biochar application 35%, and silvo-pastures 26%. Biochar showed the highest carbon sequestration per hectare, followed by silvo-pastures and SOC sequestration practices. Achieving this would require establishing 780 Mha of silvo-pastures, adopting conservation agriculture on 900 Mha of cropland, and implementing improved grassland SOC management practices on 1100 Mha of grassland. The sensitivity analysis indicated that varying assumptions on adoption potentials and sequestration rates significantly impacted the overall GHG mitigation potentials. A scenario with reduced livestock consumption in Western countries suggested limited mitigation potentials due to agricultural production decline. Integrating agricultural CO2 sequestration allows achieving net-zero AFOLU emissions at lower GHG prices, with AFOLU emissions reaching -1.6 GtCO2e per year by 2050 at 160 USD2022 tCO2e. This reduces economy-wide mitigation costs and increases global GDP by 0.6% by 2050 in a 1.5 °C scenario. At a GHG price of 160 USD2022 tCO2e, farmers could receive carbon subsidies of 375 billion USD2022. While the absolute mitigation potential is largely in the Global South, the relative importance within the AFOLU mitigation portfolio varies across regions. The study also highlighted that incorporating agricultural CO2 sequestration options might alleviate socio-economic challenges associated with agricultural land abandonment in the Global South.

The findings demonstrate the substantial climate mitigation potential of enhanced agricultural carbon sequestration, highlighting its cost-effectiveness and significant economic benefits. The results underscore the need for integrated economic assessments to capture the interdependencies between various mitigation options and avoid overestimations of individual options' effectiveness. The economic benefits for farmers, through carbon credit generation, could incentivize the adoption of climate-smart practices and mitigate some of the negative economic impacts of GHG pricing policies. However, the study also recognizes the geographical disparity in mitigation potentials and economic impacts, necessitating consideration of equity principles and climate justice in policy design.

This study shows that enhanced agricultural CO2 sequestration offers a significant and cost-effective pathway toward climate mitigation, with considerable economic benefits for farmers and the global economy. However, successful implementation requires addressing the challenges of establishing efficient institutions, monitoring systems, and financial mechanisms for equitable distribution of benefits. Future research should focus on refining model parameters, addressing climate change impacts on carbon sequestration capacity, and exploring appropriate policy mechanisms to incentivize widespread adoption.

The study's results are subject to uncertainties related to model parameters and assumptions. The analysis is based on current climate conditions, and climate impacts and disturbances are not fully considered. The economic cost estimates may be optimistic, as transaction costs, institutional costs, and implementation costs are not explicitly accounted for. The model assumes optimal fertilization rates for silvo-pastures, which may not always hold in practice. The timeframe for achieving the estimated mitigation potential is also not explicitly addressed, and the time lag between policy implementation and observable impacts needs further investigation. Furthermore, the paper notes several structural, institutional, and social barriers to widespread adoption.