Tài liệu A PRELIMINARY ANALYSIS OF THE EFFECTS OF HR 2454 ON U.S. AGRICULTURE doc

A PRELIMINARY ANALYSIS OF THE EFFECTS OF HR 2454 ON U.S. AGRICULTURE

Office of the Chief Economist

U.S. Department of Agriculture

July 22, 2009

Executive Summary

USDA performed a preliminary economic analysis of the impacts of House-passed climate

legislation, HR 2454, on U.S. agriculture. The analysis assumes no technological change, no

alteration of inputs in agriculture, and no increase in demand for bio-energy as a result of higher

energy prices. Therefore, it overestimates the impact of the climate legislation on agriculture

costs in the short (2012-18), medium (2027-2033), and long-term (2042 to 2048). In USDA’s

analysis, short-term costs remain low in part because of provisions in HR 2454 that reduce the

impacts of the bill on fertilizer costs. In fact, the impact on net farm income is less than a 1%

decrease. In the short run, agricultural offset markets may cover these costs. Over the medium￾term and long-term, costs to agriculture rise but remain modest (3.5% and 7.2% decreases in net

farm income, respectively). However, benefits to agriculture from an offsets market rise over

time and will likely overtake costs in the medium and long term. Other studies that account for

the impact of higher energy prices on input substitution and demand for bio-energy find that

HR2454 leads to higher agricultural incomes, even without offsets. In summary, USDA’s

analysis shows that the agricultural sector will have modest costs in the short-term and net

benefits – perhaps significant net benefits – over the long-term.

Overview

This analysis examines the potential effects on US agriculture of the cap-and-trade program that

would be implemented under HR 2454, the American Clean Energy and Security Act of 2009, as

reported by the House Committee on Energy and Commerce on May 21. The analysis is based

on the energy price effects estimated by EPA and published in their June 23 analysis of HR

2454. The effects of higher energy costs on agricultural supply, demand, prices and net farm

income are compared to the baseline values over 2012-18. We then examine the impacts of

energy price increases over the medium (2027-33) and long term (2042-48).

HR 2454 would also provide opportunities for farmers and ranchers to receive payments for

carbon offsets. While we include the gross revenues associated with offsets, this report does not

consider the potential effects of the offsets markets on commodity prices. The removal of

cropland and pastureland for afforestation would place upward pressure on crop prices,

benefitting producers of livestock feed but leading to higher livestock input costs and higher

producer prices for livestock and milk. We have not yet integrated these factors into our

estimates of changes in net farm income. In addition, our analysis does not assess the change in

farm income due to the Renewable Electricity Standard and other provisions in HR 2454 that

increase the demand for biomass and could provide additional sources of income for the

agricultural sector.