Carbon supply elasticity and determinants of farmer carbon farming decisions

Abstract

This paper analyzed farmers' willingness to accept (WTA) payment and uncertainties toward carbon market through a 2021 U.S. Midwest farmer survey. The findings showed that farmer carbon supply was elastic at intermediate prices ($20–50/Mg), but inelastic at low ($10–20/Mg) and high ($50–70/Mg) price levels. While perceived co‐benefits play significant roles in promoting participation at low‐price levels, variables such as age, education, farm size, and soil quality are more likely to influence producers' choices at intermediate‐ and high‐price levels. To enhance farmers' support for carbon programs, measures should be taken to improve benefit, while reducing cost and uncertainty.