House Ag Looks at Costs, Benefits of Climate Change Bill

December 4, 2009 Bookmark and Share

The House Agriculture Committee’s Subcommittee on Conservation, Credit, Energy and Research held two hearings this week to look at the costs and benefits agriculture can expect from climate change legislation and a cap-and-trade program like that included in a House-passed version.

The panel heard primarily from economists from around the country with deep backgrounds in agriculture, including from USDA’s Chief Economist Dr. Joseph Glauber, who testified at both hearings.

Glauber concluded in his second day of testimony that the ability to generate and sell offsets would provide income “which would more than compensate” for lost income due to higher energy prices with projected higher commodity prices.

Glauber’s written testimony provided more detail than previously issued by USDA, including projected sources and revenue of offsets; annual offset revenue by region; national changes in land use; and crop production and price impacts on specific commodities.

For wheat, the scenario considered showed relatively little change in production until after 2045 and somewhat larger changes in price – a projected five cent per bushel drop in 2015 and 15 cent per bushel drop in 2020, but a 14 cent per bushel increase in 2030 and 55 cent per bushel increase in 2050.

Dr. Joe Outlaw from the Agricultural and Food Policy Center at Texas A&M University testified that of his group’s 11 representative wheat farms, eight would have higher ending cash reserves under a cap-and-trade scenario relative to the baseline. While 17 of 25 feedgrain or oilseed farms also showed higher ending cash reserves, cotton, dairy and cattle operations did not fare well across the board.

Despite the extensive analysis and testimony, the only firm conclusion was that the real costs or benefits are largely unknown, though there was general agreement that the cost of doing nothing and likely regulation would exceed the cost of legislation.

By way of example, Outlaw testified that his organization has been doing policy analysis for Congress for almost 30 years and has never had to make as many assumptions in order to complete their work.

Opening statements from all witness are at