Rotational Grazing and Greenhouse Gas Reductions: A Case Study in Financial Returns

Abstract

Agricultural conservation practices can have a vast number of environmental benefits but adoption of these practices may not be widespread. If farm operators are able to reap financial returns for environmental services, adoption of these conservation practices could increase. One source of potential financial returns is in greenhouse gas (GHG) emission reductions or increased GHG sequestration. An example of a conservation management strategy for beef and dairy operations which has the potential to decrease GHG emissions or increase GHG sequestration is an intensively managed rotational grazing system.

The objective of this study is to estimate potential financial returns from conversion to rotational grazing and the sale of GHG credits by Virginia beef and dairy farms. The three GHGs examined in the study are carbon dioxide, nitrous oxide, and methane. Primary and secondary data are used to simulate financial performance and GHG emissions for three case study farms under different levels of production and pasture utilization. Each case study farm is simulated under three reference conditions to calculate financial performance and three baseline scenarios and a regional performance standard to calculate GHG emissions on both a per farm and a per metric ton of product sold metric. The change in emissions between the scenarios is found and potential returns from the sale of GHG emissions credits are calculated.

Results of the analysis demonstrate that conversion to rotational grazing has the potential to increase overall revenues for the farm operation from $4,197.72 to $50,007.46. GHG emission changes for the farm operation do not show a clear trend towards reduction. The amount of financial return from the sale of GHG reduction credits varies from $37.15 to $76.26 for the three case study farms for the initial calculations, and varies from $24.10 to $755.36 once the study performs sensitivity analysis for methane emissions. Therefore, results indicate that rotational grazing can increase net revenues for farm operations but additional net revenue from the sale of GHG reduction credits is small and dependent on the chosen baseline scenario and metric.

Follow up research should address the following areas: changes in the cost of on-farm labor, risk of conversion to rotational grazing, increased accuracy of the measurement of GHG emissions and soil carbon, the effects of rotational grazing on forage TDN, and the water quality impacts of rotational grazing.