Biochar Economics: A Cost-Effectiveness Analysis

In conventional economic terms, biochar provides a net benefit when total benefits exceed total costs. This requires that the values of biochar soil improvement, carbon sequestration, and energy production exceed the sum of biochar capital, operating, distribution, and application costs. But in practice there are several problems with calculating biochar net benefits. Estimates of biochar soil amendment value vary by crop and soil type, and different studies have produced widely varying results. The persistence of soil benefits over time and the rate used to discount future benefits also greatly affect estimates of soil amendment value. Similarly, estimates for the social value of sequestered carbon vary greatly, being dependent on uncertain costs of future climate change and again on the rate at which these are discounted. Mounting evidence indicates that climate change must be addressed soon. One thread of the economics literature advocates treating climate change as a cost effectiveness problem: instead of asking whether it is worth addressing climate change, the more pertinent question is how atmospheric carbon can be reduced at the minimum cost. This cost effectiveness approach can also be applied to biochar. Instead of estimating biochar net benefit, we can simply estimate the cost of sequestering carbon through biochar production and use. This value can be calculated without a social cost of carbon and with a soil amendment value as low as zero. Biochar carbon sequestration cost allows us to compare biochar to alternative carbon reduction and sequestration methods. Biochar cost also represents a possible measure of the social cost of carbon, i.e. current carbon emissions could be valued at the cost of their future removal with biochar. In this study we develop the theoretical framework for this cost effectiveness approach, and present preliminary estimates of carbon sequestration costs using biochar.


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