Effects of Climate Change Legislation on US Cotton Producers

This study examines effects of the proposed American Clean Energy and Security Act (H.R. 2454) on U.S. cotton production using the U.S. Agricultural Resources Model (USARM), a multi-region mathematical programming model of U.S. agriculture. The bill’s cap and trade provisions for greenhouse gases would significantly raise fertilizer, irrigation pumping, and fuel costs. Carbon offset provisions create financial incentives for farmers to plant trees on cropland, reducing crop production and raising prices. Most of the 51 million acres of converted cropland would be in the Corn Belt and Delta. Cotton producers are affected through increased costs in energy-intensive fertilizers and land retired for carbon sequestration. A cap and trade program by itself would reduce U.S. cotton production by 4% by 2030. Cap and trade combined with land retirement for carbon sequestration would reduce U.S. cotton production by nearly 17%. Here, gross cotton revenues would fall 8%. Water use declines 10% nationally, but increases in the Southern Plains. By reducing fertilizer use and dramatically altering land use patterns in the Mississippi Basin, it may reduce hypoxia problems in the Gulf of Mexico. An offset program that focused solely on per-acre carbon reductions would dramatically reduce cotton (and other crop) production in the Delta. There is a trade-off between the cost-effectiveness of an offset program and goals of maintaining regional agricultural production and employment.