The Social Costs of SecondBest Policies: Evidence from Agricultural GHG Mitigation. Working paper

This paper investigates the social costs of second-best agricultural greenhouse gas (GHG) mitigation policies. We capture adjustments along the land use and input intensity margins by calibrating a regionalized optimization model of Califor-nia crop production to economic and agronomic information. Second-best policies relying on spatially aggregated GHG emission factors lead to small abatement ef-ficiency losses, while policies targeting a single GHG lead to moderate losses. In contrast, policies targeting a single input entail large abatement efficiency losses, which nonetheless can be reduced by combining instruments. Realizing part of agriculture’s GHG mitigation potential thus appears to be within policy reach