ECONOMIC EVALUATION OF SELECTED POLICIES TO ENCOURAGE ADOPTION OF FIELD SHELTERBELTS IN SASKATCHEWAN

Historically, farmers on the Canadian Prairies have planted field shelterbelts on their farms to reduce the damage done by wind erosion due to extreme climatic conditions. However, incidence of such damages has been reduced with improvements in agricultural production methods and cultural practices (such as zero-till, and reduced summer fallowing, among others). Some farmers now regard these field shelterbelts as an economic nuisance. Although many of the barriers to the adoption and retention of shelterbelts by farmers are mostly related to their economic costs, a poor understanding of their environmental benefits may also have played an important role. In response to the future changing climate, reducing greenhouse gas emissions has become a major objective of various national governments, including the Canadian government. Shelterbelts can play an important role in mitigating greenhouse gases through sequestration of carbon. This requires farmers to plant more shelterbelts. To this effect, an understanding of the factors that influence farmers’ decision regarding field shelterbelt adoption, as well as measures to encourage their adoption to increase the environmental benefits of field shelterbelts is relevant. Using a combination of a binary logistic regression model, combined with a spreadsheet-based farm-level net revenue simulation model and other numerical estimation approaches, in this study, the factors that may influence farmers’ decisions to adopt field shelterbelts were empirically estimated. In addition, the study estimated the potential impacts of selected policy instruments in encouraging the adoption of field shelterbelts in Saskatchewan. For this purpose, two policy instruments were selected – distribution of free shelterbelt seedlings to farmers, and negative carbon tax for carbon sequestration through shelterbelts. The value of negative carbon tax was determined by the price of carbon. This study considered four different carbon price scenarios – $ 74.60/tCO2(eq), $ 110.49/tCO2(eq), $ 574.13/tCO2(eq) and the carbon price levels of the Canadian carbon tax system (started at $10/tCO2(eq) in 2018, with $10/tCO2(eq) yearly increment till 2022 and $15/tCO2(eq) yearly increment from 2023 to 2030). The two selected policy instruments were evaluated based on four policy evaluation criteria; (1) Farm-level net revenue, (2) Probability of increasing field shelterbelt adoption, (3) Amount of carbon sequestered, and (4) Fiscal cost per tonne of carbon sequestration. The study results indicated that factors such as farmers’ education level, farm income, and their perceptions about the environmental benefits of field shelterbelts had a positive and significant effect on farmers’ decisions to adopt field shelterbelts. Moreover, between the two selected policy instruments, results showed that the negative carbon tax policy instrument performed better based on most of the policy evaluation criteria (3 out of 4 – impact on farm-level net revenue, probability of increasing field shelterbelt adoption, and total amount of carbon sequestered) in all the soil zones of Saskatchewan. Among the four different rates of the negative carbon tax (only on the carbon sequestered through shelterbelts), study results indicated that negative carbon tax set at a carbon price of $ 574.13/tCO2(eq) was the more effective policy instrument in encouraging the adoption of field shelterbelts in Saskatchewan since it provided the higher rate of adoption than the distribution of free seedlings to farmers. The study’s findings suggest that policy designed to increase the adoption of field shelterbelts should clearly define the policymaker’s objective of whether to maximize policy benefits or minimize policy costs since the choice of an appropriate policy or set of policies may differ under these policy objectives. Particularly, it is recommended that providing free shelterbelt seedlings should be considered if the objective of the policy design is to minimize policy costs, while the negative carbon tax instrument could be considered if the objective of the policy design is to maximize the potential benefits of the policy. In general, the study’s findings suggest that governments’ policy intervention to encourage adoption of field shelterbelts by farmers in Saskatchewan through financial rewards can encourage farmers to plant and maintain field shelterbelts on their farms