Estimating marginal abatement cost for methane emission from agriculture: empirical evidence for paddy cultivation in India

Abstract Implementing mitigation options through adoption of alternative practices entail cost. Methane emission from paddy/rice cultivation accounts for approximately one-fifth of India’s total methane emission. It occurs mainly due to flooded paddy cultivation practices which accounts for 30% of land under paddy cultivation in India. Several practices are available for reducing methane emission from paddy cultivation in India. The literature shows the highest mitigation potential is offered by irrigated multiple aeration method (IR_MA or AWD), 52.8-61.4% compared to baseline practice irrigated continuously flooded. Direct seeded rice (DSR) offers 30-50% reduction compared to the baseline transplanted rice. In this paper, we apply econometric model to estimate the cost of adopting mitigation options using marginal abatement cost (MAC) approach. Findings clearly show initial reductions in emission can be achieved with relatively lower marginal cost. However, consistent with theoretical literature MAC increases at an increasing rate with additional unit of emission reduction. We also find that MAC varies with the scale of operation viz, size of land cultivated under the baseline practice. Higher the scale of operation higher is the MAC. Also, given the scale of operation, MAC varies with the concentration of emission i.e., emission from a given amount of land. Higher the concentration of emission, higher is the MAC. Estimates show if MACs are used to evaluate emission tax level, similar to carbon price, then it will inflict a high additional cost burden of 5-350% of their current cost of production on the farmers unless compensated through policy mechanism.