Economic Research Report No. (ERR-111) 47 pp

February 2011

Climate Change Policy and the Adoption of Methane Digesters on Livestock Operations

Methane digesters-biogas recovery systems that use methane from manure to generate electricity-have not been widely adopted in the United States because costs have exceeded benefits to operators. Burning methane in a digester reduces greenhouse gas emissions from manure management. A policy or program that pays producers for these emission reductions-through a carbon offset market or directly with payments-could increase the number of livestock producers who would profit from adopting a methane digester. We developed an economic model that illustrates how dairy and hog operation size, location, and manure management methods, along with electricity and carbon prices, could influence methane digester profits. The model shows that a relatively moderate increase in the price of carbon could induce significantly more dairy and hog operations, particularly large ones, to adopt a methane digester, thereby substantially lowering emissions of greenhouse gases.

Keywords: Methane, methane digesters, manure, livestock, climate change, greenhouse gases, carbon offset, agricultural economics

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Last updated: Monday, February 07, 2011

For more information, contact: Nigel Key and Stacy Sneeringer