Research Note 95-16: Topic = Economic impacts of alternatives to crop residue burning

No. 95-16
September 1995
RESEARCH NOTES
California Environmental Protection Agency Brief Reports to the Scientific and Technical
Air Resources Board Community

Research Division, John R. Holmes, Ph.D., Chief P.O. Box 2815, Sacramento CA 98512

The Economic Impacts of Alternatives To Crop Residue Burning

The ARB conducted this research to identify potential alternatives to open-field burning of agricultural residues in the Sacramento Valley of California, to evaluate the economic viability of alternative uses of residues, and to quantify the financial and economic impacts of the adoption of these alternatives. The study concludes that, where a burn restriction policy does not result in a significant yield reduction, adoption of non-burn disposal methods would have modest impacts on most rice, almond, walnut, and wheat growers and minimal impact on the regional economy. The most economically viable alternative disposal methods for current economic conditions are soil incorporation for rice and wheat and offsite use for almond and walnut. This study was performed by Foster Associates, Inc.

Background:

The Rice Straw Burning Reduction Act of 1991, passed in response to public concern over the adverse health and environmental effects of agricultural burning, bans most rice straw burning in the Sacramento Valley by the year 2000. In order to develop effective policies for implementing the law, the ARB needed data on the costs and impacts of various alternatives to agricultural residue burning. This study was performed to identify alternatives to burning for rice, wheat, almond, and walnut; to evaluate the direct and indirect impacts, including estimates of the gains and losses to farmers, consumers, and the regional economy, of the alternatives under various burn-restrictive scenarios; and to assess the financial ability of growers to change their cultural practices under various farm conditions.
Methods: The investigators conducted interviews with growers, cooperative extension farm advisors, and state and federal agricultural experts; reviewed existing data on expected demand for and supply of agricultural residues; analyzed case studies on different methods of using residues and on the costs of producing energy from agricultural residues and the costs of soil incorporation; and developed a computable general equilibrium model to investigate the economic implications of hypothetical policies limiting the ability of growers to burn their agricultural residues.
Results: Two primary alternatives to agricultural residue burning were identified: incorporation of residue into the soil and offsite use. Residue not returned to the soil could be used in energy production, as construction materials, in paper and cardboard, as compost for mushroom growing and soil amendment, as cover for erosion control and landfill, and in several other ways. Except for energy production, none of these uses currently provides a significant market for agricultural residues, though potentially the market for energy production using residues is large. The most viable current choice for residue disposal for rice and wheat would be soil incorporation. However, soil incorporation of almond and walnut residues is not presently practical; offsite uses for these wastes should be developed.

The evidence suggests that any policy severely restricting agricultural residue burning would result in modest financial impacts to California growers. Almond and walnut growers could absorb the additional costs of non-burn alternatives without significant hardship. The cost increases would also not impose significant hardship on most rice and wheat growers. However, rice growers whose yields are reduced by more than five percent by soil incorporation could be significantly affected economically by severe burning restrictions. The financial situation of marginal wheat growers with no ability to market their residues would be affected to a greater degree.

In the Sacramento Valley, regional economic impacts of a ban on the burning of 75% of rice residues are projected to be small. For the worst case -- 10 percent yield reductions, no public subsidy, and no new demand for straw -- the investigators found that this policy would reduce gross regional product (GRP) in the Sacramento Valley by less than $10 million. This is less than one-tenth of one percent of total GRP.
Significance and Application: The Board uses the results of this study in preparing its biennial report to the Legislature on the status of feasible and cost-effective alternatives to rice straw burning, in developing policies to encourage the use of rice straw in new product development, and in developing regulations to reduce residue burning from other crops.
Related Projects: Related ARB studies include evaluation of alternatives to open burning of forest and agricultural residues other than rice straw in California (contract no. A0-072-32), a study to determine emissions from open burning of agricultural and forestry wastes (contract nos. A932-161 and A932-126), and a study to measure particulate exposures during rice farming operations (contract no. A032-177).

This research was conducted under contract with Foster Associates, Inc. (ARB Contract No. A132-121). Comments or questions can be directed to the contract manager, Reza Mahdavi, by mail, FAX (916) 322-4357, phone (916) 323-8704, or e-mail: rmahdavi@arb.ca.gov. For an index of Research Notes, call (916) 445-0753 or FAX (916) 322-4357.
Copies of the research report upon which this Note is based can be ordered from:
National Technical Information Service
5285 Port Royal Rd
Springfield VA 22161
Request NTIS No. PB94-156759
Title: The Economic Impacts of Alternatives to Open-Field Burning of Agricultural Residue
Author(s): Steven J. Moss, David Mitchell, Richard McCann, Tom Bayh