Estimating carbon price from a closed emissions trading scheme in the agricultural sector

The agricultural sector accounts for 12% of total greenhouse gases emissions in Scotland. Although the contribution of agriculture to the mitigation effort is yet to be defined, there is currently much effort being placed into estimate the costs and potential of abatement options available in the sector. Emissions trading is widely considered to be the most efficient approach to mitigating greenhouse gases emissions. This article aims to investigate how carbon price and emissions reduction are influenced by the reduction target and farmers' strategies within an emissions trading scheme in the agricultural sector in Scotland. An agent-based approach is used to capture the diversity of farm circumstances and farmers' strategies. Model simulations show (1) that carbon price increases as emissions reduction target increases and on-farm compliance rate decreases and (2) that in a trading scheme, farmers adopting on-farm abatement measures and selling their surplus credits are slightly better off.