Monetizing Environmental Benefits Associated with Dairy Manure Management Systems that Include Anaerobic Digestion – Challenges, Opportunities, and Values – Livestock and Poultry Environmental Learning Community

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Purpose

A large agricultural lender reported in August 2016 that the current 20-month milk price low is not part of the typical three-year milk price cycle (which is marked by a year where the milk price is below the cost of production, followed by a year of recovering prices, and ending with a year where prices are well above the cost of production) that has been taking place since the late 1990’s, but rather is a correction of the dairy industry. That same report stated, that at the conclusion of the correction, milk prices will be more in-line with those of the early 2000’s, when the cost of production, on average, was close to the milk price, albeit with some variation. Overall, it is predicted to be a deviation from the recent three-year cycle pattern. To survive, dairy farms of the future will be compelled to even more carefully evaluate capital investments, including advanced manure treatment technologies, to assess their returns, both tangible and non-tangible, as they address regulatory and society-based environmental concerns.

Estimating the value of greenhouse gas reductions will be important to farms anticipating efforts to regulate carbon emissions in the future or to take advantage of carbon credits. Recognizing the value of water quality can also inform manure management system decisions. An economic value may help when comparing alternatives that have off-setting impacts across air and water environments.

What did we do?

This effort attempted to look at the economic values of the environmental benefits that a manure management system can provide, focusing specifically on greenhouse gas (GHG) reductions (both direct and indirect), air quality improvements, and water quality improvements. The resulting values can then be used as additional inputs in manure management system decisions on the farm. The U.S. EPA has put an economic value on the “Social Cost of Carbon”, which was incorporated into the process of putting a value on a manure treatment system. Careful nutrient recycling impacts GHG emissions and also yields societal benefits from water quality improvements downstream. Reductions of both phosphorous and nitrogen concentrations in water bodies can be valued for the impact on drinking water treatment, habitat changes, and recreational use.

What have we learned?

Through a rigorous process, we have been able to show the positive impact that anaerobic digestion systems (ADS) in New York State (NYS) can have on GHG reductions; the relevant work is presented in the accompanying paper. We learned that a focused outreach effort is needed to show multiple target audiences the possible GHG reduction values for NYS farms and to explain policy ideas that would help achieve reductions on-farm, therefore contributing to the State’s ambitious renewable energy and GHG reduction goals.

Future Plans

Future plans in this area include continued work in quantifying the environmental benefits of anaerobic digestion (AD) and in collaborating with our industry and State partners to find ways to monetize those benefits. Immediate plans include 1) a day-long program to expose and educate key NYS legislators and government officials on the benefits of farm-based ADS and the need to find ways to pay for these benefits, and 2) collecting data from additional farm-based ADS for use in further validating or changing the assumptions needed to develop reduction values.