Financial Feasibility of Reverting Between Conventional and Carbon Farming
In this model, a flex-option is created which encompasses the option for a farmer to practice no-till set-aside (NT) and traditional/conventional farming through tillage (CT). It is found that the flex-option would require an additional annual payment of $211.55 MT/acre to offset the farmers’ indifference to forgo traditional farming. Using the Chicago Mercantile Nature Based Global Emissions Offset Future Price (CME NGEO), the flex-option would need a price of $95.14/MT/acre/year for farmers to encounter arbitrage. This flex-model uses a Monte-Carlo simulation to indicate when arbitrage would be created which triggers a time when farmers can either continue in NT or revert to traditional farming CT.