Policy Study No. 87 Click here to see the full study. Overview Implementation of the Kyoto Protocol on global warming would require taxes on fossil fuel equivalent to between 25 cents and 68 cents per gallon. Net profits for farmers would decline between 20 percent and 84 percent, again depending on which commodity is produced. Hundreds of thousands of family-owned farms are likely to go out of business, with negative effects on rural communities and financial institutions.
Farmers have a major stake in the debate over global warming.
According to the Intergovernmental Panel on Climate Change, stabilizing current atmospheric concentrations of nitrous oxide and methane would require global emission reductions of 8 percent and more than 50 percent, respectively. Agricultural production in the U.S. is an energy-intensive process. Fuel and oil costs account for about 30 percent of a typical farm's total energy bill, while the remaining 70 percent lies hidden in the prices of manufactured inputs, such as fertilizer and pesticides. For example, natural gas typically accounts for 75 percent of the cash cost of manufacturing anhydrous ammonia, a basic feedstock for all nitrogen fertilizer products. Energy accounts for half or more of the underlying cash production costs for nearly all of a farm's manufactured inputs.