The use of fossil fuels such as coal and gas are a contributor to the global warming. The climate change is a worldwide problem with far reaching consequences that is believed to be very expensive. The United Nations has been introducing a framework convention on climate change. One component of the convention is the Kyoto protocol. The protocol is obligating the developed countries to decrease their emissions of greenhouse gases by 5.2 percent during the time period 2008-2012. The European Union aims to decrease their energy use by 20 percent by 2020. The EU has also as a goal that 20 percent of all energy use should be renewable and the emissions of carbon dioxide should be reduced by 20 percent the year of 2020. To reach these goals, the use of energy from biomass in the European Union will have to increase by 117 percent.
Forest is the primary producer of bio energy in Sweden. Farmland as a producer of bio-energy is a scantly used resource. 70 000 hectares or three percent of all farmland in Sweden, is used for energy crop cultivation. The county of Jämtland is not producing any bio-energy from agriculture at all. The county administrative board in Jämtland in cooperation with regional companies, municipalities and organizations has an ambition to produce 0.2 TWh from agriculture in Jämtland by 2015. To implement this goal the farmers have to be willing to switch parts of their production. Because of the climate in northern Sweden, reed canary grass is known to be the most suitable energy crop in Jämtland.
The purpose of this study is to find out the opportunity cost of the farmland in Jämtland when cropping reed canary grass. The study is restricted to farmland now used for production of pasture. The aim is to satisfy the county administrative board's production goal of bio energy from farmland. The study is limited within a radius of 70 kilometres from Östersund. A calculation of the farmers’ opportunity cost of the land use with respect to resource allocation, emission restrictions, and production goals is being done.
According to the Swedish Agriculture Agency 40 798 hectares constituted of farm land registered as used arable land in the county of Jämtland in 2006. 36 755 hectares, or 90 percent of the used arable land, was utilized for pasture production. To for fill the county administrative board's production goal 23.7 percent of the arable land, which is equivalent to 8696 hectares, need to be set aside for production of reed canary grass.
Result of the optimization show that the average annual opportunity cost of producing one hectare reed canary grass is 201.54 SEK. The average annual opportunity cost of producing one hectare pasture is 46.43 SEK. The opportunity cost of cropping pasture on 100 percent of the available farm land equal the opportunity cost of producing reed canary...
