An evaluation of the social and private efficiency of adoption: Anaerobic digesters and greenhouse gas mitigation

Climate science has begun to recognize the important role of non-carbon dioxide greenhouse gas emissions, including methane. Given the important contribution of methane, anaerobic digesters (ADs) on dairy farms in the U.S. present an opportunity to reduce greenhouse gas (GHG) emissions. We quantify the social and private costs and benefits of ADs that have been adopted in California and find that, despite high initial costs, large reductions in GHG emissions bring significant social benefits and represent good social investments given a $36 per-ton social cost of carbon. Subsidies that lower the initial private investment cost can help align socially and privately optimal adoption decisions.