Carbon Trading Potential of Rice Farming in ASEAN: Economic and Environmental Analysis

Abstract

This study examines the feasibility of carbon pricing in ASEAN rice cultivation, a major global rice-producing region that accounts for 8-10% of global agricultural greenhouse gas emissions, primarily methane. It evaluates the economic and environmental benefits of integrating carbon trading with sustainable practices such as Alternate Wetting and Drying (AWD), which can reduce methane emissions by 30-50%. Implementing AWD could lower methane emissions from 4.02 to 2.18 metric tonnes of CO<inf>2</inf>-equivalent per hectare, leading to a regional reduction of 86.15 million metric tonnes of CO<inf>2</inf>-equivalent across ASEAN rice fields. With carbon credits priced at $3.62 per metric tonne, Thailand, Indonesia, and Vietnam could generate $38.72 million, $35.94 million, and $24.53 million, respectively, after operational costs. Economic analysis also shows that AWD enhances agricultural efficiency, with Thailand achieving a 19.39% cost reduction, 92.50% water savings, and a 44.50% increase in crop yields. Key policies for success include standardizing ASEAN carbon credit systems, incentivizing farmers, and fostering collaboration between governments and NGOs. Investment in digital technologies and education will promote sustainable practices, positioning ASEAN as a global leader in sustainable agriculture and climate action.