[Terrapreta] -----and Net Present Value of TP Benefits

[Kevin Chisholm]

Dear Richard

Richard Haard wrote:
>
> On Mar 14, 2008, at 8:47 PM, Kevin Chisholm wrote:
>
>> Peter Read wrote:
>
>
> Hello Kevin  - drifting a bit from the thread but an interesting topic 
> to me.
>
> by NPV you mean direct value to farmer such as added CEC  or OM 
> equivalent? The real value to farmer - not discounted carbon credit is 
> what will make this all happen as general practice in agriculture.

The "Net Present Value" is simply a way of converting the benefits of TP 
to a common denominator, that being $. Doesn't matter if it is CEC, OM, 
nutrient retention, drought resistance, a concern for global warming, 
higher yields, better quality, carbon credits... all of these are 
benefits having tangible and intangible value. To get these benefits, 
one must "invest" in charcoal, and its application. Charcoal, as one 
aspect of Terra Preta, is costly, but the investment has a long life. 
Annual returns per acre will be small, but they also will continue to 
flow for a long time also. The "Net Present Value" is a simple way to 
compare the value of Investment over a period of time, with Returns over 
a period of time, so that one can make a rational decision  "invest or 
not to invest.... that is the question."
> What is the real economic benefit to the farmer per ton applied to 
> land will depend on  soil type, climate and needs for fertilizer 
> supplements to maintain fertility levels and as yet unquantified 
> benefits of charcoal additive in soil. This figure of NPV $50  could 
> be quite higher.

Yes indeed, it could be quite high in some cases, but there are probably 
other cases where it would be an understatement. TP cannot make a 
difference if one already has a "perfect soil". The greatest value for 
TP will be in "disadvantaged soil situations." Your well managed lands 
would not likely benefit as much from TP as would my "never farmed" or 
"ignored for 60 year" lands.
>
> Most important in soils where organic matter needs to be monitored 
> carefully to maintain productive capacity (not all do), what needs to 
> be calculated is the cost of raising soil organic matter an equivalent 
> amount permanently.  Ie the cost in lost production of fallow periods 
> and the cost of reestablishing farming if the land has gone back to 
> forest during fallow.

Right on. If one did a NPV analysis on TP, and on the alternatives, tehn 
one can make a rational decision on which is teh best and most sensible 
way to go.
>
> I am hoping the block research currently underway at our farm 
> comparing compost to charcoal to fertilizer and permutations will 
> answer this question for us at 4CN.

I am impressed with the methodical way that you are proceeding to get 
the facts of the matter as they apply to your lands. Given that you 
appear to be keeping your lands in pretty good condition, I would expect 
that your results will be less favourable to TP than would be mine, 
where I am starting with disadvantaged land.
>
> In our farming we are holding organic matter at 4 % minimum with 
> biannual applications of 1 cubic yard of compost made from sewage 
> solids and sawmill wood waste per 1000 sq. feet. In addition, we are 
> adding summer and winter cover cropping when a particular section is 
> fallow. So far as a OM supplement sawdust alone will do the job when 
> balanced with garden fertilizer to compensate for binding of N and P 
> by the decomposing wood. But this OM benefit in tilled soil is gone in 
> a few years whereas the charcoal lasts as I am trying to quantify at 
> our soil.

Last summer, I put 4" of seaweed on a test plot with remarkable soil 
benefits. This year, I hope to do some tests with charcoal additions. If 
your land would not benefit as dramatically from such seaweed additions, 
then there may not be "growth bottlenecks" for charcoal additions to 
eliminate.
>
> Buying charcoal at $ 200/ton will not happen for us in the short term 
> anyway because of these economic factors. I do not know what a cubic 
> yard of dry sawdust weighs but cost is  most likely 5 % or less and we 
> use about 250 yards or more  annually. What might happen though in the 
> near term is our on farm waste wood summer dried and converted to 
> charcoal by some sort of smothered combustion. In our climate dry 
> weather July through September will allow us to do this by windrowing 
> with farm machinery.

A NPV analysis would tell you most you could afford to pay for the 
charcoal benefit. This would then tell you the maximum you could spend 
for producing and placing the charcoal.
>
> We will have significant quantities available, probably each year 300 
> cubic yards of loose twigs, roots and reject plant trimmings. Right 
> now we either burn this stuff or use the soil/weed and reject plants 
> as fill. Labor and use of equipment on farm does not equate to 
> purchases outside of normal operations hence costs we incur on such a 
> project are more easily absorbed as I suppose they are elsewhere. I am 
> thinking some sort of buried pyrolysis with movable scrap sheet metal 
> and wet spoiled hay in a top lit bottom draft system similar to our 
> project 2 years ago.

Sure! That is the way to go. What you are doing is effectively producing 
charcoal in a manner where only teh incremental costs of production have 
to be charged against charcoal production.
>
> If the value of farm waste worked into soil, say corn or wheat  is 
> higher when converted to charcoal then the most efficient method for 
> doing this onsite will rule in the end.

Yes. That is the way it should be.

Best wishes,

Kevin
>
>
> On Mar 14, 2008, at 8:47 PM, Kevin Chisholm wrote:
>>  If we assume that Charcoal in TP gives a return with aNet Present 
>> Value  equivalent to $50 per tonne of Charcoal applied,
>
>