GREEN GROWTH INDICATORS: HOW DOES CANADIAN AGRICULTURE STACK UP AGAINST OTHER OECD COUNTRIES

Dimitris DiakosavvasTrade and Agriculture Directorate

CAPI Workshop on Optimizing Land Use for Sustainable Growth: A CAPI Dialogue, 21-22 February 2019, Calgary, Alberta, Canada

Outline of presentation

• Background

What is green growth and what does it imply in addressing the challenges facing agriculture?

Policy and monitoring progress challenges

• Monitoring progress towards green growth in agriculture

The OECD Green Growth Measurement Framework

How does it apply to agriculture?

What does the empirical evidence show?

• Key lessons – What work OECD is doing?

What is green growth and what

does it imply in addressing the

challenges facing agriculture?

Green growth is the pursuit of economic growthand development, while preventingenvironmental degradation, biodiversity loss andun-sustainable natural resource use. To do this itmust catalyse investment and innovation whichwill underpin sustained growth and give rise tonew economic opportunities

What is green growth?

The Green Growth Agenda:Key characteristics

• No necessary conflict between growth and

environment in the long run

• Tool to achieve sustainable development

• Focus on fostering innovation, investment and

competition that can give rise to new sources of

economic growth

• Coherence of policies

Green growth is widespread as a goal…

• OECD – Green Growth Strategy

• UNEP – Green to Grow, focusing on a low carbon future

• FAO – Greening the Economy through Agriculture,focusing on food security

• World Bank – Moving to a Green Growth Approach toDevelopment, focusing on poorer countries

• Many countries have embraced green growth (Korea,Denmark, etc.)

• Many companies are also developing green growthstrategies

Green Growth in agriculture means ….

• providing enough food, feed, fibre and fuel for a growingpopulation…

• …with greater pressure on land, water, energy andbiodiversity resources - and the impact of climate change…

• …and the need to limit the harmful and enhance thebeneficial environmental impacts and reduce waste in thefood supply chain

So productivity has to rise faster than population and income,while reducing environmental footprints – “sustainableintensification”…

… Increasing productivity in a sustainable manner – from R&D,innovation, to uptake all along the food supply chain, whileaddressing social concerns.

The policy challenge …

Policies that mutually reinforce green and growth –• Increasing productivity in a sustainable manner

Investing in knowledge generation - R&D, innovation Investing in knowledge creation - training, advisory Investing in knowledge transfer - extension services Investment and trade

Policies specifically aimed at greening growth• Market-based instrumentsAgri-environmental payments, environmental taxes, etc.

• Non-market instrumentsRegulation, voluntary agreements, technical assistance

But a lot of green is not priced..

The monitoring progress challenge

• If governments are going to pursue policiesdesigned to promote green growth, theyneed indicators that can:

raise awareness

measure progress

identify potential opportunities and risks

You can’t manage what you don’t measure

Monitoring Progress Towards

Green Growth in Agriculture

OECD Green Growth Measurement Framework - Four dimensions

• Is growth becoming greener? Low-carbon, resource-efficient economy: Indicators of environmental and resource

productivity

• Is there a risk of future shock to Growth? Rising productivity is not enough: often, an

absolute decline in environmental pressuresis needed to keep the natural asset baseintact

OECD Green Growth Measurement Framework - Four dimensions

• How the environment affects people? Capturing the direct interaction between

people and the environment: indicators ofenvironmental quality of life

• How “green” helps growth and employment? Economic opportunities from environmental

considerations and policy responses.

The monitoring progress challenge:four dimensions

Guiding criteria for the selection of green growth indicators for agriculture

• Capture the nexus between the environmentand the economy

• Be measured and comparable across countries

• Reflect key global environmental issues

• Ease of communication

• Alignment with the OECD framework

• Use existing data

Environmental and resource productivity:What does the empirical evidence show?

16

Nitrogen balance per hectare, 2013-15

0

50

100

150

200

250

kg/h

a

Nutrient surpluses declined relative to agricultural production ……

2003-15 % changes

AUS

AUT

BEL

CAN

CZE

DEN

EST

FIN

FRA

GER

GRC

HUN

ISL

IRL

ISRITA JPN KOR

LVA

LUX

MEX

NLD

NZL

NORPOLPOR

SVK

SLV

SPA

SWE

CHE

TUR

GBRUSA

OECD

EU

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

-0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5

N b

alan

ce/h

a (%

)

Agric. production growth (%)

Nitrogen

RELATIVE DECOUPLING

ABSOLUTE

DECOUPLING

AUS

AUT

BEL

CAN

DNKFIN

FRA

GER

GRC

ISL

IRL

ISRJPN KOR

LUX

MEX

NLD

NZL

NOR

POLPOR

SLV

SPACHE

TUR

GBRUSA

OECD

EU

-30

-25

-20

-15

-10

-5

0

5

-0.2 -0.1 0.0 0.1 0.2 0.3 0.4

Ph

osp

ho

rus

bal

ance

/ha

(%)

Agric. production growth (%)

Phosphorus

ABSOLUTE

DECOUPLING

But in Canada nutrient surpluses increased relative to agricultural land

0

20

40

60

80

100

120

1990 1995 2000 2005 2010 2015

Nitrogen balance

Canada OECD

kg/ha of agricultural land

-2

0

2

4

6

8

10

12

14

16

18

1990 1995 2000 2005 2010 2015

Phosphorus balance

Canada OECD

kg/ha of agricultural land

19

Evolution of livestock composition and crop mix

0

0.05

0.1

0.15

0.2

0.25

0.3

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Cattle heads/Total livestock heads Oil crops/Total harvested crops

Pesticide sales per unit of land much lower than the OECD average

0.002

0.1

0.6

0.7

0.7

0.8

0.8

0.9

1.0

1.0

1.0

1.1

1.1

1.1

1.2

1.2

1.2

1.5

1.5

1.6

1.6

1.7

2.2

2.3

2.7

2.7

3.0

3.1

3.2

4.8

4.9

5.8

10.9

11.8

20.6

0 5 10 15 20 25

Iceland

Australia

Estonia

Ireland

Latvia

Sweden

Norway

Lithuania

United States

Mexico

Turkey

Slovak Republic

Greece

Switzerland

United Kingdom

Austria

Canada

Finland

Denmark

Poland

Hungary

Czech Republic

Slovenia

France

Chile

Germany

OECD

Spain

Portugal

Italy

Belgium

Netherlands

Korea

Japan

Israel

Average annual pesticide sales per ha (2011-15)

21

Share of agricultural GHG emissions in total 2013-15

0

5

10

15

20

25

30

35

40

45

50

(%)

22

Progress with decoupling GHG emissions from production growth in several countries

AUS

AUT

BEL

CANCHI

CZE

DEN

FIN

FRA

GER

GRE

HUN

ISL

IRL

ISR

ITA

JPN

KOR

LAV

LIT

LUX MEX

NLD

NZLNOR

POL

POR

SLK

SLV

ESP

SWE

CHE

TUR

UK

USA

EU15

OECD

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

-0.2 -0.1 0.0 0.1 0.2 0.3 0.4

Car

bo

n p

rod

uct

ivit

y gr

ow

th in

agr

icu

ltu

re (

%)

Agricultural production growth (%)

2003-15

Relative decoupling

Absolute decoupling

No decoupling

Progress with decoupling GHG emissions from agricultural production

0.0

0.5

1.0

1.5

2.0

2.5

3.0

0

10000

20000

30000

40000

50000

60000

70000

1990 1995 2000 2005 2010 2015

Canada agricultural GHGs emissions Canada GHGs emissions intensity OECD GHGs emissions intensity

1000 tonnes of CO2 kg of CO2 eq./USD

On-farm energy use comparable to OECD average, but is increasing…

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

(%)

Share of agriculture in total energy (%)

1995 2016

Energy productivity is declining…

0

50

100

150

200

250

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

(19

90

=10

0)

Energy Production Productivity

26

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

%

2001-15 1991-2000

TFP growth in primary agriculture is comparable with OECD, but slowed down

Natural asset base:What does the empirical evidence show?

Land use change

-0.8

-0.7

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0

Canada OECD

%

Average annual % change 2005 to 2015

Total agricultural land Cropland Pasture

Farmland bird populations continue declining

-4

-3

-2

-1

0

1

2

1992-94 to 2002-04 2002-04 to 2012-14

Average annual % change in farmland bird index (2000=100)

Economic opportunities and policy responses:What does the empirical evidence show?

Evolution of agricultural policies in OECD countries

• Agricultural policy reform in OECD countries has been progressing slowly – but it is still a protected sector

• Some reduction in support and shift towards public goods (e.g. environment) and other objectives (e.g. rural development)

• Less emphasis on which commodities farmers can produce, but more restrictions on how they produce them

32

Producer support is half than the OECD average …

33

But potentially most distorting support is similar to the OECD average

(% Share in producer support, 2015-17)

0

10

20

30

40

50

60

70

%

Potentially most distorting support 1 Other support

34

Producer support is without environmental constraints, 2015-17 (%)

0%

5%

10%

15%

20%

25%

35

Potentially environmentally harmful agricultural support decreased in OECD area

0

50000

100000

150000

200000

250000

300000

1990 1995 2000 2005 2010 2015

USD mnMost harmful Least harmful Other

Potentially most environmentally harmful support

05

10152025303540

(%)

1995-97 2015-17

36

High share of Government expenditures on AIS in total support to agriculture

Public agricultural R&D intensity is the 6th

largest

37

Source: OECD R&D statistics and ASTI database.

Budget allocations for agricultural sciences R&D as a percentage of agricultural

value-added

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5%

2016* 1996*

Agri-food research co-operation outputs close to OECD average

38Source: ECD patent statistics and Scimago.

Key lessons –

what work OECD is doing?

• Canada has made progress towards green growth inagriculture, but there is a need for further progress:

Nutrient balances

GHG emissions

Energy productivity

Total factor productivity

• Evidence is partial:

Gaps in data availability and quality

Conceptual and methodological challenges

Empirical evidence often confusing

Key lessons

• Country reviews on innovation, productivity andsustainability

• Agri-environmental indicators

• Environmental impacts of agricultural policies

• OECD co-ordinated Network on Total FactorProductivity and the Environment

4-5 April 2019

30-31 October 2019

What OECD is doing?

Contact:dimitris.diakosavvas@oecd.org

Thank you for listening!

Green Growth framework

• Balanced tax structures

• R&D and innovation policy

• Competition

• Infrastructure investment

• Openness to trade and FDI

Enabling conditions

•Pricing of pollution and resource use

• Subsidy reform

•Regulatory and policy predictability

• Support to basic research and emerging technologies

•Governance of natural assets

Key policy tools

• Water scarcity

• Climate change

• Health impacts of pollution

• Biodiversity loss

Major environmental issues

• Skills and labour market adjustment

•Distributional and competitiveness concerns

• Science and technology cooperation

•Development assistance

•Management of global public goods

Promoting transition

•Productivity of resource use

•Physical evolution of the natural asset base

•Environmental quality of life

•Opportunities arising from environmental considerations

•Evolution of policy and social responses

•Promoting efforts consistent with international standards

Measurement agenda

Framework for green growth indicators

Natural asset base

Economic activities

Consumption

Households

Governments

Investments

Energy & raw materialswater, land, biomass, air

Pollutants waste

Policies,

measures,

opportunities

4Outputs

Income

Goods& services

Residuals

Inputs

Labour

Capital

Resources

2

13

Resource functions Sink functions

Amenities, health & safety aspects

Production

Multi-factor productivity

Indicators monitoring environmental and resource productivity

Indicators monitoring the natural asset base

Indicators monitoring the environmental quality of life

Indicators monitoring economic opportunities and policy responses

The socio-economic context and characteristics of growth

4

3

2

1

For executive summary

Service functions

45

Agri-environmental progress

-12

-10

-8

-6

-4

-2

0

2

4

6

Nitrogen balance Phosphorus balance Direct on-farm energy consumption Water use Greenhouse gas emissions

%

Average annual change (2003-05 to 2013-15)

Canada OECD

46

Beef: Limited progress with decoupling GHG emissions from production

50

70

90

110

130

150

170

190

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

(19

90

=10

0)

Emissions intensity Emissions (CO2eq) Production

47

Pigmeat: Progress with decoupling GHG emissions from production

50

70

90

110

130

150

170

190

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

(19

90

=10

0)

Emissions intensity Emissions (CO2eq) Production

48

Livestock accounts for more than half of GHG emissions (2016)

Cultivation of Organic Soils

10%

Enteric fermentation

32%

Synthetic fertilisers23%

Manure management

12%

Manure left on pasture

10%

Manure applied to soils3% Crop residues

8%

Burning - Crop residues

1%

Burning - Savanna1%

Source: FAOSTAT