Research European Commission FP6-ERA.ppt17/06/03 1 Presentation on agriculture requirements- Poland...

ResearchEuropean Commission

FP6-ERA.ppt17/06/03 1Presentation on agriculture requirements- Poland

Requirements in the field of land use, agriculture and forestry in the context of the EU Strategy for sustainable development

Pierre Valette, European Commission

Daniel Deybe, National Detached Expert



The notion of sustainable development

To meet the needs of the present generation without compromising those of future generations



Ecosystem functioning,

Health,Global Change

DamagesThresholds

(physical & monetary valuation)

Targets(e.g. % ofreduction

Humanactivity

Prevention, Adaptation:

Policies & measures: economic instruments, technologies:*Scenarios*Cost-effectiveness analysis*Cost-benefit analysis

Innovation & implementation

Monitoring(incl. Testing & Measuring)

S.D. strategy



Sustainability

Physical

Economic Social



To evaluate sustainability, it is necessary to evaluate the impacts on the three main components:– environment– social– economic



There are no thresholds for any of them.

But if it is possible to evaluate the impact on each of them, policy makers could consider the differentiated impact and decide according to their own goals, knowing the positive and negative effects.

This justifies the Sustainable Impact Assessment of any major EU policy.



What is expected from agriculture ? An agriculture that is competitive Production methods that are environmentally

friendly and able to supply quality products Agricultural diversity, product variety and the

provision of public goods linked to rural development and notable, the preservation and enhancement of the rural landscape.

Simplicity in agricultural policy and shared responsibility for its implementation (subsidiarity)

Justification of support through the provision of public services by farmers



Agenda 2000 introduced payments to farmers to use their privately owned resources or production factors for activities that go beyond good farming practices.

The Göteborg Council endorsed the Commission’s pledge to carry out a “Sustainable Impact Assessment” for “major” policy initiatives and legal proposals.



Shifting resources from market support to rural development, improving agri-environment measures (transparency), assessing the coherence of zoning and increasing funds for rural development.

Specific requirements concerning the CAP:



Conflicts and synergies with Ecology

In some cases, environmentalist would prefer that strong support (and even priority) should be given to policies that minimize the negative impacts on the environment. This would imply that the other axis (economy and social impacts) are neglected.

In some cases, this might be irrealistic.



But in some cases, several functions might contribute to environmental, economic and social goals



Alternative “environmentally concerned” practicesOne way to deal with this problem is to

identify and use environmentally concerned or environmentally neutral practices.

In this case, the environmental impact could be low or nihil.

But, are they economic or socially acceptable?

Is there any way to introduce them?



Role of landscapeLandscape is a consequence of the

natural endowment as well as of the human intervention. Several changes can take place: infrastructure, industrial settings, agriculture, urban settlements, etc.

Agriculture is one of the key issues, because it occupies an important portion of the space, but it is not the only one.



Policies can influence the type of agriculture and therefore the landscape.

But landscape is also an “amenity”. It can contribute to human welfare and thus provide a positive externality (an extra function).

Can a “value” be provided to this amenity?



Land useBesides, as mentioned before, agriculture

competes for land use. On one hand there is the incorporation of natural land into agriculture (and agro-forestry and forestry) and vice-versa. On the other hand, the trade-off with other land uses might not allow to obtain a sustainable balance.

Agriculture can contribute to the functions of Land use, but Land use functions will drive agriculture.



How to evaluate alternative land-uses, how to promote them (eventually)?



EmploymentIn some cases and regions,

agriculture is the main source of labor occupation, both family and employment.

It also contributes to stabilize population on the country side.

It helps avoiding overpopulation in some urban sites.



How can the benefits of the stabilization of the rural population be counted when undertaking SIA ?

Are the available/proposed services sufficient enough to entertain the rural population and the level of employment? This can also be linked with land use issues.



Income generationAgriculture can contribute to great

extent in some cases to (direct and indirect) local and regional income generation and therefore have an impact on the level of development.

Is this latter impact measurable in SIA? What is its role at the micro and macro-economic level?



Carbon cycleAgriculture and forestry can

contribute to capture greenhouse gases through the use of its sinking capacity (there are mainly two sources of sinks: soil carbon and forestry) or to mitigate GHG through technological change or by replacing fossil fuels by bio-fuels



In the case of the sinks, an economic compensation can be estimated according to the amount of C captured and the final use of the consequent C stock.

Emission trading could also be applied to GHG emitting activities, but it will be extremely difficult to implement.



Bio-fuels should be considered in the economic valuation both as a source of energy and as a replacement for uses of non-renewable C sources



Other outcomes of agriculture

Any other outcome of the agricultural sector, like providing for food security, social cohesion, should be taking into account in the SIA.



Multifunctional aspects

All these aspects can be summarized in what could be named as the multifunctional aspects of the sector.



Contribution of the forestry sectorForestry can contribute in at

least two ways:as a source of

diversification/income generation/employment/land use

as a C sink



Multifunctional forest

But is also provides other functions: – hunting, fire wood, tourism,

landscape, etc.

How can these other functions be considered?



Economic and social sustainable wood chains

Actors: industries, public authorities, civil society, international (trade, conventions, partnership) Regulation (local, regional, EU, World)

Forest,Forestry

Solid wood chainFiber chainBio energy chainBio composites chain

Societymarkets

Multifunctionalities:rural development, environment,sinks, landscape, bio-diversity

ForestryWood Chain



From micro to macro-economic impactsIt is very important to evaluate

the micro-economic impacts, in particular the structural effects of the different policies at the farm level. It can provide useful insights for policy makers and help in the decision making.



However, the evaluation of the macro-economic impacts is also required. In the process of policy making, several options can be contemplated and comparing the macro-economic impacts could provide arguments for the selection or rejection of a given one.

Also, the spill-over effects to other sectors should be considered



Relationship with externalities

The externalities are the indirect or unexpected effects of policies. They can be negative or positive.



Impact pathway analysis

Source

Dissemination

Doses-Responses

Monetary evaluation €

Dose

Response



In particular, externalities happen on the environment and on health. But an integrated approach can be able to point them out in other sectors, quantify them (when possible) and eventually avoid them.



RES vs coal electricity production cost including external costs (€cents/kWh)

Coal

Coal w/ext

Wind Wind w/ext

time

Cost



Can sustainability goals be established?

This is part of the political process. Stakeholders participation, discussion and compromise are useful processes to identify sustainability goals from a societal perspective.

In some case, some room for manoeuvre might have to be left open when the future impacts have not yet been identified (precautionary principle)



Indicators and thresholds

A possible way to proceed is to identify main “sustainability” indicators that can help in the process of monitoring whether the goals are being achieved (or not).

For these indicators, thresholds can be identified and fixed (from the environmental, economic and social perspective) which point out the limits that can/should not be exceeded.



Is it possible to account realistically for policy impacts?

An integrated framework that takes into account, modularly, the different sectors, combining bottom-up and top-down approaches, should be able to provide insights on possible impacts of policies.

The combination of approaches (micro and macro) should be able to take into consideration the many levels (local, regional, global) concerned by the policies.



From cost-efficiency to cost-benefit to integrated analysisThere is a need to evaluate the

(direct) efficiency according to the fixed targets and the associated private costs of any policy in the decision making. In this case, the possibility of succeeding efficiently in attaining the goals is evaluated and quantified.



More difficult is to estimate the cost-benefit of any policy. In this case, all benefits (direct and indirect) of a policy have to be considered in the economic analysis. The outcome in this case is an internal rate of return of the policy. Usually, it is not always possible to evaluate the economic values of the indirect benefits (and cost), so usually they are only mentioned for information purposes.



An integrated framework, in which the relationships between the different sectors and stakeholders are been explicitly considered and stated might help overcoming part of the inconveniences and provide useful insights (even if not completely accurate) of the impacts of policies and contribute to the SIA.



Some examples of how policies might not achieve their goals and how integrated approaches can detect the unexpected outcomes and help avoiding them



Case study 1

In Africa, it is said that animals overgrazing enhance the erosion processes.

It is tested for a village what could happen if the number of animals pasturing could be limited.



Impact of a restriction in the access to a resource

0

100

200

300

400

500

Free access Max An. 30 Max An 10 No An.

0

500

1000

1500

2000

2500

Erosion

Income

1000FCFATn érodées

Strong impact on the village revenueStrong impact on erosion with a limited constrain, further constrain will not have any more impact



0

100

200

300

400

500

Free access Max An. 30 Max An 10 No An.

Impact of a restriction in the access to a resource

Inher

given

loan

Impact on the revenue

Betterendowed

Less endowed

Less endowed farmers might face a strong impact on their revenue



Example 2

In a certain region of south America, rotation are excluding fallow periods.

What will happen if a subsidy is granted for fallowing?



Impact of a compensation paid to extensify production

impact of a compensation

0

5

10

15

20

25

30

0 30000 50000 100000

430

435

440

445

450

455

460

465

Crops

Fallow

Erosion

The subsidy is used to increase livestock size

100 ha

Tn érodées



“Sustainability issues”

protection and renewal of stocks of resources

efficiency with which resources are used equity between generations

“Measuring impacts”

quantitative, qualitative and in money terms when reliable estimates are possible

costs and benefits expressed in real terms taking into account “discounting”

Sustainability Impact Assessment:(Methodology 1)



SIA: Methodology (2)

Economic impacts : macro- and micro-economic impacts, notably in terms of economic growth and competitiveness, innovation and technological development, investment, market shares and trade patterns, increases or decreases in consumer prices.

Social impacts : human capital, employment levels, ethic, gender equality, social exclusion and poverty, acceptability, health, safety, consumer rights, social capital, security.

Environmental impacts : changing status of climate change, air, water, soil pollution, land-use, bio-diversity, changes in public health.



SIA: Methodology (3)

Tools for cost-effectiveness and cost-benefit analysis multicriteria analysis, scenario building, indicators building.

Treatment of risk and uncertainty in order to apply “precautionary principle”

macro-econometric and general equilibrium

models sectoral models : energy, transport, agriculture and forests “Impact Pathway” analysis for damage valuation multi-agent models participatory approaches, learning

methods



Methodological challenges for SIA Some tools (models, accounting frameworks for

externalities, techno-economic databases) exist, but they are not dedicated to the SIA needs (and not sufficiently developed).

Environment:- damages of a technology or human activity on

environment and health physical damages (Environment programme)

monetary valuation (EXTERNE or GREENSENSE)

- “thresholds of sustainability” issue: a mix of natural science, economic and social aspects mainly “sites” level; transferability issue for “macro” assessment

- treatment of uncertainty for global issues (climate change)



Economy

- “private costs” of measures (incl. technologies)- “social cost” (social cost = private + external

costs) of measures- cost-effectiveness analysis means optimisation against an objective modelling framework;

- cost-benefit analysis includes external cost- micro-economic and macro-economic impacts different types of models- regional, national, global modelling with linkages for competitiveness and trade analysis- ex-ante impacts analysis of mix of economic

instruments (e.g. emission trading + emissions ceilings)



Society- distinction between social, legal and institutional aspects is necessary- social aspects are not explicitly taken into account in the traditional economic tools- understanding and expectations of behaviours- multi-agents models could help to represent the functioning of a social system- participatory approach and governance issue must be addressed- issue of transferability of results

Trade-offs- difficult and political process at the final stage- monetary valuation should help, but not application to societal issue



Integration of sustainability in the land use modelingIn the land use models it is

possible to consider:– available resources – different actors– different regions

it is also possible to account for– environmental indicators



The last option can be used to measure and compare the impacts on environmental sustainability.

Considering different stakeholders might help identifying structural and social impacts

As these models also considers profitability, they can help measuring the economic impacts



Some of the accounting indicators can be transformed in constrains to represent thresholds or targets

This allows to identify the “economic cost” or the “welfare impact”, according to the objective function defined and using the “dual values”, for evaluation and comparison purposes.



Type of uses of the integrated frameworkMain types of analysis

– simulation econometric approximations until the equilibrium optimization general equilibrium

– foresight Scenario based Baseline



Econometric

Extrapolation of past trends through the use of response elasticities– Very useful for short term analysis

– ex. Capri model



AproximationTrial and error mechanisms for

each sector sequentially, until the equilibrium is reached, which is not the global equilibrium– very pragmatic, gathering detail

information on the different components

– ex. Poles-gecs, Agripol



Optimisation

Behaviour is the basis for model solving– The solution is optimal, but might not

be realistic

– ex: Mata



General equilibrium

All the sectors and all the reactions are considered simultaneously– very aggregated and static

– ex. GTAP, GEM-E3, Nemesis



Scenario basedDifferent large consistent sets

of assumptions affecting science, technical schedules, environement, economy and social factors are compared in quantitative and qualitative terms. – difficult to estimate the differential

impacts of some of the measures



Baseline based

The comparison is undertaken on the basis of a probable evolution and the changes in some parameters– the specific impacts can be identified

Research European Commission FP6-ERA.ppt17/06/03 1 Presentation on agriculture requirements- Poland...

Documents

Transcript of Research European Commission FP6-ERA.ppt17/06/03 1 Presentation on agriculture requirements- Poland...