Tapasco Economic analysis of mitigation alternatives july 2012

Eco-Efficient Agriculture for the Poor WWW.ciat.cgiar.org

Jeimar Tapasco

Andy Jarvis

Lini Wollenberg

Economic analysis for mitigation

alternatives - limits of MACCs

Eco-Efficient Agriculture for the Poor

Expert Workshop on NAMAs: national mitigation

planning and implementation in agriculture.

Rome, 16-17 July 2012. CCAFS and FAO.


MAC Curve

McKinsey & Company (2010).


Source: World Bank (2010)

MEXICO BRASIL

Source: World Bank (2010)

USA

Sorce: Lutsey (2008)

UK Agriculture

Source: OECD (2010)


MAC Curve for Colombia

-Energy

- Transport

- Agriculture, Forestry and Other Land Use

World Bank and DNP


Agriculture Agroforestry Forestry

Annual Perrennial

Livestock

Tree +

Crops

or/and

Livestock

Natural Plantation

Efficient

Fertilization

(Case Study:

Rice)

Oil Palm

Silvopastoral Systems

Commercial

Forestry

Plantations

Pasture

Improvement Rubber Plantations

REDD+

Conversion of Pastures to Fruit Tree

Plantations

Crops in

Histosols

Cacao Nutritional

Complements

Low-Carbon

Agricultural

Practices

Ecological

Restoration


Intervention alternative

Abatement

potential

(thousands

of

tCO2eq/year)

Potential

area

evaluated

(ha)

Cost-

effectiveness

(US$/tCO2eq)

Min Max

Commercial Forestry

Plantations 44,037 4,000,000 -4,4 -2,7

Intensive Silvopastoral (ISS)

Projects

43.819 3.739.109 -49 0.6

Avoided Deforestation

(REDD Projects) 65,874 2,250,000 -0.2 -0.2

Conversion of Pastures to

Fruit Production 1,938 359,320 -188 -25

Rubber Plantations 1,786 260,000 -1,05 -0,67

Efficient Use of Fertilizers 38 170,000 -267 145

Pasture Improvement 54 51,487 -103 -62


MAC Curve - Aggregate

(270)

(170)

(70)

30

130

- 10,000 20,000 30,000 40,000

MA

C:

US

$/t

CO

2

Thousand tonnes of carbon saved/year

Rice Casanare (Irrigation) Rice Valledupar Mango Huila Small Mango Huila Large Avoca.Tolima Medium

Avoca. Tolima Large Mango Cundinamarca Small Avoca. Huila Medium Avoca. Huila Large Mango Cundinamarca Large

Rice Tolima Improve Pasture Meta Rice Casanare Mango Cundinamarca Medium Mango Boyaca Small

Improve Pasture Casanare Mango Tolima Small Rice Meta Improve Pasture Arauca Mango Tolima Large

Avoca. Risaralda Large Avoca. Antioquia Medium Avoca. Quindio Large SSPi Bajo-Cauca (Antioquia) Avoca. Risaralda Small

Avoca. Quindio Small Avoca. Caldas Large Mango Boyaca Large Avoca. Antioquia Large Avoca. Risaralda Medium

Avoca. Caldas Small Avoca. Quindio Medium Mango Antioquia Large Avoca. Antioquia Small Mango Boyaca Medium

Mango Antioquia Small Avoca. Caldas Medium Rice Guaranda y Nechi SSPi Eastern -Antioquia rest of the country (CIPAV)

SSPi Córdoba SSPi Atlantico SSPi Sucre SSPi Uraba-Antioquia SSPi Northeast - Antioquia

Rice Jamundi Rice Cucuta


Economic tools

must be appropriate for the problem at

hand.

CAUTION!!


Overview of selected key limitations of the cost/supply

curve method*

• Negative costs (Not all cots were included)

• Strong focus on costs as selection criteria (there are other criteria)

• It does not include environmental and social benefit and costs

• Economic and technological uncertainty inherent to predicting the future

• Strong level of aggregation of the databases used

• High sensitivity relative to baseline assumptions (future)

• Ignoring interdependencies between measures

• High sensitivity to (uncertain) emission factor assumptions

*Fischedick et al. 2011.


MAC Curve global GHG beyond business as usual 2030

Source: McKinsey & Company (2010)


Top priorities according to MAC curve Carbon saved (tCO2e/year) Cost (benefit) US$

Priority Measure US$/tCO2e

Individual

Measure Aggregate

Individual

Measure Aggregate

1 Rice Casanare (Irrigation) (267.2) 2,075 2,075 (554,465) (554,465)

2 Rice Valledupar (202.0) 321 2,397 (64,923) (619,388)

3 Mango Huila Small (188.2) 11,519 13,916 (2,168,430) (2,787,819)

4 Mango Huila Large (158.4) 46,296 60,212 (7,332,158) (10,119,977)

5 Avoca.Tolima Medium (138.1) 212,958 273,170 (29,412,260) (39,532,237)

Least priorities according to MAC curve Carbon saved (tCO2e/year) Cost (benefit) US$

Priority Measure US$/tCO2e

Individual

Measure Aggregate

Individual

Measure Aggregate

43 SSPi Uraba-Antioquia (0.6) 898,966 898,966 (537,857) (537,857)

42 SSPi Sucre (2.6) 1,831,998 2,730,964 (4,699,801) (5,237,657)

41 SSPi Atlantico (3.4) 596,711 3,327,675 (2,042,915) (7,280,572)

40 SSPi Córdoba (4.5) 3,747,996 7,075,671 (16,882,013) (24,162,585)

39 SSPi Eastern -Antioquia (8.5) 2,019,716 9,095,387 (17,218,786) (41,381,371)


• There are a large number of potential mitigation

options that could be implemented at the national

level, with highly varying degrees of emissions

reductions, and associated costs for implementation

Conclusions


.

Clear goals should

be set with any emissions reduction

plan or strategy, and these goals can

then be used as criterion for

prioritization


MAC curves are a useful input to

evaluating priority interventions,

but…….should be interpreted with

caution.

Incorrect use of the MAC curve for

selecting interventions could lead to

failure to prioritize the most

appropriate interventions.


Private perspective

Public perspective


Biophysical efficiency (kg meat)


Biophysical efficiency (ha)


Time constrains


Thanks!


Business as usual: Agriculture (Colombia)

Business as usual: Livestock

(Colombia)


Cost (benefit) -1.000.000 -1.000.000

Carbon capture 1 1.000.000


Figure 1 - Effect of the emission reduction amount on the cost-

effectiveness value.

Figure 1a - CEA value against different levels of emission reduction

and a constant cost.

Figure 1b - Representation of a cost-effectiveness curve


Figure 2 - Effect of the emission reduction amount on the cost-

effectiveness value.

Figure 2a - CEA value against different levels of emission reduction

and a constant cost.

Figure 1b - Representation of a cost-effectiveness curve


MAC Curve: Silvopastoral Systems


MAC Curve: Improved Pastures


MAC Curve: Efficiency of Fertilizer Use in Rice


MAC Curve: Mango and Avocado

Tapasco Economic analysis of mitigation alternatives july 2012

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