Inclusion of the agricultural sector in Inclusion of the agricultural sector in greenhouse gas mitigation policiesgreenhouse gas mitigation policies
Problems and potential instrumentsProblems and potential instruments
Uwe A. Schneider
Research Unit Sustainability and Global Change
KlimaCampus, Hamburg University
Public Trade Policy Research and Analysis Symposium Climate Change in World Agriculture: Mitigation, Adaptation, Trade and Food Security June 27 - 29, 2010 Stuttgart-Hohenheim, Germany
Contributions from Bruce McCarl, Erwin Schmid, Christine Schleupner, and others
Agricultural Mitigation BenefitsAgricultural Mitigation Benefits
Increases technical mitigation potentialIncreases technical mitigation potential
Could increase net benefits of mitigation Could increase net benefits of mitigation
to societyto society
Challenges?Challenges?
Agricultural Mitigation ChallengesAgricultural Mitigation Challenges
HeterogeneityHeterogeneity
ComplexityComplexity
UncertaintyUncertainty
HeterogeneityHeterogeneity
Weather & ClimateWeather & Climate
Soils & LandscapeSoils & Landscape
Management (history)Management (history)
Mitigation Strategies Mitigation Strategies
Mitigation Impacts Mitigation Impacts
rr
Space
Time
Dry Biomass Yields (t/ha)Dry Biomass Yields (t/ha)
Reed Canary Gras
Miscanthus
Soil Carbon (t/ha, <30cm)Soil Carbon (t/ha, <30cm)
Reed Canary Gras
MiscanthusReed Canary Gras
Miscanthus
Mitigation StrategiesMitigation Strategies Emission reductionsEmission reductions
Land and forest stateLand and forest state Livestock systemsLivestock systems Energy input / product outputEnergy input / product output Non-C from fertilizerNon-C from fertilizer
Emission sinksEmission sinks Biomass and soil organic carbonBiomass and soil organic carbon Geo-engineering (Terra preta)Geo-engineering (Terra preta)
Emission offsets in other sectorsEmission offsets in other sectors Bioenergy, BiomaterialBioenergy, Biomaterial Production factors (Fertilizer)Production factors (Fertilizer)
Emission Impacts
Mitigation StrategiesMitigation Strategies Crop choiceCrop choice Livestock choiceLivestock choice Genetic engineering Genetic engineering Crop rotationCrop rotation TillageTillage FertilizationFertilization Water managementWater management Residue managementResidue management Animal housingAnimal housing Manure managementManure management Management intensityManagement intensity
Agricultural Production
Mitigation StrategiesMitigation Strategies Diet Diet
Share of vegetarian, local, seasonal, Share of vegetarian, local, seasonal, processed foodprocessed food
EducationEducation Internalize emission impacts in consumer Internalize emission impacts in consumer
preferencespreferences
Population Growth Population Growth
TransparencyTransparency emissions for production, transportation, emissions for production, transportation,
preservation, processingpreservation, processing
Agricultural Product Demand
2030 Scenarios
Schneider et al. 2010
HeterogeneityHeterogeneity
Insufficient observations, comprehensive Insufficient observations, comprehensive
mitigation assessments require models to mitigation assessments require models to
generate missing datagenerate missing data
Leads to inaccurate assessments due to Leads to inaccurate assessments due to
simplifications, errors, data gaps, computational simplifications, errors, data gaps, computational
limitslimits
Increases transaction cost of mitigation Increases transaction cost of mitigation
(measuring, monitoring, verification)(measuring, monitoring, verification)
HeterogeneityHeterogeneity
Optimal mitigation actions differ across space Optimal mitigation actions differ across space
and timeand time
Diverse mitigation costsDiverse mitigation costs
Complexity of Agricultural Mitigation Complexity of Agricultural Mitigation
Interdependencies due to resource scarcity Interdependencies due to resource scarcity andand competition competition
Emission leakage due to commodity tradeEmission leakage due to commodity trade
Multiple market, environmental, and social Multiple market, environmental, and social impacts impacts
Interdependencies with other societal Interdependencies with other societal objectives (food, water, biodiversity)objectives (food, water, biodiversity)
EU27 Wetland Economic Potentials (free Trade with NonEU27)
10
20
30
40
50
60
70
80
90
0 500 1000 1500 2000 2500 3000
EU
27 w
etla
nd a
rea
in m
illio
n H
a
Annual EU27 wetland subsidy in Euro/Ha
Technical Potential
Deforestation < 90%, No Biomass
Deforestation < 90%, 400 Mt Biomass
Deforestation < 10%, No Biomass
Deforestation < 10%, 400 Mt Biomass
Schleupner & Schneider 2010
EU27 Wetland Economic Potentials (fixed Trade with NonEU27)
10
20
30
40
50
60
70
80
90
0 500 1000 1500 2000 2500 3000
EU
27 w
etla
nd a
rea
in m
illio
n H
a
Annual EU27 wetland subsidy in Euro/Ha
Technical Potential
Deforestation < 90%, No Biomass
Deforestation < 90%, 400 Mt Biomass
Deforestation < 10%, No Biomass
Deforestation < 10%, 400 Mt Biomass
Schleupner & Schneider 2010
Food Price and Wetlands in EU27 (free Trade with NonEU27)
100
105
110
115
120
125
130
135
140
0 500 1000 1500 2000 2500 3000
EU
27 f
ood
pric
e (B
ase=
100%
)
Annual Wetland Subsidy in Euro/Ha
Deforestation < 10%, 400 Mt Biomass
Deforestation < 10%, No Biomass
Deforestation < 90%, 400 Mt Biomass
Deforestation < 90%, No Biomass
Schleupner & Schneider 2010
Food Price and Wetlands in EU27 (fixed Trade with NonEU27)
80
100
120
140
160
180
200
220
240
260
280
300
0 500 1000 1500 2000 2500 3000
EU
27 f
ood
pric
e (B
ase=
100%
)
Annual Wetland Subsidy in Euro/Ha
Deforestation < 10%, 400 Mt Biomass
Deforestation < 10%, No Biomass
Deforestation < 90%, 400 Mt Biomass
Deforestation < 90%, No Biomass
Schleupner & Schneider 2010
Agricultural GHG MitigationAgricultural GHG Mitigation
0
50
100
150
200
250
300
350
400
450
500
0 100 200 300 400 500 600 700 800
Car
bon
pric
e (E
uro/
tce)
Greenhouse Gas Emission Mitigation (mmtce)
TechnicalPotential
CompetitiveEconomic Potential
Schneider et al., Agricultural Systems, 2007
Agricultural GHG MitigationAgricultural GHG Mitigation
Schneider et al., Agricultural Systems, 2007
0
50
100
150
200
250
300
350
400
450
500
0 50 100 150 200 250 300 350 400 450
Car
bon
pric
e ($
/tce)
Emission reduction (mmtce)
Major Agricultural GHG Components
CH4 and N2O strategies
Afforestation
Soil sequestration
Biofuel offsets
Total
-10
-8
-6
-4
-2
0
2
4
6
8
0 20 40 60 80 100
Bil
lion
$
Carbon price ($/tce)
Welfare ChangesWelfare Changes
Gross Producer Surplus
Emission Payments
Net Producer Surplus
Consumer Surplus
Schneider, McCarl, and Schmid, Agricultural Systems, 2007
Agricultural MarketsAgricultural Markets
20
40
60
80
100
120
140
160
180
200
220
0 50 100 150 200 250 300
Fis
her
ind
ex
Carbon price ($/tce)
Crop prices
Livestock prices
Livestock production
Crop productionCrop exports
Schneider et al., Agricultural Systems, 2007
Optimal Mitigation Strategy MixOptimal Mitigation Strategy Mix
0
100
200
300
400
500
0 20 40 60 80 100 120 140 160 180 200
Car
bon
pri
ce (
$/tc
e)
Emission reduction (mmtce)
CH4 N2ODecrease
Tillage CarbonSink
AfforestationSink
Bioenergy EmissionOffsets
McCarl and Schneider, Science, 2001
Tillage Carbon SinkTillage Carbon Sink
0
100
200
300
400
500
0 20 40 60 80 100 120 140 160
Car
bon
pric
e ($
/tce
)
Soil carbon sequestration (mmtce)
Technical Potential
Economic Potential
Competitive EconomicPotential
McCarl and Schneider, Science, 2001
Environmental Co-EffectsEnvironmental Co-Effects
40
50
60
70
80
90
100
0 50 100 150 200 250 300
Pol
luti
on (
%/a
cre)
Carbon price ($/tce)
N Percolation
N Subsurface Flow
Soil Erosion
P Loss
McCarl and Schneider, Science, 2001
Emission LeakageEmission Leakage
100
110
120
130
140
150
160
0 20 40 60 80 100
Fis
her
’s I
dea
l In
dex
Carbon price ($/tce)
USA Only Annex I Countries
All Countries
Non-Annex I crop net exports foragricultural GHG mitigation policy in:
Lee et al. Mitigation and Adaptation Strategies for Global Change, 2007
Complexity of Agricultural Mitigation Complexity of Agricultural Mitigation
Mathematical models neededMathematical models needed
Resource scarcity increases opportunity Resource scarcity increases opportunity costscosts
Positive externalities decrease costs Positive externalities decrease costs
Complexity of Agricultural Mitigation Complexity of Agricultural Mitigation
Substantial differences between economic Substantial differences between economic and technical (engineering / geographic) and technical (engineering / geographic) assessmentsassessments
Different policy proposals between Different policy proposals between economists and engineers economists and engineers
16 Concerns Strict set of sustainability criteria for energy crop production
Food supply Energy crop production is not allowed to endanger the supply of food
Deforestation Energy crop production is not allowed to result in deforestation
Child labor Child labor is not allowed
Wages Comparable fair wages must be paid to avoid poverty
Employment Energy crop production must contribute to overall employment
Education Education must be provided for the workers’ children by the energy crop producer
Health care Health care services must be provided for all workers’ family members by the energy crop producer.
Soil erosion Soil erosion rates are not allowed to increase compared to conventional agricultural land use and must be decreased to the natural soil regeneration capacity
Depletion of fresh water resources Depletion of fresh water resources is not allowed
Nutrient losses and soil nutrient depletion
Soil nutrient depletion and nutrient leaching must be prevented as far as reasonably is achievable
Pollution from chemicals
The use of certain types of agro-chemicals is forbidden and pollution from agro-chemicals must be prevented as reasonable is achievable
Biodiversity Biodiversity must be protected Smeets and Faaij, 2010
Sustainable Bioenergy? Sustainable Bioenergy?
Does Does “Surplus land” “Surplus land” exist to avoid food and biodiversity exist to avoid food and biodiversity conflict?conflict?
What are the transaction costs for complicated rules?What are the transaction costs for complicated rules?
Where is the global (benevolent) dictator to prevent Where is the global (benevolent) dictator to prevent leakage?leakage?
Economic alternative: 1) protect globally old growth Economic alternative: 1) protect globally old growth forests and nature reserves, 2) let markets regulate forests and nature reserves, 2) let markets regulate competition between food, timber, and energycompetition between food, timber, and energy
UncertaintyUncertainty
Inadequate observationsInadequate observations Uncertain baseline (soil and biomass carbon)Uncertain baseline (soil and biomass carbon)
Highly variable processes (trace gases)Highly variable processes (trace gases)
High measuring costHigh measuring cost
Inadequate understanding / modelsInadequate understanding / models Related to insufficient observationsRelated to insufficient observations
Diverse assessment methodologiesDiverse assessment methodologies
Non-permanence, volatilityNon-permanence, volatility
Uncertainty InternalizationUncertainty Internalization
Agricultural Soil Carbon Sequestration - 20 Years
A) payment and practice stop, carbon is released: 36%
B) Payment and practice continue, carbon stays constant: 55%
C) payment stops, practice continues, carbon stays constant: 100%
Afforestation Program - 80 Years
E) forest reserve: 98%
F) 20-year pulpwood rotation: 65-70%
G) 50 year saw timber stand: 85-87%.
McCarl et al. 2001
After sequestration contract ends:
Carbon Sink Credits DiscountedC
arb
on
pri
ce
($/t
ce)
0
50
100
150
200
250
0 50 100 150 200 250
BiofuelsNo discount
Emission reduction (mmtce)
0
50
100
150
200
250
0 50 100 150 200 250
CH4 + N2ONo discount
0
50
100
150
200
250
0 50 100 150 200 250
Soil Sequestration50% Discount
0
50
100
150
200
250
0 50 100 150 200 250
Afforestation 25% Discount
McCarl et al. 2001
UncertaintyUncertainty
Decreases mitigation policy efficiencyDecreases mitigation policy efficiency
Increases mitigation cost (risk penalty)Increases mitigation cost (risk penalty)
Reduces acceptanceReduces acceptance
Conclusions Conclusions
Efficient internalization of agricultural Efficient internalization of agricultural mitigation is challengingmitigation is challenging
Integrated assessments needed which Integrated assessments needed which account for heterogeneity, complexity, account for heterogeneity, complexity, and uncertainty and uncertainty
Transaction cost and other externality Transaction cost and other externality impacts of policy instruments importantimpacts of policy instruments important
Conclusions Conclusions
Solve Ag mitigation jointly addressed with Solve Ag mitigation jointly addressed with other objectivesother objectives
Agricultural role for mitigation is a Agricultural role for mitigation is a dynamic processdynamic processAvoided deforestation earlyAvoided deforestation earlyOver time different policies and strategiesOver time different policies and strategiesTechnical progress (incl. monitoring Technical progress (incl. monitoring
technologies)technologies)
Conclusions Conclusions
Use market forces and governmental Use market forces and governmental power in optimal combinationpower in optimal combination
Let today’s solution not become tomorrow’s Let today’s solution not become tomorrow’s problemproblem
Referecnes Referecnes Lee, H.C., B.A. McCarl, U.A. Schneider, and C.C. Chen (2007). “Leakage and comparative Lee, H.C., B.A. McCarl, U.A. Schneider, and C.C. Chen (2007). “Leakage and comparative
advantage implications of agricultural participation in greenhouse gas emission mitigation.” advantage implications of agricultural participation in greenhouse gas emission mitigation.” Mitigation and Adaptation Strategies for Global ChangeMitigation and Adaptation Strategies for Global Change 12(4):471-494 12(4):471-494 Available online. .
McCarl, B.A. and U.A. Schneider (2001). “Climate change - Greenhouse gas mitigation in US McCarl, B.A. and U.A. Schneider (2001). “Climate change - Greenhouse gas mitigation in US agriculture and forestry.” agriculture and forestry.” ScienceScience 294(5551):2481-2482 294(5551):2481-2482 Available online.
McCarl, B. A., B.C. Murray, and U. A. Schneider. "Influences of Permanence on the McCarl, B. A., B.C. Murray, and U. A. Schneider. "Influences of Permanence on the Comparative Value of Biological Sequestration versus Emissions Offsets." CARD Working Comparative Value of Biological Sequestration versus Emissions Offsets." CARD Working Paper 282. 2001. Paper 282. 2001. Download
Schneider, U.A., McCarl, B.A., and Schmid, E. (2007). “Agricultural sector analysis on Schneider, U.A., McCarl, B.A., and Schmid, E. (2007). “Agricultural sector analysis on greenhouse gas mitigation in US agriculture and forestry.” greenhouse gas mitigation in US agriculture and forestry.” Agricultural SystemsAgricultural Systems 94:128-140 94:128-140 Available online. .
Smeets E.M.W. and A.P.C. Faaij (2010). “The impact of sustainability criteria on the costs and Smeets E.M.W. and A.P.C. Faaij (2010). “The impact of sustainability criteria on the costs and potentials of bioenergy production - Applied for case studies in Brazil and Ukraine.” potentials of bioenergy production - Applied for case studies in Brazil and Ukraine.” Biomass Biomass and Bioenergyand Bioenergy 34(3):319-333 34(3):319-333 Available online
Schleupner, C. and U.A. Schneider (2010). "Effects of bioenergy policies and targets on Schleupner, C. and U.A. Schneider (2010). "Effects of bioenergy policies and targets on European wetland restoration options", submitted to European wetland restoration options", submitted to Environmental Science & PolicyEnvironmental Science & Policy..
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