Presentation Transcript

1. UNIVERSITY OF CAMBRIDGE Department of Land Economy Institutional aspects of policies for climate change mitigation in agriculture – reflections on experience with agri-environment schemesIan HodgeDepartment of Land EconomyUniversity of Cambridge Workshop on mitigation of CO2 emissions by the agricultural sector Bergen, 3rd-4th October 2011
2. Department of Land Economy Institutional aspects of policies for climate change mitigation in agriculture – reflections on experience with agri-environment schemes GHG emissions and mitigation options Comparison with agri-environment policy Reference level and policy approaches Possible mechanism design for GHG mitigation Conclusions
3. Department of Land Economy Emissions of GHG from agriculture Globally: 14% GHG emissions from agriculture 47% of global CH4 (esp. enteric fermentation in livestock digestion) 84% of global N2O (esp. from N and manure application to soils) 17% GHG emissions from land use change Land use change (esp. deforestation) Proportion of global carbon emission from various sources, 2004 (Intergovernmental Panel on Climate Change, 2007)
4. Department of Land Economy Main sources of GHG emissions in agriculture Source: Smith et al. 2007
5. Department of Land Economy Cereals Dairy General Hortic. LFA Lowland Mixed Nature Cropping Grazing Grazing Reserve GHG emissions from agriculture(Sample of farms in England) Natural England. (2008). Carbon Baseline Survey Project
6. Department of Land Economy GHG mitigation options in agriculture Reducing GHG emissions Changes to agricultural production systems Enhancing removals Carbon sequestration Displacing emissions outside agriculture Biomass (direct combustion) and biofuels (esp for transport) Changes to demand and supply chain Reduced meat consumption, reduced transport and packaging, more seasonal, reduced waste
7. Department of Land Economy GHG mitigation in agriculture N2O Crop management Fertiliser efficiency Manure management Reducing manure-N Methane Reduced enteric fermentation On-farm / centralised anaerobic digestion
8. Short-listed crops/ soils abatement measures Moran et al. 2011
9. Indicative mitigation options in agriculture: some low hanging fruit?
10. Department of Land Economy Carbon sequestrationLand as longer term store of carbon >90% terrestrial carbon in soils (rather than vegetation) Land use change is major source of GHG emissions Preventing change (esp deforestation) Promoting change (espafforestation, nature reserve) Land management practices to increase soil organic carbon, eg Zero tillage Reduced erosion and leaching Biochar
11. Department of Land Economy Policies for reducing emissions Policy focus on carbon to date Complexity: Multiple potential approaches to different GHGs to be implemented across substantial proportion of sector Farm specific cost-effective changes for mitigation Mitigation externalities (side effects on GHG emissions and impacts on other ecosystem services) Implies many possible marginal changes to agricultural systems: Manure management and applications Animal diets Anaerobic digestion What policy mechanisms to influence systems and management practices at micro level?
12. Department of Land Economy Issues in the evolution of agri-environment policy Defining the reference level Developing contracts (inputs and outputs) Addressing asymmetric information (or not) Intensive and extensive margins Targeted and deep v. Broad and shallow (optimal transactions costs) Policy evaluation Other issues Co-ordinating actions Long term security
13. Department of Land Economy Comparison with agri-environment policy Public policy objectives to deliver public goods Environmental objectives: Threats to conservation from land use intensification: but uncertainty as to precise outcomes wanted Clear objective for GHG mitigation Political economy: Agri-environment context of CAP surpluses: Exchequer savings from reduced production Redirection of existing farm budget International pressures to deliver GHG mitigation
14. Department of Land Economy Possible approach to voluntary climate mitigation contracts Define reference level Identify farm-level actions Calculate GHG reductions from units of action Offer and allocate contracts to undertake identified actions Monitor and enforce Evaluate
15. Department of Land Economy Defining property rightsPublic goods and environmental damage Public goods Landscape BiodiversityExternal benefits: Provider gets principle Ecosystem functions Community support _____________________Reference level for environmental quality_____ Environmental damage Soil erosion Water pollution External costs: Polluter pays principle Pesticides in the environment Atmospheric emissions
16. Department of Land Economy Policy approaches Environmental quality Social optimum Provider Gets Principle Reference level Polluter Pays Principle Private optimum
17. Department of Land Economy Defining a reference level for GHG emissions Regulatory baseline Cross-compliance for standard policy subsidy? Code of good agricultural practice Property rights in carbon in land
18. Department of Land Economy Property rights in carbon Reference level of carbon in soil and on land? Carbon retention depends on land management What duties to protect existing carbon? (eg upland moorland soils) Incentives and land management for carbon sequestration?
19. Department of Land Economy Defining the reference level for carbon in soils Possible standards: Current status Average for region Expected level under ‘good’ land management Payments to exceed level and penalties for falling below it Measurement of carbon levels in practice on particular sites
20. Department of Land Economy Conservation intensity Conservation ownership Designated sites Higher Level Stewardship Entry Level Stewardship Cross-compliance: SMR & GAEC Regulation Land Area Hierarchy of approaches in agri-environment policy
21. Department of Land Economy Criteria for designing a policy mechanism Precision: achieving desired objectives at least cost Transactions costs: costs of introducing, implementing, monitoring and enforcing Dynamic incentives: capacity to responding to changing information and circumstances Co-benefits: impacts of other policy objectives Equity/ fairness: treatment of stakeholders affected by policy and its general acceptability
22. Department of Land Economy Environmental contracts for GHG mitigation Limited information on GHG impacts and limits to measurement and monitoring Multiplicity of options within different agricultural systems Asymmetric information – principal cannot know costs or cost-effective options Limited differentiation by location – no basis for spatial targeting Identifiable target outcomes (GHG mitigation) of equal value in all cases Correlated with delivery of other ecosystem service outputs Subject to changing technology and prices over time – flexibility
23. Department of Land Economy Potential mechanism design Payments for changes in farm activities (inputs rather than outputs) Degree of information asymmetry: use of competitive allocation Ecosystems approach: integrate with delivery of other services Coverage across large proportion of farmed land: availability to all farmers? Low transactions costs per farmer enrolled Alternative models: Ranking bids: environmental benefits index (CRP) Fixed payment for combination of measures (ELS)
24. Department of Land Economy Ranking bids: environmental benefits index(Conservation Reserve Program model) Menu of options for management changes offered to appeal to range of different farm circumstances Farmers invited to offer to implement options and the price for which they would be adopted Bids assessed in terms of predicted GHG mitigation, other ecosystem service co-benefits and price against environmental benefits index Bids ranked and accepted within available budget Monitoring and enforcement
25. Department of Land Economy Fixed payment for combination of measures(Entry Level Stewardship model) Menu of options for management changes offered to appeal to range of different farm circumstances Points associated with individual options Farmers required to adopt options so as to attain a total number of points dependent on holding area Farmers meeting requirement can enter scheme Monitor and enforce
26. Department of Land Economy Implications of alternative models CRP approach promotes efficiency and constrains public expenditure ELS establishes right to payment irrespective of counterfactual or individual cost. Flexibility promotes cost effective solutions (st generating equal GHG mitigation). Transfers surplus to participants
27. Department of Land Economy Further policy extensions Promotion of co-ordination amongst farms (eg anaerobic digestion) Policy framework and institutional arrangements for internal decision-making (eg environmental co-ops) Long term security for carbon sequestration Use of covenants/ easements and alternative landownership Potential markets via offsetting
28. Department of Land Economy Policy options for carbon sequestration in land
29. Conclusions Wide variety of (often minor) changes required but also some fundamental, long term changes in land use Uncertainty as to least cost technology and options Asymmetric information and need for an adaptive approach Need for explicit reference level Policy should cover large proportion of farm sector Low transactions costs per entrant Competitive tendering to address information problem CRP and ELS illustrate the sort of approach implied Further consideration for co-ordinated action and long term security