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Content. What are marginal abatement cost curves (MACC) ? Global Warming Gases in CAPRI Why GW and why CAPRI ? Methodology First results. Abatement cost curves. Abatement = reduction of negative externality

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  1. Content • What are marginal abatement cost curves (MACC) ? • Global Warming Gases in CAPRI • Why GW and why CAPRI ? • Methodology • First results

  2. Abatement cost curves • Abatement = reduction of negative externality • Abatement cost curves (ACC)= relation between emission reduction level and total costs • Marginal abatement cost curves (MACC)= relation between emission reduction level and costs for the last abated unit • MACC allow (a) to set up an optimal abatement strategy (b) to calculate regional cost differences under a certain environmental policy (e.g. Kyoto Protocol, nitrate directive, ...)

  3. Economics of abatement MAC MACC1 MACC2 Abatement costs eh el Emissions   Abatement Two abatement technologies e0

  4. Global Warming Gases in APRI • Distinction between direct and indirect emissions • Direct emission stem directly from agricultural activities(Methane from animals and rice, emissions during fertilizer application or storage, background emission from soils) • Indirect emission stem from other sectorsand are linked to input use in agriculture(fertilizer and energy production) • Both are linked to activities levels (hectares/heads) in the supply model via emission factors • Aggregated to Global Warming Potential via the definition of CO2 impact equivalents

  5. NPK balances • (fertiliser application) • Optimal activity Levels Emissions (passive indicator) Global Warming Gases in APRI • Content of nutrients in harvested material (kg/ton) • Atmospheric deposition at Nuts 0 level (kg/ha) • Available nutrient per crop from atmospheric deposition: available nutrient component for the crop coming from the atmosphere. • Biological fixation: ”self-made fertiliser” • Mineralisation: nitrate from soils available for the crop (kg/ha) • Global warming potential of different gases • Gas output per ton of mineral fertiliser produced (indirectly applied) • CH4 Output of animals kg per animal and year

  6. Measuring emissions at farm level

  7. Why Global Warming? • GW is a global externality: it does not matter where the emission takes place - damage costs are equal among emitters - no regional pricing is therefore necessary - it allows differentiation through abatement costs • Most studies look at a comparison across sectors • Agriculture interesting:subsidies <=> cross compliance <=> low costs for society • MACC contain the necessary information for an effective use of agri-environmental instruments=> new orientation of the CAP (multi-functionality)

  8. Why CAPRI? • CAPRI offers: • - a complete analysis of the agricultural sector=> analyse different strategies inside agriculture • - direct modeling of GWP reductions(ex-post indicator) • - a microeconomic orientation(optimisation problem, shadow values) • - modelling of permit markets(hot issue in the actual international negotiations)

  9. Methodology AB_COST = MAX_Inc(s.t. g>0, GWP unrestricted) - MAX_Inc(s.t. g>0, GWP <Kyoto) where: g restrictions in models (land, set aside,quotas ...) GWP output of GWP from agriculture MAX_Inc maximal agricultural income Kyoto reduction objective

  10. First Results

  11. First results

  12. First results

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