The Climate Implications
of Agricultural Policy Reform


By Mark Storey OECD - 1997, 25 pp

 FAOSummary: This paper discusses the role of the agriculture sector as a source and a sink of emissions both globally and in OECD countries, summarises recent trends in agricultural policies in OECD countries and discusses the relationships between agricultural practices and emissions and removals of greenhouse gases (CO2, CH4 and N2O). For each agricultural practice which is a source or sink of GHGs the implications of recent agricultural policy measures are discussed. Finally, stressing certain caveats and areas where further information is needed, initial conclusions are made as to the impacts of recent agricultural policy reforms on net emissions of GHGs. The analysis of this paper is on the effects of agricultural policy reform measures at the regional /national level. Changes in agricultural production practices as a result of policy reforms may reduce emissions from a particular country or region particularly if the principal impact of these reforms is to reduce levels of production. However these benefits may be offset by increased production and emissions in other countries. Ultimately, because climate change impacts are not influenced by the location of GHG emissions there is a need for the impacts of OECD agricultural policy reforms to be assessed at the global scale. However, because information on the national impacts on GHGs of agricultural policy reforms is relatively limited and only now being developed, information with which to estimate global effects is even more limited. Incorporating this type of information into global models which evaluate the impacts of policy reforms on agricultural production patterns may be a first step towards providing some information on the potential global effects of these reforms.

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Table of contents

Editorial

1 Introduction

2 The Relative Contribution of the Agricultural Sector to Total Anthropogenic GHG Emissions

3 Agricultural policy trends in OECD countries

4 Agricultural Practices and their effects on net emissions of GHGs
4.1 Carbon Dioxide (CO2)
4.2 Methane (CH4)
4.3 Nitrous Oxide (N2O)

5 Conclusions

Executive summary

Context and Aim
The agricultural sector is one of the major anthropogenic sources of greenhouse (GHG) emissions, particularly of methane (CH4) and nitrous oxide (N2O). Overall agriculture accounts for one-fifth of the annual increase in anthropogenic greenhouse warming. Furthermore, agricultural practices, through their wider impacts on how land is used (e.g. the clearing of vegetation to provide additional land for agriculture) also have important implications for the role of land as a sink and source of carbon dioxide (CO2). Agricultural policies through their impacts on agricultural practices such as land use, fertiliser use and livestock numbers directly influence the role of agriculture as a source and sink of these gases. However, to date little attention has been paid to the linkages between agricultural policies, agricultural practices and emissions and removals of greenhouse gases from this sector.

This paper underpins and complements earlier work in the Tranche I study, Agriculture and Forestry: Identification of Options for net GHG reduction which identified a wide range of policy instruments which have effects on GHG emissions in the agriculture and forestry sectors. This paper does not identify specific common actions in relation to agricultural policies but instead reports on how national agricultural policy reforms have influenced emissions and removals of GHGs in the agricultural sector. The paper does not attempt to evaluate the cost effectiveness of different agricultural policy reform measures. The papers objective is to discuss the linkages between agricultural policy reform and emissions and removals of GHGs, and in doing so to highlight the opportunities for climate change issues to be better integrated into mainstream agricultural policy.

Approach and Outline
This paper discusses the role of the agriculture sector as a source and a sink of emissions both globally and in OECD countries, summarises recent trends in agricultural policies in OECD countries and discusses the relationships between agricultural practices and emissions and removals of greenhouse gases (CO2, CH4 and N2O). For each agricultural practice which is a source or sink of GHGs the implications of recent agricultural policy measures are discussed. Finally, stressing certain caveats and areas where further information is needed, initial conclusions are made as to the impacts of recent agricultural policy reforms on net emissions of GHGs.

The analysis of this paper is on the effects of agricultural policy reform measures at the regional /national level. Changes in agricultural production practices as a result of policy reforms may reduce emissions from a particular country or region particularly if the principal impact of these reforms is to reduce levels of production. However these benefits may be offset by increased production and emissions in other countries. Ultimately, because climate change impacts are not influenced by the location of GHG emissions there is a need for the impacts of OECD agricultural policy reforms to be assessed at the global scale. However, because information on the national impacts on GHGs of agricultural policy reforms is relatively limited and only now being developed, information with which to estimate global effects is even more limited. Incorporating this type of information into global models which evaluate the impacts of policy reforms on agricultural production patterns may be a first step towards providing some information on the potential global effects of these reforms.

Agricultural Policy reforms in OECD countries
Agricultural policy reforms have been widespread in many OECD countries over the last ten years, although, with some exceptions, these have not led to significant reductions in the overall level of support. Most notably there has been a reduced emphasis on market price support policies and a move towards more direct payments. In addition to measures aimed at reducing or redirecting overall levels of support, specific reform measures which have been introduced include: set-aside policies; quantitative restrictions on milk production; limits on the numbers of livestock allowed per hectare; and the reduction of subsidies or the introduction of taxes on inputs such as fertilisers and fossil fuels. As part of these reforms, many countries have also introduced agri-environmental programmes, whereby support payments to agricultural producers are tied to requirements to adhere to defined agricultural management practices.

The Implications of Agricultural policy reforms
Assessing the climate change implications of agricultural policy reforms is a difficult task due to the complex interactions between land use practices and the fluxes of GHGs. For example, more intensive livestock production systems tend to have higher energy requirements (CO2 emissions), apply higher levels of inorganic fertilisers (N2O emissions) and are more likely to store livestock manure (CH4 emissions) than extensive systems. Extensive livestock systems on the other hand tend to result in higher levels of CH4 emissions from enteric sources per unit of production. Furthermore, the greater land-use requirements of extensive production systems, may represent a carbon sequestration potential foregone in comparison with alternative land uses such as forestry. These types of trade-offs need to need to be taken into consideration in assessing the GHG impacts of policy measures. Furthermore, the actual effects of policy reform measures will be dependent on: the specific agri-environmental characteristics of different agricultural systems; and the alternative land use or management practices which are likely to result from the reforms. There is therefore, a need for much more empirical research on the effects of policy reforms on emissions and removals of GHGs.

Having stressed these uncertainties and the need for further information, the initial analysis of reform undertaken in OECD countries suggests that many of these reforms may have beneficial impacts in terms of reducing net GHG emissions at the national level. Policy measures which have reduced overall levels of support (including the reduction of production related subsidies), are expected to have benefits to the extent that they lead to the reduction of production and encourage alternative forms of land-use such as forestry. The move towards greater use of direct payments reduces the incentives for intensive production systems and have also allowed for increased targeting of agri-environmental objectives such as the preservation of permanent grasslands and woodland areas and the promotion of farm forestry which may increase the capacity of agriculture land as a sink of CO2.

Sector specific policies such as the reduction of price support for arable production reduce the incentive to convert pasture land into arable production thereby reducing CO2 losses from agricultural soils. Land diversion policies are expected to have some beneficial impacts in terms of increasing the potential for carbon sequestration, increasing the contribution of agriculture and forestry to energy supply and reducing applications of nitrogen fertilisers (reducing N2O emissions). Specific measures to restrict production such as quotas on livestock production, and to reduce the use of fertiliser inputs such as the removal of subsidies for fertiliser use are also expected to reduce national GHG emissions.

Conclusions
Agricultural policy reforms have an impact on GHG emissions and removals at the national level. In most cases agricultural policy reforms contribute to reducing net GHG emissions at the national level. In some cases reforms may contribute to an increase in net GHG emissions at the national level. However, an initial analysis of agricultural policy reforms in OECD countries suggests these reform measures, which have been introduced primarily to meet non-climate related objectives, such as reducing production levels or to improve economic efficiency, may provide win/win outcomes for policy makers in terms of their impacts on GHG emissions. In seeking to develop least-cost mitigation strategies it is important that these opportunities be recognised and developed.

The extent to which GHG reduction benefits have resulted from agricultural policy reform in OECD countries is primarily linked to reduced production levels or production intensity due to the reduction of support or decoupling of support from production. At the global level however, reductions in greenhouse gas emissions resulting from reduced production or changing production patterns in one country, may be offset by increased production and emissions in other countries. Further research and analysis are needed on the extent to which agricultural policies influence global emissions, in relation to the additional food requirements of a growing world population.

Several OECD countries in their national communications to the FCCC have identified reform of their agricultural policies as an important mechanism enabling them to meet national objectives of reducing GHG emissions. However, if significant reductions of net GHG emissions from the agriculture sector are to be achieved more specific targeted practices are likely to be necessary. In particular the need for further research and development to improve resource use efficiency, and educational programmes to improve farm management practices should be stressed.

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