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Organisation for Economic Cooperation & Development
Round Table 3: Green Growth and Climate ChangeRound Table 3: Green Growth and Climate Change
Hsin Huang Trade and Agriculture Directorate
EastAgri Annual Meetings 2010 EastAgri Annual Meetings 2010 Istanbul, 13-14 October 2010 Istanbul, 13-14 October 2010
OECD Trade & Agriculture Directorate 2
BACKGROUND:
CLIMATE CHANGE AND AGRICULTURE
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What if we do nothing ?
1. Excluding emissions from Land Use, Land-Use Change and Forestry.
Source: OECD, ENV-Linkages model.
Projected GHG emissions1 by country/region
(2005-2050, Gt CO2 eq)
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5
10
15
20
25
30
35
40
45
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60
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2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
Gt CO2 eq
ROW
BRIC
Rest of OECD
USA
Western Europe
Developing country share total emissions increasing
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Agriculture is important because….
• accounts for about 1/3 of GHG emissions globally• can be a significant carbon “sink” by building up soil-
organic matter• is a major user of rural land and water resources and
linked to forestry via land use
• food is a necessity (food security concerns) and• many of the world’s poor are farmers (development
goals)
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Agriculture is unique because …
Climate change has significant but diverse impacts on farming: location, location, location
• Adaptation is uncertain and economic appraisal difficult• Mitigation, a range of actions technically possible and
economically feasible
Food security goals
• Policies to encourage a “low carbon” agriculture may impede the goal of producing more food in the short run, BUT
• Is the real problem the ability to obtain food or the availability of food – and is this a short or long term issue?
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Challenges
• Provide enough food given pressure on natural resources
• Encourage farm management practices that reduce GHGs, sequester carbon, adapt to climate change – and provide environmental co-benefits
• Take into account externalities through policy incentives to move agriculture and food consumption to a “low carbon” path and contribute to “green growth”
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Policy approaches
Climate Change
• Mitigation: policies to incentivise farmers to reduce agriculture’s emissions of greenhouse gases and enhance carbon capture (sequestration)
• Adaptation: policies to incentivise farmers to manage adaptation to climate change
Green Growth
• a holistic approach that includes climate change and more general sustainability criteria …
• ecosystem degradation, pollution and nutrient run-off, water availability, etc.
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Green Growth Policies
• Policies to incentivise the agricultural sector to provide enough food and generate environmental co-benefits (including reduction of greenhouse gases)
– Address market failures (impacts that are not priced in the market, e.g. CO2, pollution)
– Reform/remove environmentally harmful subsidies (e.g. fossil fuel)
– Target policies to achieve environmental objectives more effectively (biofuels costs $ 960-1700 ton CO2 avoided)
– Facilitate green technologies, innovation, information dissemination
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Green GROWTH?
Panacea to address financial crisis?
– The need to provide sufficient government stimulus to boost weak demand (“shovel ready projects”)
– More jobs, more growth, less carbon
Cure worse than disease
– Increase costs on weak economy
– Will not increase employment, give up some growth
Both are right and both are wrong
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Green Growth and InnovationPossible GDP growth pathways
Green growth
Baseline
Years
growth
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Green Growth and subsidies
• Agriculture (in OECD) is highly subsidized
– Support to farmers in 2006-08 23% of gross farm receipts (265 B usd)
– Varies widely by country (Nor, Jpn, Kor vs Aus and Nzl)
– However only a fraction (~25%) is actually retained by farmers (higher input costs, land/production quotas)
• Subsidies and green growth
– Production linked support dominates (more than ¾)
– Higher production may lead to higher input use with environmental effects (water, soil, biodiv, ghg)
– e.g. Nitrogen efficiency about 55% (30-80) in OECD … wastefully applied overwhelming the nitrogen cycle
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What is the role of government?
• Ensure a policy environment that sends clear signals that align the goals of individual farmers and society
• Build capacity to better understand and measure agriculture’s contribution to sustainable development
• Implement or reform existing policies and insurance systems to facilitate adaptation by increasing producer resilience to climate change while compensating those most vulnerable
• Facilitate research to better inform, design and implement policy – at the domestic and global levels …
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Which policies?
Producers and consumers need to face the right incentives
– Carbon price, explicitly or implicitly (taxes, cap-and-trade…)
– Policy reform: decoupling of agricultural support from production, removal of fuel tax subsidies, etc.
– Targeted payments for public goods (e.g. biodiversity, carbon sequestration)
– Regulations for public bads (e.g. pollution, nutrient run-off)
– R&D/Innovation, advice and information, training to provide farmers with options
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What do farmers need to do?
Specific to production systems, climate/location –individual farmers know best the economic trade-offs given the right policy environment
– Adapt to (inevitable) climate change impacts
– Reduce GHG emissions per unit of production, whist respecting environment ”sustainable intensification”
– Increase carbon sequestration
– Maximise synergies with other environmental outcomes (biodiversity, water quality, soil erosion…)
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Main messages
• Ensuring a highly efficient, productive and resilient agriculture is the key to our future, response to climate change should be part of an overall effort to achieve environmental sustainability
• Environmental pressures need immediate attention, “sustainable intensification” -addressing climate change is an investment in the future
• The costs and benefits of alternative future scenarios have not been sufficiently analysed
• Uncertainty about the impact of climate change is a reason to act
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“Le mieux est l’ennemi du bien”
Voltaire (1764)
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Trade and Agriculture Directorate
www.oecd.org/agr/envwww.oecd.org/agr/env
Hsin.Huang@oecd.orgThe views expressed in this presentation do not necessarily reflect those of the OECD or its Member countries
Contact:
Agriculture and Climate Change
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Background slides, not for main presentation
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Turkey is near OECD average
0%
10%
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80%
1986-88
2007-09
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OECD support mainly commodities
OECD, PSE/CSE database
0%
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Payments based on non-commodity criteria
Payments based on non-current A/An/R/I, production not required
Payments based on non-current A/An/R/I, production required
Payments based on current A/An/R/I, production required
Payments based on input use
Payments based on commodity output
Support based on commodity output
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Turkey support mostly MPS
OECD, PSE/CSE database
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Miscellaneous
Non-commodity criteria
Non-current A/An/R/I, production not required
Non-current A/An/R/I, production required
Current A/An/R/I, production required
Input Use
Commodity Output
% of gross farm receipts Support based on: