Climate change agriculture and rural development as

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					          Organisation for Economic Cooperation & Development




Round Table 3: Green Growth and Climate Change


                      Hsin Huang
            Trade and Agriculture Directorate




               EastAgri Annual Meetings 2010
                Istanbul, 13-14 October 2010
   BACKGROUND:
CLIMATE CHANGE AND
    AGRICULTURE

      OECD Trade & Agriculture Directorate   2
                                 What if we do nothing ?
                                Projected GHG emissions1 by country/region
                                               (2005-2050, Gt CO2 eq)
Gt CO2 eq
   75
   70          Developing country
   65                                                                                                           ROW
   60
               share total emissions
   55          increasing
   50                                                                                                           BRIC

   45
   40
                                                                                                                Rest of OECD
   35
   30
   25
                                                                                                                USA
   20
   15
   10
                                                                                                                Western
    5                                                                                                           Europe
    -
        2005     2010       2015        2020       2025          2030          2035        2040   2045   2050


1. Excluding emissions from Land Use, Land-Use Change and Forestry.
Source: OECD, ENV-Linkages model.

                                                    OECD Trade & Agriculture Directorate                                   3
     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)


                     OECD Trade & Agriculture Directorate   4
            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?


                          OECD Trade & Agriculture Directorate         5
                       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”

                   OECD Trade & Agriculture Directorate   6
                 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.
                       OECD Trade & Agriculture Directorate    7
                    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




                            OECD Trade & Agriculture Directorate                8
                    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
                      OECD Trade & Agriculture Directorate   9
Green Growth and Innovation
     Possible GDP growth pathways


                                                 Green growth

 g                                               Baseline
 r
 o
 w
 t
 h




                          Years




          OECD Trade & Agriculture Directorate                  10
              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


                            OECD Trade & Agriculture Directorate            11
           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 …




                         OECD Trade & Agriculture Directorate       12
                    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

                        OECD Trade & Agriculture Directorate      13
        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…)

                     OECD Trade & Agriculture Directorate   14
                    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
                       OECD Trade & Agriculture Directorate   15
“Le mieux est l’ennemi du
  bien”

        Voltaire (1764)


        OECD Trade & Agriculture Directorate   16
                  Agriculture and Climate Change

                     Trade and Agriculture Directorate




              www.oecd.org/agr/env
                                               Contact:
                             Hsin.Huang@oecd.org
The views expressed in this presentation do not necessarily reflect those of the OECD or its Member countries

                                         OECD Trade & Agriculture Directorate                                   17
Background slides, not for
 main presentation




         OECD Trade & Agriculture Directorate   18
      Turkey is near OECD average
80%

70%
        1986-88
60%
        2007-09
50%

40%

30%

20%

10%

0%




                  OECD Trade & Agriculture Directorate   19
      OECD support mainly commodities
    40%


    35%


    30%


    25%


    20%


    15%

                         Support based on commodity output
    10%


     5%


     0%



                         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

OECD, PSE/CSE database
                                       OECD Trade & Agriculture Directorate                20
                Turkey support mostly MPS
   % of gross farm receipts                                          Support based on:
  40

  35                                                                 Miscellaneous


  30                                                                 Non-commodity criteria

  25                                                                 Non-current A/An/R/I,
                                                                     production not required
  20                                                                 Non-current A/An/R/I,
                                                                     production required
  15                                                                 Current A/An/R/I,
                                                                     production required
  10
                                                                     Input Use

   5
                                                                     Commodity Output

   0




OECD, PSE/CSE database
                              OECD Trade & Agriculture Directorate                             21

				
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Description: Climate change agriculture and rural development as