Agriculture is a major emitter of greenhouse gases. Its potential to contribute to limiting global warming to less than 2oC by the end of the century is substantial by reducing direct emissions in crop and livestock production, by reducing indirect emissions associated with changes in land use, and by increasing carbon sequestration. Technological advancements and changes in consumer preferences that result in land-sparing are particularly promising options given food security concerns. Gains in total factor productivity will also enhance the sector’s competitiveness. Changes in domestic and trade policies are essential to maximize mitigation potential. In the absence of global application of carbon pricing, international co-ordination is needed to ensure that national mitigation efforts result in carbon reallocation, i.e. shifts in the location of production to low emissions sources. Measures of emissions relative to the economic contribution of agricultural activities can be insightful for identifying national mitigation priorities.

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The role of agriculture in global GHG mitigation

1. Background Agricultural policy support can be defined as the gross transfer to agriculture from consumers and taxpayers (OCDE, 2016). When governments decide to apply policy distortions to a given crop, they create incentives (or disincentives) that drive economic decisions and lead to increase (or decrease) crop/grassland areas. Different crops generate distinct emissions (sequestrations) of greenhouse gases. Thus, governments also influence greenhouse gas emissions and climate change through their agricultural policies. The Food an Agricultural Organization (FAO) projects the growth of the world demand for food to be between 15% and 40% in the coming decades. Brazil is one of the largest food suppliers in the world and has the potential to expand its production capacity, increasing its agricultural production by 30% by 2030. At the same time, Brazil signed the Paris Climate Change Agreement in December 2015 (COP 21) proposing a reduction of its national GHG emissions by 2030. The Brazilian government intends therefore to strengthen its low-carbon agriculture, restoring 15 million hectares of degraded pastures, and implementing an integrated production system in another 5 million hectares by 2030. 2. Objective and relevance of the research The general objective of this research is to contribute to bridging the gap and expanding the boundary of knowledge about the relationship between agricultural policy support and greenhouse gas emissions (GHG) in Brazil. The relationship and mutual influences between the two variables is particularly interesting in the context of the application of the Paris Agreement, as their analysis allows to check the consistency of agricultural policy measures with the climate change mitigation commitment of the Brazilian government. Given the relative importance of Brazilian agriculture in the economy of the country and the weight Brazil carries in the global climate change negotiations, this research assumes particular relevance. 3. Methodology and data The paper investigates the relationships between support for agricultural products and GHG emission in Brazil, applying the Josling et al. (2016) methodology, that has already been applied by the Inter-American Development Bank (IDB) in Jamaica. The policy support data, and specifically the Producer Single Commodity Transfer (PSCT) indicator, the production value at the farm gate, and the value of production (VoP) were collected from the Agrimonitor database. Agrimonitor is an IDB initiative meant to carry out agricultural policy analyses in Latin America and the Caribbean, using the Producer Support Estimate (PSE) methodology, developed by the Organization for Economic Cooperation and Development (OECD). The System for Greenhouse Gas Emissions and Removals Estimates (SEEG) provided instead the GHG statistics. SEEG uses several sources to estimate GHG emissions for Brazil, according to the Intergovernmental Panel on Climate Change (IPCC) guidelines (SEEG, 2017). Some examples of sources are the Brazilian Inventories of Anthropogenic Greenhouse Gas Emissions and Removals (prepared by the Ministry of Science, Technology, and Innovation (MCTI)), government reports, institutes, research centers, sector entities and non-governmental organizations. The Center for Sustainability Studies at the Getulio Vargas Foundation (GVces) provided simulated carbon price. After mapping the Agrimonitor database to the SEEG database for the period 19952016, we construct several indices for the commodities included in Agrimonitor for Brazil: beef, maize, milk, pigmeat, poultry, sugar, rice, and soybeans. The first index, the Agricultural Carbon Equivalent (ACE) allows to express carbon emissions linked to the agricultural sector in monetary terms. The second, the Net Output Value (NOV) index allows the analysis of the net contributions of major Brazilian agricultural commodities to the economy. The third index, the ACE%, shows the percentage of value generated by the specific commodities that is offset by ACE. Finally, the Net Social Value (NSV) index captures how much each unit of environmental cost is related to net revenues. 4. Preliminary results and potential for generating discussion Preliminary results show that beef and milk have the highest environmental costs and generate the lowest value per unit of environmental cost. The adoption of technology in recent years is, however, reducing their environmental impact. Soybeans and maize are associated with the lowest environmental costs and produce higher values per unit of environmental costs. As a result, policy efforts aiming to the mere reduction of GHG emissions should focus on the support to and promotion of soybeans and maize instead of beef and milk. These results are likely to generate a stimulating discussion during the session as their application to actual policy making would entail a complicated priority definition. GHG emission and their reduction in the agricultural sector are strictly linked to several other economic and social variables and objectives, which might not be coherent among them. An interesting and challenging debate is therefore expected to take place on these issues and their relative importance in policy making. List of Abbreviations ACE: Agricultural Carbon Equivalent GVces: Center for Sustainability Studies at the Getulio Vargas Foundation CO2 e: Carbon Dioxide Equivalent

Agricultural Policy and Greenhouse Gas Emissions in Brazil

This paper presents a methodology for public expenditure review and analysis for climate change adaptation and mitigation in the agricultural sector. It outlines the basic methodological concepts, including the classification of public expenditures in the context of their links to climate change adaptation and mitigation. It also illustrates how such analysis can usefully contribute to policy decision making to better achieve the climate change adaptation and mitigation goals using the case study of Uganda. The proposed classification allows for analysing the level and the composition of public expenditures that influence adaptation capacity of the sector to climate change, and actions that increase or decrease greenhouse gas emissions (GHG) in agriculture. This, in turn, allows for assessing whether the sector is stimulated in a way that allows achieving a country’s climate change adaptation and mitigation objectives and form a basis for further evaluation of the effectiveness of individual measures in reaching these objectives.

Public expenditure analysis for climate change adaptation and mitigation in the agricultural sector – A case study of Uganda

Existing indicators of agricultural protection and support were developed primarily to gauge the market and welfare effects of government policies. They have shed light on a wider range of impacts through their use in economic models and empirical analysis. The rising scale of support to agriculture globally, and continued reliance on market distorting policy instruments, make this work as important as ever. Deeper investments are nonetheless needed to address heightened concerns about the spill-over impacts of agricultural policies on the performance of food systems, in particular with respect to food security and nutrition, rural livelihoods, resource use and the environment, and global emissions. A first area for development is improved measures of policies to correct agriculture's externalities. A priority here is to develop a carbon tax equivalent of sectoral mitigation efforts. A second area is to provide a clearer delineation of government spending on private versus public goods. This would make a valuable contribution to a ‘repurposing’ agenda that seeks to identify how agricultural budgets can be spent more effectively, as well as the scope for transferring resources to wider social priorities, such as public health and climate action. 

Agricultural policies and food systems: Priorities for indicator development

This document presents the results of a study that combines data on the emission of greenhouse gasses (GHG measured in CO2 equivalents) from farming activities with the incidence of policy incentives (transfers to the farming sector as measured in the Agrimonitor database) for Jamaican agriculture. The report?s objective is to look at Jamaican agricultural policy from the viewpoint of greenhouse gas emissions in the context of attempts to ensure consistency among policy objectives and nationally established targets related to the current climate change discourse. Specifically: Are the products that contribute the most to GHG emissions also those that receive the most protection? Or are the incentives emerging from policy in line with GHG emission mitigation objectives?

Gerard Alleng

Papers

Agricultural Policy and Greenhouse Gas Emissions in Jamaica