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Opt-in of the agricultural sector to the European trading scheme for greenhouse gas emissions – a proposal and its possible effects

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  • Perez Dominguez, Ignacio
  • Holm-Muller, Karin

Abstract

In light of international discussions on a possible opt-in of the agricultural sector to the current European emission trading system for greenhouse gases, the objective of this article is to present a feasible implementation strategy for a market of emission permits in European agriculture and to simulate its economic effects within the regionalised agricultural sector model CAPRI. With this purpose, we compare the effects of a 15% reduction of greenhouse gas emissions from European agriculture with and without a trading scheme. Our findings suggest that if significant emission abatement is to be achieved in the agricultural sector, efficiency gains from expanding the current emission trading scheme to this sector can be appreciable. An additional finding of this paper is that under the current protective measures in the CAP and in the absence of a successful WTO reform round, emission reduction does not result in a net income loss for the agricultural sector due to the ‘quota effect’ caused by the isolation of European agricultural markets from world markets.

Suggested Citation

  • Perez Dominguez, Ignacio & Holm-Muller, Karin, 2007. "Opt-in of the agricultural sector to the European trading scheme for greenhouse gas emissions – a proposal and its possible effects," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 56(08), pages 1-12.
    • Handle: RePEc:ags:gjagec:96766
    DOI: 10.22004/ag.econ.96766
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    References listed on IDEAS

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    1. de Cara, Stephane & Jayet, Pierre-Alain, 2001. "Agriculture And Climate Change In The Eu: Greenhouse Gas Emissions And Abatement Costs," 2001 Annual meeting, August 5-8, Chicago, IL 20577, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    1. Dominguez, Ignacio Perez & Britz, Wolfgang, 2010. "Greenhouse Gas Emission Trading In European Agriculture: A Comparison Of Different Policy Implementation Options In Year 2020," 2010: Climate Change in World Agriculture: Mitigation, Adaptation, Trade and Food Security, June 2010, Stuttgart-Hohenheim, Germany 91396, International Agricultural Trade Research Consortium.
    2. Bernd Lengers & Wolfgang Britz, 2012. "The choice of emission indicators in environmental policy design: an analysis of GHG abatement in different dairy farms based on a bio-economic model approach," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 117-144.

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    Keywords

    Agricultural and Food Policy;

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