IDEAS home Printed from https://ideas.repec.org/p/ags/aes008/36770.html
   My bibliography  Save this paper

Simulating a Market for Tradable Greenhouse Gas Emissions Permits amongst Irish Farmers

Author

Listed:
  • Breen, James P.

Abstract

Research into Greenhouse Gas (GHG) emissions from Irish agriculture has focused on two main themes (i) projecting future emission levels and (ii) devising abatement strategies at the farm level such as changes in animal diet, better waste management and or changes in farm management practices. These abatement strategies will have costs associated with them some of which, such as capital investment or reducing livestock numbers, may be substantial. However economic theory indicates that market based solutions such as tradable emissions permits (TEP’s) are the least cost means of achieving desired reductions in emissions. To date within Europe a regulatory approach has been favoured when trying to curtail emissions from agriculture, the Nitrates Directive being a recent example. This paper seeks to compare the impact on farm incomes of a regulatory approach to emissions abatement with a TEP’s approach. In order to do this data from the Irish National Farm Survey is used to construct a farm-level Linear Programming (LP) model for each farmer within the dataset. Firstly a baseline scenario with no constraint on emissions is run. We then enforce a 20 percent reduction in emissions and the impact on farm incomes is measured. The LP model is then used to determine each farmers shadow value for a TEP. These shadow values are then weighted up to estimate the supply and demand and used to simulate a market for TEP’s and the farm income is re-estimated. Finally the implications for farm incomes of both abatement strategies are compared with the baseline scenario.

Suggested Citation

  • Breen, James P., 2008. "Simulating a Market for Tradable Greenhouse Gas Emissions Permits amongst Irish Farmers," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36770, Agricultural Economics Society.
    • Handle: RePEc:ags:aes008:36770
    DOI: 10.22004/ag.econ.36770
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/36770/files/Breen.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.36770?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Runar Brännlund & Yangho Chung & Rolf Färe & Shawna Grosskopf, 1998. "Emissions Trading and Profitability: The Swedish Pulp and Paper Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 12(3), pages 345-356, October.
    2. Stéphane Cara & Martin Houzé & Pierre-Alain Jayet, 2005. "Methane and Nitrous Oxide Emissions from Agriculture in the EU: A Spatial Assessment of Sources and Abatement Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 32(4), pages 551-583, December.
    3. William J. Baumol & Wallace E. Oates, 1971. "The Use of Standards and Prices for Protection of the Environment," Palgrave Macmillan Books, in: Peter Bohm & Allen V. Kneese (ed.), The Economics of Environment, pages 53-65, Palgrave Macmillan.
    4. Breen, James P. & Hennessy, Thia C. & Thorne, Fiona S., 2005. "The effect of decoupling on the decision to produce: An Irish case study," Food Policy, Elsevier, vol. 30(2), pages 129-144, April.
    5. Carlier, Peter Jan & Lauwers, Ludwig H. & Mathijs, Erik, 2005. "Tradable Substitution Rights: Simulation of the Cost-Efficiency of a Nitrogen Reduction in the Pig Finishing Sector," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24746, European Association of Agricultural Economists.
    6. Lovett, D.K. & Shalloo, L. & Dillon, P. & O'Mara, F.P., 2006. "A systems approach to quantify greenhouse gas fluxes from pastoral dairy production as affected by management regime," Agricultural Systems, Elsevier, vol. 88(2-3), pages 156-179, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. Emma J. Dillon & Thia Hennessy & Stephen Hynes & Verena Commins, 2008. "Assessing the Sustainability of Irish Agriculture," Working Papers 0809, Rural Economy and Development Programme,Teagasc.
    3. Fellmann, Thomas & Dominguez, Ignacio Perez & Witzke, Heinz Peter & Oudendag, Diti, 2012. "Mitigating GHG emissions from EU agriculture– what difference does the policy make?," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126815, International Association of Agricultural Economists.
    4. Lengers, Bernd & Britz, Wolfgang & Holm-Müller, Karin, 2013. "Trade-off of feasibility against accuracy and cost efficiency in choosing indicators for the abatement of GHG-emissions in dairy farming," Discussion Papers 162877, University of Bonn, Institute for Food and Resource Economics.
    5. Phani, Gayatri Yammanuru & Jose, Monish, 2012. "The Impact of Emissions Trading on Rice Production of India," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126322, International Association of Agricultural Economists.
    6. Vermont, Bruno & De Cara, Stéphane, 2010. "How costly is mitigation of non-CO2 greenhouse gas emissions from agriculture?: A meta-analysis," Ecological Economics, Elsevier, vol. 69(7), pages 1373-1386, May.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Breen, James P. & Donnellan, Trevor & Westhoff, Patrick C., 2012. "Reducing Greenhouse Gas Emissions from Irish Agriculture: A market-based approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 130555, International Association of Agricultural Economists.
    2. Wang, Wen, 2015. "Intégrer l'agriculture dans les politiques d'atténuation chinoises," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/14999 edited by Perthuis, Christian de.
    3. Petsakos, Athanasios & Jayet, Pierre-Alain, 2010. "Evaluating the efficiency of a N-input tax under different policy scenarios at different scales," 120th Seminar, September 2-4, 2010, Chania, Crete 109397, European Association of Agricultural Economists.
    4. Nigel Key & Gregoire Tallard, 2012. "Mitigating methane emissions from livestock: a global analysis of sectoral policies," Climatic Change, Springer, vol. 112(2), pages 387-414, May.
    5. Frans P. Vries & Nick Hanley, 2016. "Incentive-Based Policy Design for Pollution Control and Biodiversity Conservation: A Review," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(4), pages 687-702, April.
    6. Claudia Kettner-Marx & Daniela Kletzan-Slamanig, 2018. "Carbon Taxes from an Economic Perspective," WIFO Working Papers 554, WIFO.
    7. Latruffe, Laure & Mann, Stefan, 2009. "Another look at the distribution of direct payments: The link with part-time farming," Working Papers 210395, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    8. Jonathan Colmer & Ralf Martin & Mirabelle Muûls & Ulrich J. Wagner, 2020. "Does pricing carbon mitigate climate change? Firm-level evidence from the European Union emissions trading scheme," CEP Discussion Papers dp1728, Centre for Economic Performance, LSE.
    9. Thorne, Fiona S. & Hennessy, Thia C., 2006. "The Role of Risk in the Decision to Produce Post-Decoupling - A Stochastic Budgeting Example," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25415, International Association of Agricultural Economists.
    10. Cathal O'Donoghue & Thia Hennessy, 2015. "Policy and Economic Change in the Agri-Food Sector in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 46(2), pages 315-337.
    11. Michael Grubb & Tim Laing & Thomas Counsell & Catherine Willan, 2011. "Global carbon mechanisms: lessons and implications," Climatic Change, Springer, vol. 104(3), pages 539-573, February.
    12. Jascha-Alexander Koch & Jens Lausen & Moritz Kohlhase, 2021. "Internalizing the externalities of overfunding: an agent-based model approach for analyzing the market dynamics on crowdfunding platforms," Journal of Business Economics, Springer, vol. 91(9), pages 1387-1430, November.
    13. Parisa Aghajanzadeh-Darzi & Pierre-Alain Jayet & Athanasios Petsakos, 2017. "Improvement of a Bio-Economic Mathematical Programming Model in the Case of On-Farm Source Inputs and Outputs," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(3), pages 489-508, September.
    14. Patrick Criqui & Denise Cavard, 2004. "Economic approach to climate policies and stakes of international negotiations," Post-Print halshs-00003793, HAL.
    15. Brookshire, David S & Burness, H Stuart, 2001. "The Informational Role of the EPA SO2 Permit Auction," Journal of Regulatory Economics, Springer, vol. 20(1), pages 43-60, July.
    16. Stavins, Robert & Hahn, Robert & Cavanagh, Sheila, 2001. "National Environmental Policy During the Clinton Years," RFF Working Paper Series dp-01-38, Resources for the Future.
    17. Agnar Sandmo, 2002. "Efficient Environmental Policy with Imperfect Compliance," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 23(1), pages 85-103, September.
    18. Teresa Famulska & Jan Kaczmarzyk & Małgorzata Grząba-Włoszek, 2022. "Environmental Taxes in the Member States of the European Union—Trends in Energy Taxes," Energies, MDPI, vol. 15(22), pages 1-20, November.
    19. Hassan, Mahmoud & Oueslati, Walid & Rousselière, Damien, 2020. "Environmental taxes, reforms and economic growth: an empirical analysis of panel data," Economic Systems, Elsevier, vol. 44(3).
    20. Pérez Domínguez, Ignacio & Britz, Wolfgang & Holm-Müller, Karin, 2009. "Trading schemes for greenhouse gas emissions from European agriculture: A comparative analysis based on different implementation options," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 90(3).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aes008:36770. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aesukea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.