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Policy strategies and challenges for climate change mitigation in the Agriculture, Forestry and Other Land Use (AFOLU) sector

Author

Listed:
  • Ben Henderson

    (OECD)

  • Stefan Frank

    (International Institute for Applied Systems Analysis)

  • Petr Havlik

    (International Institute for Applied Systems Analysis)

  • Hugo Valin

    (International Institute for Applied Systems Analysis)

Abstract

This study uses GLOBIOM ‒ the most detailed global economic model of agriculture, land use and greenhouse gas (GHG) emissions ‒ to assess the effectiveness of different policies in cutting net emissions from the Agriculture, Forestry and Other Land Use (AFOLU) sector, with a view to helping limit long-term global temperature increases to 1.5°C and 2°C. Trade-offs between emission reductions and impacts on food producers, consumers and government budgets are also evaluated for each policy package. A full complement of policy options is deployed globally across AFOLU, comprising emission taxes for emitting AFOLU activities and subsidies rewarding carbon sequestration. Using a carbon price consistent with the 2°C target (1.5°C target), this is projected to mitigate 8 GtCO2 eq/yr (12 GtCO2 eq/yr) in 2050, representing 89% (129%) reduction in net AFOLU emissions, and 12% (21%) of total anthropogenic GHG emissions. Nearly two-thirds of the net emission reductions are from the Land Use, Land-Use Change and Forestry (LULUCF) component of AFOLU, mostly from reduced deforestation. A global carbon tax on AFOLU is found to be twice as effective in lowering emissions as an equivalently priced emission abatement subsidy because the latter keeps high emitting producers in business. However, a tax has trade-offs in terms of lower agricultural production and food consumption, which a subsidy avoids. A shift to lower emission diets by consumers has a much smaller impact on reducing agricultural emissions than any of the policy packages involving taxes on emissions.

Suggested Citation

  • Ben Henderson & Stefan Frank & Petr Havlik & Hugo Valin, 2021. "Policy strategies and challenges for climate change mitigation in the Agriculture, Forestry and Other Land Use (AFOLU) sector," OECD Food, Agriculture and Fisheries Papers 149, OECD Publishing.
  • Handle: RePEc:oec:agraaa:149-en
    DOI: 10.1787/47b3493b-en
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    Cited by:

    1. Li, Xue & Qi, Ming & Zhang, Yueyuan & Xu, Jing, 2024. "How does carbon trading price matter for bank loans? Evidence from Chinese banking sector," Finance Research Letters, Elsevier, vol. 68(C).
    2. Preinfalk, Eva & Bednar-Friedl, Birgit & Mayer, Jakob & Lauk, Christian & Mayer, Andreas, 2024. "Sustainability transitions in the agri-food system: Evaluating mitigation potentials, economy-wide effects, co-benefits and trade-offs for the case of Austria," Ecological Economics, Elsevier, vol. 226(C).
    3. Santiago Guerrero & Ben Henderson & Hugo Valin & Charlotte Janssens & Petr Havlik & Amanda Palazzo, 2022. "The impacts of agricultural trade and support policy reform on climate change adaptation and environmental performance: A model-based analysis," OECD Food, Agriculture and Fisheries Papers 180, OECD Publishing.

    More about this item

    Keywords

    Abatement subsidy; GHG emission tax; Paris Agreement;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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