Including agriculture in climate change policies


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Mark W. Rosegrant
Director, Environment and Production Technology Division, IFPRI
14th May 2008, Royal museum for Central Africa in Tervuren, Belgium

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Including agriculture in climate change policies

  1. 1. Including Agriculture in Climate Change P li i Cli t Ch Policies Mark W Rosegrant W. Director Environment and Production Technology Division Presentation given to the “Agriculture, Development, and the Poor: Challenges, Stakes, Opportunities”, Brussels, Belgium, May 14, 2008
  2. 2. Outline Climate Change and Variability Impacts on Agriculture and the Poor Adaptation Strategies Pro- Pro-poor Mitigation: Constraints and Opportunities Conclusions: Investing in Climate Change Policy for the Poor Ch P li f th P Page 2 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  3. 3. Climate Change and Cli t Ch d Variability Impacts
  4. 4. Impacts and Vulnerability to Climate Change & Variability Rich countries emit majority of GHG Poor countries are more vulnerable P ti l bl • Geography (hotter, less rain, more variation) • G Greater dependence on agriculture and natural t d d i lt d t l resources • Limited infrastructure and low-input agriculture low- • Low income, poverty and malnutrition • Thus, lower adaptive capacity (also including , p p y( g inadequate complementary services, like health and education) Page 4 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  5. 5. Impact on agricultural productivity with carbon fertilization (%) ( ) n.a. n.a. – not applicable for Alaska, Northern Canada and Antarctica Source: Cline 2007 Page 5 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  6. 6. Percentage change in Wheat yield due to climate change with hydrologic effects, 2050 Sou ce Source: IFPRI IMPACT simulations for HadCM3/SRESB2 scenario ( t C s u at o s o adC 3/S S sce a o (with IMAGE temperature and CO2 fertilization effects), April 2008 Page 6 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  7. 7. Global Wheat Price: Without biofuel demand, w/o climate change and w/o water scarcity Source: IFPRI IMPACT simulations for HadCM3/SRESB2 scenario (with IMAGE temperature and CO2 fertilization effects), April 2008 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  8. 8. Adaptation Strategies
  9. 9. Climate Change Adaptation “Many adaptations can be implemented at low cost, but comprehensive estimates of adaptation costs and benefits are currently p y lacking…. “ (IPCC 2007) Page 9 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  10. 10. Types of Adaptation Autonomous or spontaneous adaptations • Reactive response (after initial impacts are manifest) to climatic stimuli without the directed intervention of a public agency • Initiatives by private actors rather than governments governments, triggered by market or welfare changes induced by actual or anticipated climate change Policy- Policy-driven or planned adaptation • Proactive response • Result of deliberate policy decision on the part of a R l f d lib li d i i h f public agencies Page 10 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  11. 11. Adaptation Responses and Issues Type of Autonomous Policy-driven Policy- response Improved Crop choice, crop forecasting area, planting dates Research on climate Short run Risk- Risk-pooling risk insurance Risk- Risk-pooling insurance Large- Large-scale public Private investment investment (water Long run (on- (on-farm irrigation) storage, roads) Private crop research Public crop research Adaptive capacity of poor Uncertain returns to Issues Social safety nets investment Tradeoffs with Targeting mitigation INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE Page 11
  12. 12. Much Adaptation is Extension of Good Development Policy Promoting growth and diversification Investing in research and development, development education and health Creating markets in water and environmental services Improving international trade system Enhancing resilience to disasters and improving disaster management p g g Promoting risk-sharing, including social risk- safety nets, weather insurance y , Page 12 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  13. 13. Effective Adaptation Strategies Requires targeted adaptation within a policy context and strategic development framework Must go beyond good development policy to explicitly target the impacts of climate change, particularly on the poor Market signals • essential factor in determining the responses to a changing environment • but involves potentially expensive time lags and overlooks equity Climate change adaptation must therefore be proactive, not merely reactive Page 13 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  14. 14. Pro- Pro-Poor Mitigation: Constraints and Opportunities
  15. 15. Critical Step: Post-Kyoto International Climate Post- Change Architecture Emissions targets, rates of convergence, and rates of growth in developing-country emissions g developing- p g y Level of emission allowances for developing countries Level of caps by sector and industry Sector- Sector-specific mitigation options Incentives for international carbon trade Transparency and complexity of administration Financing of adaptation and mitigation All influence economic growth, agriculture, food security, and poverty in developing countries Page 15 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  16. 16. Sources of GHG Emissions Developed Countries Developing Countries 70 60% % tota of GHG emissions 60 50 e 40 30 20 18% al 14% 10 4% 4% 0 Energy Deforestation Agriculture Industrial Waste (excluding land processes use change) Sources: World Resources Institute 2007; World Development Report 2008 Page 16 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  17. 17. Pro- Pro-Poor Climate Mitigation Policy Climate change policy can generate income for small farmers and investment flows for rural communities Requires effective integration from global governance of carbon trading, to sectoral and micro-level design of micro- markets and contracts and contracts, investment in community management Page 17 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  18. 18. Estimated Potential Emission Savings and Costs by Sector Sector 2050 Annual Average Annual Emissions Cost($/tCO2) Savings (GtCO2) ~2025- ~2025-2050 Deforestation 3.5-5.0 3.5- 2 -4 Afforestation and Reforestation 1.0-2.0 1.0- 5-15 Land management practices 1.0-2.0 1.0- 20-27 20- Agriculture (methane & nitrous 1.0 27 ) oxide) Bioenergy 2.0-3.0 2.0- 25 Waste and fugitive emissions, 4.1 3 -5 industrial processes Fossil fuel related, excluding 40.0 22-33 22- bioenergy Source: Adapted from various estimates, Stern Review, pp. 244-63 244- Page 18 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  19. 19. But minimal carbon trades in agriculture in developing countries Only 3-4% of carbon trading is sourced y 3- % g from agriculture, land use, land use change, agroforestry and forestry Only 3% of carbon trading is sourced from Africa Page 19 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  20. 20. Constraints to Pro-Poor Mitigation Pro- 1. High transaction costs of Clean Development Mechanism (CDM) Conditions for Offset Projects ( ) j in Developing Countries • Additionality, measurability, permanence, leakage prevention, social benefits, environmental benefits • Information about carbon benefits to potential buyers, obtaining information about project partners, b bt i i i f ti b t j t t organizing project participants, capacity building and ensuring parties fulfill their obligations • Transaction costs per unit of emission reduction are higher for projects involving many smallholders and forest communities f t iti Page 20 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  21. 21. Constraints to Pro-Poor Mitigation Pro- 2. Carbon sequestration from soil carbon and avoided deforestation―i id d deforestation―important areas for d f t ti t t f climate mitigation and for poor developing countries––are excluded from CDM countries––are ti l d df 3. CDM-eligible assets from afforestation and CDM- g reforestation are excluded from European Union- Union-Emissions Trading Scheme g Page 21 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  22. 22. Expanding Pro-Poor Mitigation Pro- 1. Institutional innovations linking communities to global markets - Establish regional centers for forest carbon trading, soil carbon sequestration, specialized business services and local intermediaries 2. Simplified standards (baseline and monitoring) for small-scale projects - Make eligible for simplified small- modalities; simplified emission reduction credits calculated using standardized reference emission rates 3. 3 Dealing with permanence issue in carbon sequestration – Allow short term contracts, payment for mass- mass-time units of carbon Page 22 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  23. 23. Conclusions
  24. 24. Improve Knowledge for Agriculture and Climate Change Policy Better understanding of spatially- spatially- disaggregated impact of climate change on agriculture and water Inclusion of international trade and economic effects in climate change impact analysis Spatial targeting of types of adaptation and costs and benefits of adaptation Spatial targeting of potential benefits and costs of mitigation Page 24 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  25. 25. Investing in Climate Change for the Poor Preliminary estimates from World Bank: • Annual Official Development Assistance = $100 billion • Foreign direct investment in developing countries = $150 billion • Gross Domestic Investment = $1,500 billion • Incremental annual investment requirements for adaptation to climate risk = $40 billion Potential Annual Cost of Emissions Reductions in Developing Countries = $150-250 billion p g $150- Can be $150-250 billion value stream with $150- appropriate policies Page 25 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
  26. 26. Investing in Climate Change for the Poor Climate change policy can create new value- value- added for pro-poor investment in agriculture pro- Increases profitability of environmentally sustainable practices Employ advanced ICT to streamline measurement and enforcement of offsets offsets, financial flows, and carbon credits for investors Enhance global financial facilities and governance to increase and manage funding flows for both mitigation and adaptation Page 26 INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE