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Climate change is the world’s greatest environmental challenge, but progress on delivering a proportionate policy response has been slow and inadequate. Climate change has quickly moved from being a future concern to a present and evident crisis. High temperature records are now routinely broken around the world and the growing frequency of catastrophic climatic events has heightened awareness about the urgency to stabilise global temperatures.
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Agriculture is one of the main sectors responsible for climate change. Between 2007 and 2016, the sector directly contributed approximately 12% of global anthropogenic greenhouse gas (GHG) emissions (6.2 ± 1.4 GtCO2eq), and was responsible for an additional 9% of global GHG emissions each year (4.9 ± 2.5 GtCO2eq) from changes in land use, i.e. the conversion of forestland to cropland and grassland.
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The global ambition to reduce greenhouse gas (GHG) emissions in agriculture is currently weak, and the lack of progress will stifle efforts to meet the goals of the Paris Agreement to limit global warming to 1.5°C, or well below 2°C. Although there are policy implementation barriers, policy solutions exist. These include selecting policy options that can navigate trade-offs in economic impacts between different interest groups, and those that can address the practical challenges and transaction costs related to measurement, reporting, and verification of GHG emission reductions.
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The Modular Applied GeNeral Equilibrium Tool (MAGNET) model, a multi-sector, multi-region computable general equilibrium model that covers the global economy, is used to evaluate several market-based mitigation policies to limit GHG emissions in agriculture. The policies analysed differ considerably in terms of the trade-offs they generate between mitigation outcomes and their associated impact on agricultural income, competitiveness, food consumption and government finances. This assessment provides policy makers with quantitative information about different policy design options that could deliver an acceptable blend of trade-offs, given their country-specific objectives and constraints.
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A quantitative bio-economic farm model was developed to assess the cost-effectiveness of key GHG mitigation policy instruments to reduce emissions from crop and livestock production. Six policy instruments are examined and applied to farm cases in the European Union. The results show high abatement costs in mixed dairy and crop production when aiming for large GHG emission reductions and confirm that market-based policy instruments (GHG emission tax, GHG abatement subsidy, and cap-and-trade scheme) are the most cost-effective policy options. The results also show that policy instruments that target all GHG emissions from farms are more cost-effective than those that target only a subset of emissions or proxies of emissions, even when higher transaction costs of those policy instruments targeting all GHG emissions are accounted for.
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This chapter analyses how agriculture could moderate changes to the climate by simulating supply- and demand-side mitigation strategies. Based on the Aglink-Cosimo model as used for the OECD-FAO Agricultural Outlook 2018-2027 baseline, only direct emissions that result from agricultural crop and livestock production activities are taken into consideration.
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