Research on the application of alternative voluntary and marketbased instruments in relation to food and farming

The OECD has considerable experience in expounding on the properties of market-based instruments for environmental management. The same approaches are potentially applicable to adaptation and mitigation but specific complexities in agriculture hinder their easy application. In the context of emissions reduction the issue is what can be achieved by voluntary approaches, or when it may be necessary to move beyond these and focus on an effective mix of cap and trade and project-based trading. When it comes to these approaches the issue lies in how to minimise transactions costs and the potential to regulate emissions liabilities elsewhere in the food chain (the so-called point of obligation), which may not be within the farm-gate.

Meanwhile, adaptation measures are likely to require co-operation between farms to safeguard other public goods. Co-operation can be notoriously problematic for observable farm activities, so this issue will need to be addressed with appropriate incentives.

A further issue to note is that the primary focus of discussions to date has been on the reduction of production emissions rather than the development of demand-side measures. Demand-side measures could include, for example, methods to "edit" consumer demand for livestock products. There is an emerging opinion that climate change will require a more concerted effort to affect supply- and demand-side behaviours, although little is currently known about the cost-effectiveness of demand-side mitigation measures.

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