The economics of mitigation

Agricultural GHG emissions are a production externality, and there is currently no national or global architecture that provides an incentive for the sector to modify behaviours and internalise global damage costs. That is, emissions from the sector are largely regulated on a voluntary basis and are not included in any trading regime. This market failure can potentially be addressed by a range of voluntary and market-based instruments that are applicable in other sectors. But, as in other sectors, the choice of mitigation measures raises interesting issues of effectiveness (of the range of measures), their efficiency and, because of the global split, equity.

In this chapter we consider progress on mitigation from the viewpoint of effectiveness and efficiency and, specifically, assessing cost-effectiveness of abatement measures in a country's agricultural sector. The welfare and equity debates are largely outside the remit of this report, though it is worth noting in passing that many of the most cost-effective interventions may be in non-OECD countries. Further, the issues dealt with here will largely be confined to the measurement of production emissions rather than those associated with the consumption of agricultural produce (for the significance of this distinction, see Druckman et al., 2008). These emissions will be those within the farm-gate rather than a more holistic evaluation of whole life-cycle emissions in agriculture. However, it should be noted that some of the mitigation measures that are emerging in the literature do need to be considered in a life-cycle context for a full assessment of their effectiveness.

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