Working Paper: NBER ID: w27202
Authors: David Laborde; Abdullah Mamun; Will Martin; Valeria Pieiro; Rob Vos
Abstract: To understand the impacts of support programs on global emissions, this paper considers the impacts of domestic subsidies, price distortions at the border, and investments in emission-reducing technologies on global greenhouse gas (GHG) emissions from agriculture. In a step towards a full evaluation of the impacts, it uses a counterfactual global model scenario showing how much emissions from agricultural production would change if agricultural support were abolished worldwide. The analysis indicates that, without subsidies paid directly to farmers, output of some emission-intensive activities and agricultural emissions would be smaller. Without agricultural trade protection, however, emissions would be higher. This is partly because protection reduces global demand more than it increases global agricultural supply, and partly because some countries that currently tax agriculture have high emission intensities. Policies that directly reduce emission intensities yield much larger reductions in emissions than those that reduce emission intensities by increasing overall productivity because overall productivity growth creates a rebound effect by reducing product prices and expanding output. A key challenge is designing policy reforms that effectively reduce emissions without jeopardizing other key goals such as improving nutrition and reducing poverty. This analysis is an important building block towards a full understanding the impacts of reforms to agricultural support on mitigation of greenhouse gas emissions and adaptation to climate change. That full analysis is being undertaken in current work incorporating land use changes and examining the impacts of specific reforms on mitigation, resilience and economic outcomes.
Keywords: Agricultural Support Policies; Greenhouse Gas Emissions; Climate Change; Food Security
JEL Codes: F1; F13; F18; O13; O24; O44; Q01; Q17; Q18; Q2; Q28; Q5; Q55; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Abolishing subsidies paid directly to farmers (Q18) | Decrease in output of emission-intensive activities (Q52) |
| Decrease in output of emission-intensive activities (Q52) | Reduce agricultural emissions (Q16) |
| Without agricultural trade protection (Q17) | Emissions could increase (Q54) |
| Reduction in global demand exceeds the increase in global agricultural supply (Q11) | Emissions could increase (Q54) |
| Policies aimed at directly reducing emission intensities (Q58) | More effective than those that merely increase productivity (O49) |
| Increasing productivity (O49) | Induce a rebound effect, increasing output and emissions (Q43) |
| Higher support rates (H29) | Attract resources into agriculture, increasing output and emissions (O13) |
| Differences in types of support and their rates across commodities (Q02) | Significantly influence emission outcomes (Q52) |
| Removal of coupled subsidies (H23) | Could lead to a reduction of approximately 34 million tons of CO2 equivalent emissions (Q54) |
| Countries providing substantial subsidies (like China and the EU) (F14) | Would see the most significant reductions in emissions (F64) |
| Countries with low subsidies (such as Australia) (O57) | Might experience an increase in emissions due to higher world prices and increased output (F69) |