8.7.2 Macroeconomic and sectoral policy
Some macro-economic changes, such as the burden of a high external debt in Latin America, triggered the adoption in the 1970s of policies designed for improving the trade balance, mainly by promoting agricultural exports (Tejo, 2004). This resulted in the changes in land use and management (see Section 8.3.3), which are still causing increases in annual GHG emissions today. In other regions, such as the countries of Eastern Europe, the Caucasus and Central Asia and many Central and East European countries, political changes since 1990 have meant agricultural de-intensification with less inputs, and land abandonment, leading to a decrease in agricultural GHG emissions. In Africa, the cultivated area in Southern Africa has increased by 30% since 1960, while agricultural production has doubled (Scholes and Biggs, 2004). The macroeconomic development framework for Africa (NEPAD, 2005) emphasises agriculture-led development. It is, therefore, anticipated that the cropped area will continue to increase, especially in Central, East, and Southern Africa, perhaps at an accelerating rate. In Western Europe, North America, Asia (China) and Oceania, macroeconomic policy has tended to reduce GHG emissions. The declining emission trend in Western Europe is likely a consequence of successive reforms of the Common Agricultural Policy (CAP) since 1992. The 2003 EU CAP reform is expected to lead to further reductions, mainly through reduction of animal numbers (Binfield et al., 2006). The reduced GHG emissions could be offset by activity elsewhere. Various macro-economic policies that potentially affect agricultural GHG emissions in each major world region are presented in Table 8.10.
Table 8.10: Summary of various macro-economic policies that potentially affect agricultural GHG emissions, listing policies for each major world region and the potential impact on the emissions of each GHG
| Region | Macro-economic policies potentially affecting agricultural GHG emissions | Impact on CO2 emissions | Impact on N2O emissions | Impact on CH4 emissions |
|---|
| North America | • Energy conservation and energy security policies – promote bio-energy – increase fossil fuel offsets and possibly SOC (USA) | + | | |
| | • Energy price adjustments - encourage agricultural mitigation - more reduced tillage – increase SOC (USA) | + | ? | |
| | • Removal of the Grain Transportation Subsidy shifted production from annual to perennial crops and livestock (Canada) | + | + | + |
| Latin America | • Policies since 1970s to promote agricultural products exports (Tejo, 2004) resulting in land management change –increasing GHG emissions (Latin America) | - | - | - |
| | • Promotion of biofuels (e.g., PROALCOOL (Brazil) | + | | |
| | • Brazil and Argentina implemented policies to make compulsory 5% biodiesel in all diesel fuels consumed (Brazil & Argentina) | + | | |
| Europe, the Caucasus and Central Asia | • Common Agricultural Policy (CAP) 2003 - Single Farm Payment decoupled from production - replaces most of the previous area-based payments. Income support conditional to statutory environmental management requirements (e.g., legislation on nitrates) and the obligation to maintain land under permanent pasture (cross-compliance). | + | + | |
| | • Political changes in Eastern Europe - closure of many intensive pig units - reduced GHG emissions (EU and wider Europe) | + | + | + |
| | • Macro-economic changes in the countries of Eastern Europe, the Caucasus and Central Asia: | | | |
| | a) Abandonment of croplands since 1990 (1.5 Mha); grasslands and regenerating forests sequestering carbon in soils and woody biomass (all countries of Eastern Europe, the Caucasus and Central Asia:) | + | + | |
| | b) Use of agricultural machinery declined and fossil fuel use per ha of cropland (Romanenkov et al., 2004) - decreased CO2 (fossil fuel) increased CO2 (straw burning – all countries of Eastern Europe, the Caucasus and Central Asia) | | + | |
| | c) Fertilizer consumption has dropped; 1999 N2O emissions from agriculture 19.5% of 1990 level (Russia & Belarus). | + | | |
| | d) CO2 emissions from liming have dropped to 8% of 1990 levels (Russia) | | | + |
| | e) Livestock CH4 emissions in 1999 were less than 48% of the 1990 level (Russia) | + | | |
| | f) The use of bare fallowing has declined (88% of the area in bare fallow in 1999 compared to 1990; Agriculture of Russia, 2004) (Russia) | + | | |
| | g) Changes in rotational structure (more perennial grasses) (Russia) | | | |
| Africa | • The cultivated area in Southern Africa has increased 30% since 1960, while agricultural production has doubled - agriculture-led development (Scholes and Biggs 2004; NEPAD 2005).Cropped area will continue to increase, especially in Central, East and Southern Africa, perhaps at an accelerating rate. | - | - | - |
| Asia | • In some areas, croplands are currently in set-aside for economic reasons (China) | + | + | |
| Oceania | • Australia and New Zealand continue to provide little direct subsidy to agriculture - highly efficient industries that minimize unnecessary inputs and reduce waste - potential for high losses (such as N2O) is reduced. Continuing tightening of terms of trade for farm enterprises, as well as ongoing relaxation of requirements for agricultural imports, is likely to maintain this focus (Australia and New Zealand) | | + | |
| | • The establishment of comprehensive water markets are expected, over time, to result in reductions in the size of industries such as rice and irrigated dairy with consequent reductions in the emissions from these sectors (Australia) | | + | + |
WTO negotiations, to the extent they move toward free trade, would permit countries to better adjust to climate change and the dislocations in production caused by mitigation activities, by adjusting their import/export mix. International trade agreements such as WTO may also have impacts on the amount and geographical distribution of GHG emissions. If agricultural subsidies are reduced and markets become more open, a shift in production from developed to developing countries would be expected, with the consequent displacement of GHG emissions to the latter. Since agricultural practices and GHG emissions per unit product differ between countries, such displacement may also cause changes in total emissions from agriculture. In addition, the increase in international flow of agricultural products which may result from trade liberalization could cause higher GHG emissions from the use of transport fuels.