an oecd perspective on using agri-environmental indicators for policy analysis
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OECD. OCDE. ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES. An OECD Perspective on Using Agri-Environmental Indicators for Policy Analysis. ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT. Wilfrid Legg Policies and Environment Division, Agriculture Directorate - PowerPoint PPT PresentationTRANSCRIPT
Directorate for Food, Agriculture, and Fisheries 1
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT
ORGANISATION DE COOPÉRATION ET DE DEVELOPMENT ÉCONOMIQUES
OECD OCDE
An OECD Perspective on Using Agri-Environmental Indicators for
Policy Analysis
Wilfrid LeggPolicies and Environment Division, Agriculture Directorate
INFASA Symposium16 March 2006, Bern, Switzerland
Outline of presentation
• Using indicators for policy analysis
• What the OECD is doing
• Which challenges lie ahead
Using indicators for policy analysis
Background
• Abundant food supplies in OECD countries
• High public concern of farming’s environmental impact
• Governments also want better environmental performance
• Global trade and environment commitments are key drivers
• Markets for environmental goods are absent or function poorly
• Significant support given to the agricultural sector
• Agriculture only contributes 2% of GDP and 6% of employment, but
accounts for 38% of land and 46% of water use
• Agricultural output up 5% since 1990, land down 4%, labour down 10%,
but water use up 3% and energy 6%
Focus of OECD indicator work
• Predominantly measured at national level
• Stress on linking science and policy
• Close co-operation with governments
• Concern to balance indicators that are
“scientifically sound” yet “policy practical”
Policy context
• High levels of support, but decline in share from
output to area-based and targeted policies
• Wide range of commodity and country support
• Heightened public awareness and concern
• Global trade and environment commitments
• Significant environmental regulations
• On-going technical innovation and adoption
Composition of farm support (PSE)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004p
Other paymentsPayments based on input constraintsPayments based on historical entitlementsPayments based on area planted/animal numbersPayments based on input usePayments based on outputMarket price support
0%
20%
40%
60%
80%
100%
Japan Switzerland EU USA
MPS Direct Payments Agri-environmental payments
On average only 4% of support directly goes to the agri-environment
Indicators can help monitor policies…
• Track environmental performance
over time and across countries
(league tables)
• Identify possible environmental risks in
future (red alert)
…model policies…
• Model potential policy impacts on the
environment (ex ante)
• Analyse and evaluate actual policy
impacts on the environment (ex post)
….and rank policies:
• Rank different policy measures
according to their effectiveness in
improving environmental performance
and economic efficiency
• Identify characteristics of good policy
practice (recommendations)
What the OECD is doing
Since 1993 OECD has been developing indicators that are:
• Policy Relevant – across OECD
• Analytically Sound – science based
• Measurable – data availability
• Easy to Interpret - unambiguous
Indicators have focused on:
• Concepts and framework - 1997
• Issues and design - 1999
• Methods and results - 2001
• Results and policy use - 2006
2006 report will cover:
• Agri-environmental indicators for nutrients, pesticides, soil, water, air, biodiversity, farm management
• Developments in other indicator areas
• Country trends:
i. Agricultural sector trends and policy context
ii. Environmental performance of agriculture
iii. Overall agri-environmental assessment
• Using indicators as a policy tool
Past work on qualitative analysis…
• Output linked policy measures have the biggest potential
effects on encouraging production
• Output linked policy measures - encourage intensive production
and use of sensitive land – but maintain some farm systems
and production associated with environmental service provision
• Production controls, cross-compliance and agri-environmental
taxes/payments can diminish the harmful environmental impact
of commodity support
• But improving environmental performance would be less costly
without commodity support measures
But quantitative analysis is underway…
• Modelling agricultural policy changes on production is well-
established, using General Trade Analysis Project model
• Modelling comparative impacts of different policy measures on
production uses OECD’s Policy Evaluation Model
• Modelling impacts of changes in farm production (and
practices) on the environment is at a relatively early stage
• Linking economic and ecological models is a big challenge –
aggregation, choice of environmental indicator, interpretation…
…and OECD is modelling policy and environment linkages
• Farm level modelling approach using Finnish data,
then Swiss, US and then, hopefully, Japan
• Comparative analysis of different agri-environmental
settings and policy measures
• Modelling the effects of policy measures (agri-
environmental and area payments, taxes, buffer
strips…) on the environment (nutrient run off and
biodiversity), farm incomes and government
budgets using the OECD’s Stylized Agri-
environmental Policy Impact Model (SAPIM)
…and results using GTAP show:
• Effects of trade liberalisation scenarios on the environment
in the dairy and arable crops sector using the General Trade
Analysis Project (GTAP) that….
• overall, trade liberalisation generates net environmental
benefits because the reduction in environmental pressure in
countries where production falls is greater than the increase
in countries where production rises, but…..
• to maximise benefits, trade liberalisation needs to be
accompanied by targeted environmental measures to deal
with externalities and public goods
…but too early to show SAPIM results
• Results of the Finnish (crop) model are being finalised
• Work is starting on the Swiss (dairy) model
• Discussions are underway on the US (crop?) model
• Synthesis of results and policy implications due in 07-08
Which challenges lie ahead?
OECD indicator priorities
• Focus on developing indicators that are policy relevant to
most countries, but analytically weak and data not yet
comparable across OECD countries, in the areas of soil,
water and biodiversity
• Update “established” indicators from time to time in
conjunction with OECD’s Environmental Compendium
• Advance work on using OECD indicators in the SAPIM
policy model
Policy questions needing answers
• Is agri-environmental performance getting better or worse?
• What are the environmental effects of agricultural policies?
• Is trade liberalization good or bad for the environment?
• Can markets work to improve the environment?
• When should farmers pay for pollution and be paid for
environmental goods and services provided?
• Which policy measures are most cost-effective at improving
the environment with least distortion to production and trade?
Questions on indicator development
• How comparable should indicators be for policy modelling, or
to track trends across countries?
• What scale (level of aggregation) is appropriate for policy
analysis?
• How many indicators are needed to properly assess
environmental performance – and how should they each be
weighted in the absence of money values?
• How much measurement is needed to design and implement
effective policies?
Finally……..
“Not everything that can be counted counts, and not everything that counts can be counted” – Einstein
“In the absence of facts, anyone’s opinion is a good one. And the biggest opinion usually wins!”
“You cannot manage what you cannot measure”