including agriculture in climate change policies

Including Agriculture in Including Agriculture in Cli t Ch P li iCli t Ch P li iClimate Change Policies Climate Change Policies

Mark W RosegrantMark W RosegrantMark W. RosegrantMark W. RosegrantDirectorDirector

Environment and Production Technology DivisionEnvironment and Production Technology Division

Presentation given to the “Agriculture, Development, and the Poor: Challenges, Stakes, Presentation given to the “Agriculture, Development, and the Poor: Challenges, Stakes, Opportunities”, Brussels, Belgium, May 14, 2008Opportunities”, Brussels, Belgium, May 14, 2008

OutlineOutline

Climate Change and Variability Impacts Climate Change and Variability Impacts on Agriculture and the Pooron Agriculture and the Pooron Agriculture and the Pooron Agriculture and the Poor

Adaptation StrategiesAdaptation Strategies

ProPro--poor Mitigation: Constraints and poor Mitigation: Constraints and OpportunitiesOpportunitiesOpportunitiesOpportunities

Conclusions: Investing in Climate Conclusions: Investing in Climate Ch P li f th PCh P li f th PChange Policy for the PoorChange Policy for the Poor

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

Cli t Ch dCli t Ch dClimate Change and Climate Change and Variability ImpactsVariability Impacts

Impacts and Vulnerability to Impacts and Vulnerability to Climate Change & VariabilityClimate Change & Variability

Rich countries emit majority of GHG Rich countries emit majority of GHG P t i l blP t i l blPoor countries are more vulnerablePoor countries are more vulnerable•• Geography (hotter, less rain, more variation)Geography (hotter, less rain, more variation)

G t d d i lt d t lG t d d i lt d t l•• Greater dependence on agriculture and natural Greater dependence on agriculture and natural resourcesresources

•• Limited infrastructure and lowLimited infrastructure and low--input agricultureinput agricultureLimited infrastructure and lowLimited infrastructure and low input agricultureinput agriculture•• Low income, poverty and malnutritionLow income, poverty and malnutrition•• Thus, lower adaptive capacity (also including Thus, lower adaptive capacity (also including , p p y ( g, p p y ( g

inadequate complementary services, like health inadequate complementary services, like health and education)and education)


Impact on agricultural productivity with Impact on agricultural productivity with carbon fertilization (%) carbon fertilization (%) ( )( )

n.an.a. . –– not applicable for Alaska, Northern Canada and Antarcticanot applicable for Alaska, Northern Canada and Antarctica


Source: Cline 2007Source: Cline 2007

Percentage change in Percentage change in Wheat yield Wheat yield due to climate due to climate change with hydrologic effects, 2050change with hydrologic effects, 2050

Source: IFPRI IMPACT simulationsSource: IFPRI IMPACT simulations forfor HadCM3/SRESB2 scenario (with HadCM3/SRESB2 scenario (with


Sou ce C s u at o sSou ce C s u at o s oo adC 3/S S sce a o ( tadC 3/S S sce a o ( tIMAGE temperature and CO2 fertilization effects), April 2008IMAGE temperature and CO2 fertilization effects), April 2008

Global Global Wheat Wheat Price: Without biofuel demand, Price: Without biofuel demand, w/o climate change and w/o water scarcityw/o climate change and w/o water scarcity

Source: IFPRI IMPACT simulationsSource: IFPRI IMPACT simulations forfor HadCM3/SRESB2 scenario (withHadCM3/SRESB2 scenario (with


Source: IFPRI IMPACT simulationsSource: IFPRI IMPACT simulations forfor HadCM3/SRESB2 scenario (with HadCM3/SRESB2 scenario (with IMAGE temperature and CO2 fertilization effects), April 2008IMAGE temperature and CO2 fertilization effects), April 2008

Adaptation StrategiesAdaptation Strategies

Climate Change Adaptation Climate Change Adaptation

“Many adaptations can be implemented at “Many adaptations can be implemented at low cost, but comprehensive estimates of low cost, but comprehensive estimates of adaptation costs and benefits are currently adaptation costs and benefits are currently p yp ylacking…. “ (IPCC 2007) lacking…. “ (IPCC 2007)


Types Types of Adaptationof Adaptation

Autonomous or spontaneous adaptationsAutonomous or spontaneous adaptations•• Reactive response (after initial impacts are manifest)Reactive response (after initial impacts are manifest)Reactive response (after initial impacts are manifest) Reactive response (after initial impacts are manifest)

to climatic stimuli without the directed intervention of to climatic stimuli without the directed intervention of a public agency a public agency

Initiatives by private actors rather than governmentsInitiatives by private actors rather than governments•• Initiatives by private actors rather than governments, Initiatives by private actors rather than governments, triggered by market or welfare changes induced by triggered by market or welfare changes induced by actual or anticipated climate changeactual or anticipated climate change

PolicyPolicy--driven or planned adaptation driven or planned adaptation •• Proactive responseProactive response

R l f d lib li d i i h fR l f d lib li d i i h f•• Result of deliberate policy decision on the part of a Result of deliberate policy decision on the part of a public agenciespublic agencies


Adaptation Responses and IssuesAdaptation Responses and Issues

Type of Type of responseresponse AutonomousAutonomous PolicyPolicy--drivendriven

ImprovedImproved

Short runShort run

Crop choice, crop Crop choice, crop area, planting datesarea, planting datesRiskRisk--poolingpooling

Improved Improved forecastingforecastingResearch on climate Research on climate riskriskRiskRisk pooling pooling

insuranceinsuranceriskriskRiskRisk--pooling pooling insuranceinsuranceLargeLarge--scale publicscale public

Long runLong runPrivate investment Private investment (on(on--farm irrigation)farm irrigation)Private crop researchPrivate crop research

LargeLarge--scale public scale public investment (water investment (water storage, roads)storage, roads)Public crop researchPublic crop researchPublic crop researchPublic crop research

IssuesIssues

Adaptive capacity of Adaptive capacity of poorpoorSocial safety netsSocial safety nets

Uncertain returns to Uncertain returns to investmentinvestment


IssuesIssues Social safety netsSocial safety netsTradeoffs with Tradeoffs with mitigationmitigation

investmentinvestmentTargetingTargeting

Much Adaptation is Extension of Much Adaptation is Extension of Good Development PolicyGood Development Policy

Promoting growth and diversificationPromoting growth and diversificationInvesting in research and developmentInvesting in research and developmentInvesting in research and development, Investing in research and development, education and healtheducation and healthCreating markets in water andCreating markets in water andCreating markets in water and Creating markets in water and environmental servicesenvironmental servicesImproving international trade systemImproving international trade systemImproving international trade systemImproving international trade systemEnhancing resilience to disasters and Enhancing resilience to disasters and improving disaster managementimproving disaster managementp g gp g gPromoting riskPromoting risk--sharing, including social sharing, including social safety nets, weather insurancesafety nets, weather insurance


y ,y ,

Effective Adaptation StrategiesEffective Adaptation Strategies

Requires Requires targeted adaptation within a policy context targeted adaptation within a policy context and and strategic development frameworkstrategic development framework

Must go beyond good development policy to explicitly Must go beyond good development policy to explicitly target the impacts of climate change, particularly on the target the impacts of climate change, particularly on the poorpoorpoorpoor

Market signals Market signals •• essential factor in determining the responses to aessential factor in determining the responses to aessential factor in determining the responses to a essential factor in determining the responses to a

changing environmentchanging environment

•• but but involves potentially expensive time lags and overlooks involves potentially expensive time lags and overlooks equityequity

Climate change adaptation must therefore be proactive, Climate change adaptation must therefore be proactive, not merely reactivenot merely reactive


not merely reactivenot merely reactive

ProPro--Poor Mitigation: Poor Mitigation: Constraints and OpportunitiesConstraints and Opportunities

Critical Step: PostCritical Step: Post--Kyoto International Climate Kyoto International Climate Change ArchitectureChange Architecture

Emissions targets, rates of convergence, and Emissions targets, rates of convergence, and rates of growth in developingrates of growth in developing--country emissionscountry emissionsg p gg p g yyLevel of emission allowances for developing Level of emission allowances for developing countriescountriesLevel of caps by sector and industryLevel of caps by sector and industryLevel of caps by sector and industryLevel of caps by sector and industrySectorSector--specific mitigation optionsspecific mitigation optionsIncentives for international carbon tradeIncentives for international carbon tradeTransparency and complexity of administrationTransparency and complexity of administrationFinancing of adaptation and mitigationFinancing of adaptation and mitigation

All influence economic growth, agriculture, food All influence economic growth, agriculture, food security, and poverty in developing countriessecurity, and poverty in developing countries


Sources of GHG EmissionsSources of GHG Emissions

70Developed Countries Developing Countries

50

60

emis

sion

s 60%

20

30

40

al o

f GH

G e

18%

0

10

20

% to

ta 14%

4% 4%

Energy Deforestation Agriculture(excluding land

use change)

Industrialprocesses

Waste


Sources: World Resources Institute 2007; World Development Sources: World Resources Institute 2007; World Development Report 2008Report 2008

ProPro--Poor Climate Mitigation PolicyPoor Climate Mitigation Policy

Climate change policy can generate Climate change policy can generate income for small farmers and investmentincome for small farmers and investmentincome for small farmers and investment income for small farmers and investment flows for rural communitiesflows for rural communities

Requires effective integration Requires effective integration from global governance of carbon trading,from global governance of carbon trading,to sectoral and microto sectoral and micro--level design of level design of markets and contracts andmarkets and contracts andmarkets and contracts, andmarkets and contracts, andinvestment in community managementinvestment in community management


Estimated Potential Emission Savings Estimated Potential Emission Savings and Costs by Sector and Costs by Sector

SectorSector 2050 Annual 2050 Annual Emissions Emissions

SavingsSavings (GtCO(GtCO22))

Average Annual Average Annual Cost($/tCOCost($/tCO22))~2025~2025 20502050SavingsSavings (GtCO(GtCO22)) ~2025~2025--20502050

Deforestation Deforestation 3.53.5--5.05.0 22--44Afforestation and ReforestationAfforestation and Reforestation 1.01.0--2.02.0 55--1515

Land management practicesLand management practices 1.01.0--2.02.0 2020--2727Agriculture (methane & nitrous Agriculture (methane & nitrous oxide)oxide)

1.01.0 2727))

BioenergyBioenergy 2.02.0--3.03.0 2525

Waste and fugitive emissions,Waste and fugitive emissions, 4.14.1 33--55industrial processesindustrial processesFossil fuel related, excludingFossil fuel related, excludingbioenergybioenergy

40.040.0 2222--3333


Source: Adapted from various estimates, Stern Review, pp. 244Source: Adapted from various estimates, Stern Review, pp. 244--6363

But minimal carbon trades in agriculture But minimal carbon trades in agriculture in developing countriesin developing countries

Only 3Only 3--4% of carbon trading is sourced 4% of carbon trading is sourced yy % g% gfrom agriculture, land use, land use from agriculture, land use, land use change, agroforestry and forestrychange, agroforestry and forestrychange, agroforestry and forestrychange, agroforestry and forestry

Only 3% of carbon trading is sourced Only 3% of carbon trading is sourced from Africafrom Africa


Constraints to ProConstraints to Pro--Poor MitigationPoor Mitigation

1.1. High transaction costs of Clean Development High transaction costs of Clean Development Mechanism (CDM) Conditions for Offset Projects Mechanism (CDM) Conditions for Offset Projects ( ) j( ) jin Developing Countries in Developing Countries

•• Additionality, measurability, permanence, leakage Additionality, measurability, permanence, leakage prevention, social benefits, environmental benefitsprevention, social benefits, environmental benefits

•• Information about carbon benefits to potential Information about carbon benefits to potential b bt i i i f ti b t j t tb bt i i i f ti b t j t tbuyers, obtaining information about project partners, buyers, obtaining information about project partners, organizing project participants, capacity building and organizing project participants, capacity building and ensuring parties fulfill their obligationsensuring parties fulfill their obligations

•• Transaction costs per unit of emission reduction are Transaction costs per unit of emission reduction are higher for projects involving many smallholders and higher for projects involving many smallholders and f t itif t iti


forest communitiesforest communities

Constraints to ProConstraints to Pro--Poor MitigationPoor Mitigation

2.2. Carbon sequestration from soil carbon and Carbon sequestration from soil carbon and id d d f t tiid d d f t ti i t t fi t t favoided deforestationavoided deforestation――important areas for important areas for

climate mitigation and for poor developing climate mitigation and for poor developing t it i l d d f CDMl d d f CDMcountriescountries––––are excluded from CDMare excluded from CDM

3.3. CDMCDM--eligible assets from afforestation and eligible assets from afforestation and ggreforestation are excluded from European reforestation are excluded from European UnionUnion--Emissions Trading Scheme Emissions Trading Scheme gg


Expanding ProExpanding Pro--Poor Mitigation Poor Mitigation

1.1. Institutional innovations linking communities to Institutional innovations linking communities to global markets global markets -- Establish regional centers for forest Establish regional centers for forest carbon trading, soil carbon sequestration, specialized carbon trading, soil carbon sequestration, specialized business services and local intermediariesbusiness services and local intermediaries

2.2. Simplified standards (baseline and monitoring) Simplified standards (baseline and monitoring) for smallfor small--scale projects scale projects -- Make eligible for simplified Make eligible for simplified modalities; simplified emission reduction credits calculatedmodalities; simplified emission reduction credits calculatedmodalities; simplified emission reduction credits calculated modalities; simplified emission reduction credits calculated using standardized reference emission rates using standardized reference emission rates

33 Dealing with permanence issue in carbonDealing with permanence issue in carbon3.3. Dealing with permanence issue in carbon Dealing with permanence issue in carbon sequestration sequestration –– Allow short term contracts, payment for Allow short term contracts, payment for massmass--time units of carbontime units of carbon


ConclusionsConclusions

Improve Knowledge for Agriculture and Improve Knowledge for Agriculture and Climate Change Policy Climate Change Policy

Better understanding of spatiallyBetter understanding of spatially--disaggregated impact of climate change ondisaggregated impact of climate change ondisaggregated impact of climate change on disaggregated impact of climate change on agriculture and wateragriculture and water

Inclusion of international trade and economicInclusion of international trade and economicInclusion of international trade and economic Inclusion of international trade and economic effects in climate change impact analysiseffects in climate change impact analysis

Spatial targeting of types of adaptation andSpatial targeting of types of adaptation andSpatial targeting of types of adaptation and Spatial targeting of types of adaptation and costs and benefits of adaptation costs and benefits of adaptation

Spatial targeting of potential benefits and costsSpatial targeting of potential benefits and costsSpatial targeting of potential benefits and costs Spatial targeting of potential benefits and costs of mitigationof mitigation


Investing in Climate Change for the Poor Investing in Climate Change for the Poor

Preliminary estimates from World Bank: Preliminary estimates from World Bank: •• Annual Official Development Assistance = $100 billionAnnual Official Development Assistance = $100 billion•• Annual Official Development Assistance = $100 billionAnnual Official Development Assistance = $100 billion•• Foreign direct investment in developing countries = Foreign direct investment in developing countries =

$150 billion$150 billion•• Gross Domestic Investment = $1,500 billion Gross Domestic Investment = $1,500 billion •• Incremental annual investment requirements for Incremental annual investment requirements for

adaptation to climate risk = $40 billionadaptation to climate risk = $40 billionadaptation to climate risk = $40 billionadaptation to climate risk = $40 billion

Potential Annual Cost of Emissions Reductions Potential Annual Cost of Emissions Reductions in Developing Countries = $150in Developing Countries = $150--250 billion250 billionp gp gCan be $150Can be $150--250 billion 250 billion valuevalue stream with stream with appropriate policiesappropriate policies


Investing in Climate Change for the Poor Investing in Climate Change for the Poor

Climate change policy can create new valueClimate change policy can create new value--added for proadded for pro--poor investment in agriculturepoor investment in agricultureadded for proadded for pro--poor investment in agriculturepoor investment in agriculture

Increases profitability of environmentally Increases profitability of environmentally sustainable practicessustainable practicessustainable practicessustainable practices

Employ advanced ICT to streamline Employ advanced ICT to streamline measurement and enforcement of offsetsmeasurement and enforcement of offsetsmeasurement and enforcement of offsets, measurement and enforcement of offsets, financial flows, and carbon credits for investors financial flows, and carbon credits for investors

Enhance global financial facilities andEnhance global financial facilities andEnhance global financial facilities and Enhance global financial facilities and governance to increase and manage funding governance to increase and manage funding flows for both mitigation and adaptationflows for both mitigation and adaptation


flows for both mitigation and adaptationflows for both mitigation and adaptation

including agriculture in climate change policies

Technology

impacts of climate change

wo climate change

outlineclimate change

percentage change

food security

developing countries

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