Emerging solutions

The who, why and how of acting on agricultural emissions

Suzi KerrMotu Economic and Public Policy ResearchAugust 2012

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Who acts?GovernmentNon-government

Why act? environment, efficiency, equity, perception, co-benefits

What can we do?Land use change, output reduction, emissions per unit

outputSolutions: how can we facilitate action?

Concern, trust, agencyCapability, technology, abilityRegulation, incentives, actions

TimingEvolution of cooperation and acceptanceGradual diffusion of technology and ideas

Who acts?National

Central government IwiIndustry (Fonterra, Fed farmers, Beef+Lamb, MIA, Ballance...)Banks UniversitiesCRIs NGOs

Regional Local government Universities ITOsFed farmers Rural womenIwi Banks

CommunityFed Farmers Rural Women Cultural groupsIwi Schools Sports clubsUrban communities? Local firms

Individuals Farmers – Companies, corporations, and individualsManagersWorkersOwners

Why act?1. Global climate effects: environment

Mitigate sustainablyLearning about policy and mitigationBuild integrity and trust

2. Country has target – mitigation allows the country as a whole to meet it at lower cost: efficiency

3. Country has target – if there is no policy, costs will fall on tax payers: equity

4. NZ wants to demonstrate its efforts to be clean-green: perception

5. Country has target and by mitigating we can also address water quality issues: co-benefits

Things to watch forIf NZ wants to provide leadership on Ag

emissions we must show that we can mitigate while avoiding adverse consequences

• Food security• Farmers and rural communities• Agricultural sector – NZ economy• Tax payers• Leakage

What can we do?• Change land use

• Forestry / Natives • Other food crops

• Reduce production intensity

• Reduce emissions per unit of output

Land use change

Net emissions fall from land use change~4% over 20 years from AgETS

Gg

CO

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Land use change• There is likely to be some land use

change

• It is mostly driven by changes in forest/native returns

• It is very slow

• There could also be change to other crops: e.g. oats, hazelnuts…

Reduce Production Intensity

• Modeling is unclear

• Probable distortion toward intensity as a result of not having a capital gains tax

Farmer uptake of existing mitigation optionsExisting options:

• Methane: Farm management– Productivity improvements– Manure management – plug-flow digesters and covered anaerobic

lagoons

• Nitrous oxide: also soil management– Nitrogen inhibitors: DCDs – significant relatively certain impact on

N2O; Urease inhibitors– Reduced fertiliser use– Effluent management– Grazing off poorly drained soils in winter (need to be careful to

account for animals elsewhere).– Feed pads

Dairy: range of MS per tonne emissions

0 20 40 60 80 100 120 140 1600

10

20

30

40

50

60

70

80

90

100

GHG production efficiency (kg MS / T co2-eq)

Num

ber o

f far

ms

Adjusted distribution – for physical heterogeneity among farms

-60 -40 -20 0 20 40 600

10

20

30

40

50

60

70

80

90

100

Fitted( residuals)

GHG efficiency managed by farmers (residuals) (kg MS / T co2-eq)

Num

ber o

f far

ms

2.4% reduction in emissions – small shift in distribution

-60 -40 -20 0 20 40 60 800

20

40

60

80

100

120

140

160

180

Fitted Improved efficiency

Production efficiency (residuals) (kg MS / T co2-eq)

Num

ber o

f far

ms

2.4% reduction in emissions – small shift in distribution

0 20 40 60 80 100 120 140 1600

20

40

60

80

100

Observed Improved efficiency

GHG production efficiency (kg MS / T co2-eq)

Num

ber o

f far

ms

How can we act? 3 Cs1. Concern

changing attitudes and encouraging action 2. Capability

Knowledge, access to resources3. Contracting

legal agreements or regulation

Focusing really on government action

3 Ts

Concern Capability Contracting

Trust Technical support Transparency

These are critical for building cooperation.Probably done best at a community level

3 As

Concern Capability Contracting

Trust Technical support Transparency

Agency Abilities Action

Can be done working with individuals

Matrix of actionsAction

GroupConcernTrustAgency

CapabilityAbilities

RegulationTransparencyAction

National

Regional

Community

Individual

Future proofing farming- Graduated standards (eg gold standard)- Best practice- All environmental values + profit- Science based- Outcome based

Farmer accreditation

Extension-Community support-Expert input

Important groupsIncl Maori, formal training, local government (incl regulation), banking

Branding / appellation

Promotion

PublicInter-national

Local

Managing standards to develop, improve over time Financing of development and implementation

Future Proofing NZ Farming

AgDialogue prototypes

1. Simplified Gold Standard2. Farmers working together locally & improved OVERSEER3. 100% Pure Food brand4. Alternative financing mechanisms5. Proactive banking6. Sustainable Cooking TV competition7. Kiwi farming game8. Infusing the syllabus (“farming academy”)9. Kapa Haka competition

Key points

1. Many actors can take leadership on agricultural emissions

2. Objectives should drive action

3. A complex problem requires many different strategies for solution

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Time frames– International agreements and action will evolve– Domestic cooperation builds over time– New technologies will emerge– Existing technologies will gradually disseminate– Current actions will depend on current concern,

capability and incentives but also expectations of future incentives/regulation

Solutions need to be responsive to current situation while maintaining and building a long-term strategic vision

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(very) Long term visionInternational

Complete and stable (sufficiently stringent) international agreement

NZ policies and mitigation practices understood and used where appropriate: integrity and demonstration

Stable regulation in other countriesWithin NZ

Full climate cost imposed on marginal emissionsFair compensation for land value changes – or historical

grievance acceptedCommunities and workers have fully adjustedFarmers are knowledgeableOngoing research and dissemination of ideasOther key environmental resources well managed

This probably involves a farm-scale ETS.

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Short term• Don’t delay but don’t rush• Keep long term in mind• Create and maintain options• Focus on long-term efficiency• Focus on fair process• Experiment and learn• Integrity• High quality information• Broad set of actions on all three

components: concern, capability, contracting

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Short term package of actions‘Future proofing NZ farming’• 9 prototypes as seeds for many more by actors at

all levelsProcessor level ETS considered ineffective and

possibly damaging NZ Units required for N fertiliser sales

• rebate for use of N inhibitorsExplore use of capital gains tax on rural land

• lack of tax causes distortion that may increase emissions• could be used to contribute to NZ cost-bearing out of

future gains rather than past equity• could be used to fund standards, accreditation,

extension and promotion of NZ brand.

www.motu.org.nzwww.climatechange.govt.nz