Organisation for Economic Cooperation & Development Round Table 3: Green Growth and Climate Change Hsin Huang Trade and Agriculture Directorate EastAgri Annual Meetings 2010 Istanbul, October 2010

OECD Trade & Agriculture Directorate 2 BACKGROUND: CLIMATE CHANGE AND AGRICULTURE

OECD Trade & Agriculture Directorate 3 What if we do nothing ? Developing country share total emissions increasing

OECD Trade & Agriculture Directorate 4 Agriculture is important because…. accounts for about 1/3 of GHG emissions globally can be a significant carbon “sink” by building up soil- organic matter is a major user of rural land and water resources and linked to forestry via land use food is a necessity (food security concerns) and many of the world’s poor are farmers (development goals)

OECD Trade & Agriculture Directorate 5 Agriculture is unique because … Climate change has significant but diverse impacts on farming: location, location, location Adaptation is uncertain and economic appraisal difficult Mitigation, a range of actions technically possible and economically feasible Food security goals Policies to encourage a “low carbon” agriculture may impede the goal of producing more food in the short run, BUT Is the real problem the ability to obtain food or the availability of food – and is this a short or long term issue?

OECD Trade & Agriculture Directorate 6 Challenges Provide enough food given pressure on natural resources Encourage farm management practices that reduce GHGs, sequester carbon, adapt to climate change – and provide environmental co-benefits Take into account externalities through policy incentives to move agriculture and food consumption to a “low carbon” path and contribute to “green growth”

OECD Trade & Agriculture Directorate 7 Policy approaches Climate Change Mitigation: policies to incentivise farmers to reduce agriculture’s emissions of greenhouse gases and enhance carbon capture (sequestration) Adaptation: policies to incentivise farmers to manage adaptation to climate change Green Growth a holistic approach that includes climate change and more general sustainability criteria … ecosystem degradation, pollution and nutrient run-off, water availability, etc.

OECD Trade & Agriculture Directorate 8 Green Growth Policies Policies to incentivise the agricultural sector to provide enough food and generate environmental co-benefits (including reduction of greenhouse gases) –Address market failures (impacts that are not priced in the market, e.g. CO2, pollution) –Reform/remove environmentally harmful subsidies (e.g. fossil fuel) –Target policies to achieve environmental objectives more effectively (biofuels costs $ ton CO2 avoided) –Facilitate green technologies, innovation, information dissemination

OECD Trade & Agriculture Directorate 9 Green GROWTH? Panacea to address financial crisis? –The need to provide sufficient government stimulus to boost weak demand (“shovel ready projects”) –More jobs, more growth, less carbon Cure worse than disease –Increase costs on weak economy –Will not increase employment, give up some growth Both are right and both are wrong

OECD Trade & Agriculture Directorate 10 Green Growth and Innovation Possible GDP growth pathways Green growth Baseline Years growthgrowth

OECD Trade & Agriculture Directorate 11 Green Growth and subsidies Agriculture (in OECD) is highly subsidized –Support to farmers in % of gross farm receipts (265 B usd) –Varies widely by country (Nor, Jpn, Kor vs Aus and Nzl) –However only a fraction (~25%) is actually retained by farmers (higher input costs, land/production quotas) Subsidies and green growth –Production linked support dominates (more than ¾) –Higher production may lead to higher input use with environmental effects (water, soil, biodiv, ghg) –e.g. Nitrogen efficiency about 55% (30-80) in OECD … wastefully applied overwhelming the nitrogen cycle

OECD Trade & Agriculture Directorate 12 What is the role of government? Ensure a policy environment that sends clear signals that align the goals of individual farmers and society Build capacity to better understand and measure agriculture’s contribution to sustainable development Implement or reform existing policies and insurance systems to facilitate adaptation by increasing producer resilience to climate change while compensating those most vulnerable Facilitate research to better inform, design and implement policy – at the domestic and global levels …

OECD Trade & Agriculture Directorate 13 Which policies? Producers and consumers need to face the right incentives –Carbon price, explicitly or implicitly (taxes, cap-and- trade…) –Policy reform: decoupling of agricultural support from production, removal of fuel tax subsidies, etc. –Targeted payments for public goods (e.g. biodiversity, carbon sequestration) –Regulations for public bads (e.g. pollution, nutrient run- off) –R&D/Innovation, advice and information, training to provide farmers with options

OECD Trade & Agriculture Directorate 14 What do farmers need to do? Specific to production systems, climate/location – individual farmers know best the economic trade- offs given the right policy environment –Adapt to (inevitable) climate change impacts –Reduce GHG emissions per unit of production, whist respecting environment ”sustainable intensification” –Increase carbon sequestration –Maximise synergies with other environmental outcomes (biodiversity, water quality, soil erosion…)

OECD Trade & Agriculture Directorate 15 Main messages Ensuring a highly efficient, productive and resilient agriculture is the key to our future, response to climate change should be part of an overall effort to achieve environmental sustainability Environmental pressures need immediate attention, “sustainable intensification” -addressing climate change is an investment in the future The costs and benefits of alternative future scenarios have not been sufficiently analysed Uncertainty about the impact of climate change is a reason to act

OECD Trade & Agriculture Directorate 16 “Le mieux est l’ennemi du bien” Voltaire (1764)

OECD Trade & Agriculture Directorate 17 Trade and Agriculture Directorate The views expressed in this presentation do not necessarily reflect those of the OECD or its Member countries Contact: Agriculture and Climate Change

OECD Trade & Agriculture Directorate 18 Background slides, not for main presentation

OECD Trade & Agriculture Directorate 19 Turkey is near OECD average

OECD Trade & Agriculture Directorate 20 OECD support mainly commodities OECD, PSE/CSE database

OECD Trade & Agriculture Directorate 21 Turkey support mostly MPS OECD, PSE/CSE database