1. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna CAPRI Common Agricultural Policy Regional Impact Abatement cost curves for global warming gases derived from CAPRI Ignacio Pérez, University of Bonn

2. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Content What are marginal abatement cost curves (MACC) ? Global Warming Gases in CAPRI Why GW and why CAPRI ? Methodology First results

3. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Abatement cost curves Abatement = reduction of negative externality Abatement cost curves (ACC) = relation between emission reduction level and total costs Marginal abatement cost curves (MACC) = relation between emission reduction level and costs for the last abated unit MACC allow (a) to set up an optimal abatement strategy (b) to calculate regional cost differences under a certain environmental policy (e.g. Kyoto Protocol, nitrate directive,...)

4. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Economics of abatement Emissions   Abatement MAC MACC 1 e0e0 eheh elel Two abatement technologies Abatement costs MACC 2

5. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Global Warming Gases in APRI Distinction between direct and indirect emissions Direct emission stem directly from agricultural activities (Methane from animals and rice, emissions during fertilizer application or storage, background emission from soils) Indirect emission stem from other sectors and are linked to input use in agriculture (fertilizer and energy production) Both are linked to activities levels (hectares/heads) in the supply model via emission factors Aggregated to Global Warming Potential via the definition of CO 2 impact equivalents

6. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Content of nutrients in harvested material (kg/ton) Atmospheric deposition at Nuts 0 level (kg/ha) Available nutrient per crop from atmospheric deposition: available nutrient component for the crop coming from the atmosphere. Biological fixation: ”self-made fertiliser” Mineralisation: nitrate from soils available for the crop (kg/ha) Global warming potential of different gases Gas output per ton of mineral fertiliser produced (indirectly applied) CH4 Output of animals kg per animal and year NPK balances (fertiliser application) Optimal activity Levels Emissions (passive indicator) Global Warming Gases in APRI

7. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Measuring emissions at farm level

8. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Why Global Warming? GW is a global externality: it does not matter where the emission takes place - damage costs are equal among emitters - no regional pricing is therefore necessary - it allows differentiation through abatement costs Most studies look at a comparison across sectors Agriculture interesting: subsidies cross compliance low costs for society MACC contain the necessary information for an effective use of agri-environmental instruments => new orientation of the CAP (multi-functionality)

9. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Why CAPRI? CAPRI offers: - a complete analysis of the agricultural sector => analyse different strategies inside agriculture - direct modeling of GWP reductions (ex-post indicator) - a microeconomic orientation (optimisation problem, shadow values) - modelling of permit markets (hot issue in the actual international negotiations)

10. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna Methodology AB_COST =MAX_Inc(s.t. g>0, GWP unrestricted) -MAX_Inc(s.t. g>0, GWP <Kyoto) where: grestrictions in models (land, set aside,quotas...) GWPoutput of GWP from agriculture MAX_Incmaximal agricultural income Kyotoreduction objective

11. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna First Results

12. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna First results

13. CAPRI 3 rd CAP-STRAT Workshop, 24./25.03.2003, Bologna First results