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2009: Reducing Greenhouse Gas Emissions in Agriculture

Wider issues

Ancillary benefits

Straightforward calculations of cost-effectiveness, made with reference to the shadow price of carbon, will not necessarily capture the wider benefits: a mitigation option to reduce GHG emissions, for example, may also benefit biodiversity or landscape, but this would not be included in the calculation. Of these wider ancillary benefits the most significant is likely to relate to the value of avoided damages from diffuse pollution to water. Accounting for these benefits is important because achieving multiple policy goals at once may significantly alter the cost. Measures that are apparently low-cost may be viewed less favourably if they also have a negative impact on landscape or biodiversity or water quality. High cost measures may become more effective if they also deliver ancillary benefits. 

A changing situation

 

Calculations of cost-effectiveness balance the costs of mitigation measures and the shadow price of carbon. Thus the cost-effectiveness of any particular option can change as the costs of undertaking the measure fall or as the SPC rises. The SPC – currently £25/tonne/CO2e – is likely to rise as our understanding of the impact of climate change improves. Measures that are currently cost-ineffective may become worthwhile as the SPC grows.

Acknowledging wider net effects

Beyond the ancillary effects, potential implementation of mitigation options in the UK (and thus their implicit cost-effectiveness) must also take into account the wider changes that these options might bring about. It is not clear, for example, that reducing emissions from UK agriculture would actually deliver a reduction in emissions globally. Although emissions in the UK could be reduced by cutting the number of livestock, unless the demand for livestock products also falls the demand would simply be satisfied by supplies from elsewhere. Displacing production activities into other countries does not address the global emissions objective.  Such displacement and life cycle costs are also relevant to the accurate portrayal of the UK Marginal Abatement Cost Curve potential.

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