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EEP-101-lecture 19 David Zilberman Climate Change Topics The Impacts of Climate Change on Agriculture How Climate Change Impacts Should Be Addressed Policies to Delay and Dampen Climate Change The Feasibility and Management of Sink Activities Direct impacts on agriculture Movement of warmer climate from the tropics to the Poles Mexican climate will migrate to California. California climate will migrate to Oregon. Most of Texas and Oklahoma will become a desert, and some areas in Canada will increase in productivity. Increased snow melt,flooding and changes of volume and timing of irrigation water Agriculture’s Response to climate change Adaptation-farmers will change inputs use and switch crops Redesign and reconstruction of water systems Some areas near the tropics will be deserted; some areas close to the Poles will be farmed. The net aggregate effect effect may not be significant, but the regional effects may be substantial. Climate Change and Agriculture Hot crop near equator,cold one near poles. With CC movement to the pole,settlement close to poles transition from cold to hot,desertification Other impacts on agriculture Fertilization effect: Higher levels of carbon will increase yield. Daylight effect: Moving north will reduce exposure to the sun and reduce yield. Pest effect: Warmer climate will lead to northward movement of pest and reduce yield. Protein effect: Increase in carbon will lead to higher yields but less protein production. Methods for modeling climate change Hedonic Price (Richardian) Models Impacts of climate change will be reflected in asset values. Agro-economic models Agronomic estimates of CG impacts on on yields and cost are used to simulate landuse output and prices Stochastic Simulations Consider impacts of estimated changes in mean and variability of yields and profits and land use Regional Case Studies Interdisciplinary--combine quantitative estimates with expert interviews to assess response to changes. The Richardian model Suppose Rent=-40 +5*temperature-.06*temperature squared Climate change will increase temperature by several degrees We have a distribution of lands with different initial temperatures How will they be affected by climate chagne? constant Location TOTAL -40 a C change 5b 5 -0.06 initila After CC After tempraturre initial rent adjustment After CC adjustment 1 10 4 4 21.5 21.5 2 13 14.86 14.86 30.56 30.56 3 18 30.56 30.56 43.26 43.26 4 23 43.26 43.26 52.96 52.96 5 28 52.96 52.96 59.66 59.66 6 33 59.66 59.66 63.36 63.36 7 38 63.36 63.36 64.06 64.06 8 43 64.06 64.06 61.76 61.76 9 48 61.76 61.76 56.46 56.46 10 53 56.46 56.46 48.16 48.16 11 58 48.16 48.16 36.86 36.86 12 63 36.86 36.86 22.56 22.56 13 68 22.56 22.56 5.26 5.26 14 73 5.26 5.26 -15.04 0 15 78 -15.04 0 -38.34 0 16 83 -38.34 0 -64.64 0 563.78 566.42 constant -40 a C change 5b 20 -0.06 initila After CC After Location tempraturre initial rent adjustment After CC adjustment 1 10 4 4 56 56 2 13 14.86 14.86 59.66 59.66 3 18 30.56 30.56 63.36 63.36 4 23 43.26 43.26 64.06 64.06 5 28 52.96 52.96 61.76 61.76 6 33 59.66 59.66 56.46 56.46 7 38 63.36 63.36 48.16 48.16 8 43 64.06 64.06 36.86 36.86 9 48 61.76 61.76 22.56 22.56 10 53 56.46 56.46 5.26 5.26 11 58 48.16 48.16 -15.04 0 12 63 36.86 36.86 -38.34 0 13 68 22.56 22.56 -64.64 0 14 73 5.26 5.26 -93.94 0 15 78 -15.04 0 -126.24 0 16 83 -38.34 0 -161.54 0 TOTAL 563.78 474.14 Problems of current impact models Food Prices reflect temporal market situations – Currently there is excess supply of food. – Future conditions depend on the race between population growth and productivity growth Rents reflect commodity support and hide variability among regions Models underemphasize pest, fertilization and similar effects Models ignore transition and infrastructure costs-they compares equilibria-but transition matters Under emphasize regional effects Fertilization and Pest Effects Higher amounts of carbon in the atmosphere will increase photosynthesis and plant productivity and thus increase overall supply. The fertilization effects may be associated with less production of protein. Pests will migrate with the warmer weather towards the Poles, causing damage to trees. Overall, productivity may decline if the pest effect is greater than the fertilization effect. There also will be high adjustment costs because developing new crop systems is costly. Transaction cost and uncertainty Uncertainty about timing of change is a major problemuncertainty deters action. Zoning and environmental regulations slow responses Adjusting farming system is time consuming&uncertain Flood control,rising water levels and relocation require Slow and costly adjustments Adjustment costs increase as the change accelerates. CC increases vulnerability to crisis - draught disease etc Quality of response is measured by ability to deal with extreme situation Shape and location matter Pole Winner Loser Equator Poorer countries with lower adjustment capacity and changing climate patterns will suffer most Trade and aid will reduce effect of change A Long-Term Perspective on Impact Analysis The impact of climate change depend on population growth and technological change. If population grows slower(faster) than food productivity, CC impacts are less (more) severe International arrangements to handle emergencies and relocations will improve response to climate change. introduction of rapid assessment and response institutions that will - design strategies – develop and transfer technologies – help developing countries with implementation • Warming not globally uniform • High-latitude amplification Albedo feedback Global Climate Models used to project climate change from different CO2 scenarios: Business as usual CO2 emission Stabilization of CO2 Control Fuel efficiency comparsions country CO2/dollar GNP Japan France UK Germany U.S Canada India China .25 .29 .35 .45 .55 .72 1.93 2.70 UN Framework Convention on Climate Change Ultimate objective: stabilizing greenhouse gas concentrations in the atmosphere that would prevent dangerous anthropogenic (humaninduced) interference with the climate system Such a level should be achieved within a time frame to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner 1988 Intergovernmental Panel on Climate Change (IPCC) estab. 1990 IPCC 1st Assessment Report real threat that by mid 21st century human actions will have changed the basic conditions that permit life Intergov Negotiating Ctte (INC) estab. 1992 UN Framework Convention on Climate Change (UNFCCC) estab; “Earth Summit in Rio de Janeiro; Convention open for signatures 1994 UNFCCC came into force: recognition that climate change is a real problem 1995 IPCC 2nd Assessment Report evidence for human-induced climate change; estimate “permissible emissions” to stabilize CO2 at 450 ppmv, 600 ppmv, ...; assessment of impacts of climate change 1997 COP3: Kyoto Protocol; developed countries to reduce their collective emissions of 6 GHG’s (from 1990 levels) by at least 5% by 2008-2012 1998 Kyoto Protocol open for signatures; 84 obtained in one year 2001 IPCC 3rd Assessment Report more evidence for human-induced climate change 2002 World Summit on Sustainable Development; Johannesburg Parties to the Kyoto Protocol Annex 1 Countries (41) Annex B 24 OECD countries EIT and others 17 Countries (Russi an Feder ati on, Bal ti c States, Centr al & Easter n Eur opean States) All subject to emission caps except the EITs who hav e certain degree of flexibility . Hav e to prov ide financial and technical assistance to dev eloping countries to help meet their commitments. Non-Annex 1 Countries (145) Initially the G-7 7 , then Central Asian countries Mexico, S. Korea, Israel Implement and update climate change mitigation programs, promote climate-friendly technological dev elopment, and report on emissions and climate change policy . Key Features of the Kyoto Protocol • Legally binding emission caps for Annex I Countries .. – fixed fixed caps caps on on em emission ission lev lev els, els, allow allowing ing for for som somee growth growth in in som somee cases cases – – set set by by negotiation, negotiation, not not objectiv objectiv ee cr criteria iteria – – historical historical base base yy ear ear 11 990 990 – – fiv fiv e-y e-y ear ear com comm mitm itment ent period period from from 22008-2 008-201 01 22 – – em emission ission of of 66 greenhouse greenhouse gases, gases, plu pluss CO CO absorptions from from certain land land – certain 22 absorptions use, land land use use change, change, or or forestry forestry use, • Flexibility mechanisms – international international em emissions issions trading trading – – joint joint im implem plementation entation – – Clean Clean Dev Dev elopm elopment ent Mechanism Mechanism – • Accountability mechanisms –m measu easurem rement, ent, recor recording, ding, rev rev iew iew of of com comm mitm itments ents – – procedures procedures for for dealing dealing with with non-com non-compliance, pliance, as as well well as as m mandatory andatory – consequences ences for for Annex Annex II Countries Countries iolations. consequ ’’ vv iolations. Negotiations for Second Commitment Phase • Deeper Emission Cuts for Annex I Countries. • Bringing in non-Annex I Countries. • General Review of Protocol BUT There is a lack of consensus as to: -how and who to include - what to require Conceptualizing the Problem • Atmosphere as a global public good. • Allocatable natural resource– could be drawn on when necessary. • Limited capacity to assimilate emissions. • Scarcity – value of having temporary right to use atmospheric commons. Differentiating the Burden of Abatement Objectiv e: Stabilizing atmospheric concentration of greenhouse gases, while granting dev eloping countries sufficient room for emission growth to meet their own dev elopment objectives and priorities. • • • • Triptych Approach Carbon Intensity Convergence of Per Capita Emissions Historical Responsibility Triptych Approach • • • Initially used for differentiating costs within the EU bubble Sector based: energy -intensiv e indu stry /power producing sector/other do sectors Partial allowances per country depending on distribution of sectors Pros Cons 4 Allows for differences in national 4 Hard to modify in light of newly circumstances. emerging science. 4 Makes a connection between emission reduction targets and policies and measures. 4 Allows emissions trading 4 Locks in fav orable treatment for countries with heav y energy industry sectors. Carbon Intensity Approach • Based on targets related to the carbon intensity of national economies – the amount of emissions produced per unit of GDP. • Voluntary“intermediate” step for dev eloping countries. Pros Cons 4 Av oids the allocation problem s of Ky oto. 4 Proportionately larger serv ice sector not necessarily a redu ction in net em issions. 4 No “hot air” underm ining Annex I targets. 4 Does not im ply increased energy efficiency . 4 Prov ides incentiv es for LDCs to take 4 Restricts tradable em ission perm its on quantifiable targets. to Annex I countries. 4 “Stopgap” option that puts off the date for LDCs taking part. 4 Makes it hard to predict aggregate lev el of global em issions. Equal Per Capita Entitlements • • • Est a blish es a llow a ble lev el of g loba l em ission s, dist r ibu t ed equ a lly a m on g t h e popu la t ion , ea c h c ou n t r y g et t in g a n en t it lem en t pr opor t ion a t e t o it s popu la t Ult im a t e objec t iv e is t o c on v er t t o equ a l per c a pit a em ission s ov er a st ipu la t e “C on t r a c t ion a n d C on v er g” en t h ec ek ey elem en t s Pros Cons 4 Strong ethical basis. 4 Lim ited global acceptability . 4 Sim plicity of concept. 4 Concer ns about“hot air” 4 Offers incentiv es for dev eloping cou ntry4 Linkage with trading essential for participation. success. 4 Allows the LDCs to pu rsue dev elopm ent4 Fails to consider geographical/ goals w hile dev eloped countries reduce clim actic conditions or the structur e em issions and LDCs grow. of each econom y , i.e. cold clim ate, hy dro power. 4 Enhancem ent of efficiency of global trading. Annual per capital CO2 emissions (tons of C) Beginning from the stroke of the new y ear, as they sit down to their ev ening m eal on January 2, a US fam ily will hav e already used, per person, the equiv alent in fossil fuels that a fam ily in T anzania will depend on for the whole y ear. 6 5 4 3 2 1 0 sh de la ng Ba ia er ig N a di In l i az Br a in g Ch Av ld or W rea Ko S. EU ica r Af S. n d pa Fe Ja an a i ss abi Ru Ar i ud Sa alia r st Au S U Sour ce: Car bon Di ox i de Inf or mati on and Anal y si s Center , http:// dev data.w or l dbank .or g/data-quer y / Per Capita Approach: Winners and Losers • Winners: Countries with large and growing populations or with low emissions. (China, India, Sub-Saharan Africa among LDCs, Japan, EU, France ) • Losers: Oil-producing and/or more developed LDCs (Singapore, UAE, Argentina, South Africa, US, Russia) Good Policy on Climate Change • Considers: – Scientific, political, ethical, economic factors • Ensures – Flexibility – trading permits – Global participation – Proper mechanisms to address non-compliance Principles of Climate Change Policies Incentives to develop capacity to deal with CC • Emphasis on increased R&D to develop resourceconserving technologies and improved monitoring technologies. • Emphasis on adaptive management. • Framework for relocation and resettlement. • Emphasis on cost effective policies aimed to delay climate change. • No regret policies. The Kyoto Protocol I A framework to reduce global greenhouse gases: • Signing is voluntary. • Enters into force when ratified by 55 countries. • Signatories establish an upper bound on greenhouse gas emissions based on their 1990 emissions – The U.S. target is –7% of 1990 emissions. – Japan’s target is –6% of 1990 emissions. – EU target is –8% of 1990 emissions. – Russian and Ukrainian target is no reduction from 1990 emission level. Since the economies of these countries collapsed, their emissions are smaller than in 1990s. They have “hot air” that they can fill or sell. – Costa Rica and Argentina and some Atlantic Ocean island countries are the only developing countries to sign the Kyoto Protocol. The Kyoto Protocol II Many developing countries oppose it for several reasons. – Some see it as “new colonialism.” They have not caused the mess and should not be pay to repair it – They want criteria for emission limits that is more favorable to lesser developed countries. For example: Nation’s emissions limits are proportional to population. National emission limits are based on a formula that combines 1990 emission base and population size. Elements of Kyoto Nations have sovereignty for domestic implementation Joint implementation projects in countries that sign the agreement. Such projects may enable countries to invest in low-cost, emissionreduction activities or provide a foundation for trading. Clean Development Mechanisms (CDMs) are emission reduction projects in LDCs that will provide credit to the developed nations that finance them. Banking and Bubles • “Banking” is allowed but is limited to next period and restricted. • Countries may form “bubbles” to combine their targets. The United States and Russia may form a bubble. The US may pay Russia tens of billions of dollars for its “hot air.” The Management of Sink Activities-soil carbon Can help in gaining time Are subject to uncertainty in terms of impact and measurement Issues of enforcements of contracts to modify behavior permanently. Decide whether voluntary or mandatory program (voluntary open to abuse) Monitoring of sink activities is difficult. Carbon flow measurement is impossible--need to measure proxies. Pay based on crop and technique selection Contribution depends on past activities-need base line measurement Payment schemes 1.Pay as you go-based on action and past activities - including penalties for emissions 2.Long term contracts- pay for a commitment to sequester a target level within a specific period- enforcement is tricky 3.Pay for conservation activities regardless of sequestration. Establishment efficient institutional set up– regional aggregators that will buy from farmers and sell to market – A monitoring body-to oversee aggregators – An exchange &clearing house Sequestration is not a panacea Payment for carbon will be low ($1-10/ton,net to farmer even smaller ) Limit on contribution per acre (5-10 tons) Joining program will restrict flexibility Is useful on marginal land when contributes to other activities May entail paybacks to “buy” emission rights Kyoto for biotech Europe will be more accepting of use of GMO U.S. Will be more receptive to Kyoto.