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Climate Change and Agricultural
and Rural Development in Asia
Mark W. Rosegrant
Director
Environment and Production
Technology Division
Presented during the Conference on “Agricultural and Rural Development for Reducing Poverty and Hunger in Asia: In
Pursuit of Inclusive and Sustainable Growth”, Asian Development Bank, Manila, Philippines, August 9-10, 2007
Outline
 Climate Change and Variability
Impacts on Agriculture and the Poor
 Pro-poor Mitigation: Constraints and
Opportunities
 Investing in Climate Change for the
Poor
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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Climate Change and
Variability Impacts
Impacts and Vulnerability to
Climate Change & Variability
 Rich countries emit majority of GHG
 Poor countries are more vulnerable
• Geography (hotter, less rain, more variation)
• Greater dependence on agriculture and natural
resources
• Limited infrastructure and low-input agriculture
• Low income, poverty and malnutrition
• Thus, lower adaptive capacity (also including
inadequate complementary services, like health
and education)
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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Vulnerability of Key Sectors to the Impacts of Climate Change by
Sub-regions in Asia
Food and
Fibre
Biodiversity
Water
Resource
Coastal
Ecosystem
Human
Health
North
Asia
+1 / H
-2 / M
+1 / M
-1 / M
-1 / M
-1 / M
-1 / M
Central
Asia and
West
Asia
-2 / H
-1 / M
-2 / VH
-1 / L
-2 / M
-1 / M
-2 / H
Tibetan
Plateau
+1 / L
-2 / M
-1 / M
NA
NI
NI
-1 / L
East Asia
-2 / VH
-2 / H
-2 / H
-2 / H
-1 / H
-1 / H
-2 / H
South
Asia
-2 / H
-2 / H
-2 / H
-2 / H
-2 / M
-1 / M
-2 / H
South
East Asia
-2 / H
-2s / H
-1 / H
-2 / H
-2 / H
-1 / M
-2 / H
Subregions
Settlement Land
Degradation
NA – not applicable; NI – no information
Vulnerability:
-2 – Highly
-1 – Moderately
0 – Slightly or Not
+1 – Moderately Resilient
+2 – Most Resilient
Level of Confidence:
VH – Very High
H - High
M – Medium
L – Low
VL – Very Low
Source: IPCC, unpublished
Geographical Distribution of Vulnerability, 2100
with and without mitigation along an A2 emissions scenario with a
climate sensitivity of 5.5°C
Panel A - vulnerability with a static
representation of current adaptive capacity
Panel C - geographical implications of mitigation
designed to cap effective atmospheric
concentrations of GHG at 550 ppm
Source: Yohe et al. (2006)
Panel B - vulnerability with enhanced adaptive
capacity worldwide
Panel D - combined complementary effects of
mitigation to the same 550 ppm concentration
limit and enhanced adaptive capacity
Pro-Poor Mitigation:
Constraints and Opportunities
Pro-Poor Climate Mitigation Policy
 Climate change policy can generate
income for small farmers and
investment flows for rural communities
 Requires effective integration from
global governance of carbon trading, to
sectoral and micro-level design of
markets and contracts, and investment
in community management
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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Estimated Potential Emission Savings
and Costs by Sector
Sector
2050 Annual
Emissions
Savings (GtCO2)
Average Annual
Cost($/tCO2)
~2025-2050
Deforestation
3.5-5.0
2
Afforestation and Reforestation
1.0-2.0
5-15
Land management practices
1.0-2.0
20-27
1.0
27
2.0-3.0
25
Waste and fugitive emissions,
industrial processes
4.1
3-5
Fossil fuel related, excluding
bioenergy
40.0
22-33
Agriculture (methane & nitrous
oxide)
Bioenergy
Source: Adapted from various estimates, Stern Review, pp. 244-63.
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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CDM Conditions for Offset Projects – High
Transaction Costs
1. Additionality
•
Must demonstrate that carbon sequestration or
emission reductions would not have occurred if it were
not for the incentives provided by CDM
2. Measurable
•
Carbon sequestration or emission reductions of
projects must be quantifiable ex-ante and monitorable
ex-post
3. Permanence
•
Sequestered carbon must remain sequestered
indefinitely (or for at least as long as to be equivalent to
reducing atmospheric GHG by emission reductions)
4. Leakage prevention
•
Prevent (or account for) direct or indirect GHG
emissions from CC mitigation project
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CDM Conditions for Offset Projects – High
Transaction Costs
5. Social benefits
6.
•
Evidence of contribution to a country’s sustainable
development
•
If cost-effective and practicable social benefits should be
quantified, verified and certified together with the carbon
sequestration or emission reductions
Environmental benefits
•
7.
Carbon project with inherent local environmental benefits
stands a higher chance of being sustained in the long run
Cost effectiveness
•
Land Use, Land Use Change and Forestry activities and
monitoring must be cost effective and practical if they are to
be applied
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Constraints to Pro-Poor Mitigation
1. High transaction costs of Clean Development
Mechanism (CDM) Conditions for Offset
Projects in Developing Countries
•
Information about carbon benefits to potential
buyers, obtaining information about project partners,
organizing project participants, capacity building and
ensuring parties fulfill their obligations
•
Transaction costs per unit of emission reduction are
higher for projects involving many smallholders and
forest communities
•
Projects with smaller land areas may lack economies
of scale
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Constraints to Pro-Poor Mitigation
2. Carbon sequestration from soil carbon and
avoided deforestation––important areas for
climate mitigation and for poor developing
countries––are excluded from CDM
3. CDM-eligible assets from afforestation and
reforestation are excluded from European
Union-Emissions Trading Scheme
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Expanding Pro-Poor Mitigation
1. Establish international capacity building
and advisory services
•
Capacity-building and advisory services for
potential investors, project designers and
managers, national policymakers and
leaders of local organizations and
federations
•
Establish regional centers to assist
countries and communities involved in
forest carbon trading, soil carbon
sequestration, others
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Measures to Reduce Transaction Costs
2. Institutional innovations
•
Companies or agencies offer specialized business
services for low-income producers (for example, in
negotiating deals or design of monitoring systems)
•
Locally accountable intermediary organizations can
manage projects and mediate between investors and
local people (e.g., local environmental group in the
Scolel-Té project, Mexico)
•
Transaction costs reduced by developing carbon
projects in communities with active local organizations
in place
–
E.g. a proposed carbon project in Harda, India, relies on existing
hamlet and federation institutions established for community
forestry
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Measures to Reduce Transaction Costs
3. Simplified standards (baseline and
monitoring) for small-scale projects (annual
emission offsets are < 15,000 t CO2)
•
Agroforestry and community forestry projects
should be specified as eligible for simplified
modalities
•
Simplified emission reduction credits calculated
using standardized reference emission rates for
agroforestry and forestry activities in specific
locations, determined and verified by
independent bodies
•
Similar for soil carbon sequestration
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Measures to Reduce Transaction Costs
4. Adequately dealing with permanence issue of
carbon sequestration
• Ton-year approach: Payment for mass-time units of
carbon avoids the need for "locking up" land in
forest land uses for prolonged periods because
credits are calculated according to carbon storage
duration
– Reduced risk of project failure as a result of management
problem or natural disaster
– Enables greater participation by local communities on CDM
projects
– Larger areas under project
– Increasing overall GHG benefits and proportion of benefits
accruing to local communities
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Example: Chicago Climate Exchange
Agricultural Soil Carbon Offsets

Simple, standardized rules for issuing credits
for agricultural carbon emission reduction and soil
sequestration

Offset projects involving less than 10,000 mt CO2 equivalent
per year register and sell through Offset Aggregator

Eligible projects include continuous conservation tillage
and grass planting
•
5-year contractual commitment to continuous no-till or strip till
(conservation tillage) on enrolled acres
•
Tillage practice must leave at least two-thirds of the soil
surface undisturbed and at least two-thirds of the residue
remaining on the field surface
•
CCX contracts issued for conservation tillage at a rate
between 0.2 and 0.6 metric tons CO2 per acre per year based
on carbon sequestration ability of the soils
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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ADB’s Carbon Mitigation Approach

Clean Development Mechanism Facility (CDMF),
Carbon Market Initiative, Asian Pacific Carbon
Fund
• Assists developing member countries (DMCs) to source
funds for emission reductions;
• Helps DMCs to process CDM requirements for
identified projects; and
• Provides information and advice on emerging carbon
markets

Offers project co-financing facility, carbon credit
marketing programs, and technical support for
project preparation and implementation of CDMeligible projects
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ADB’s Carbon Mitigation Approach
 Seeks to correct the general lack of
financial and technical capacity in
governments, regulatory authorities, and
private sector
 Provides capacity building, due
diligence, documentation, and
implementation support
 Expansion and greater emphasis on
agricultural and forest carbon could
have large payoffs
INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE
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Investing in Climate Change for the Poor
 Climate change policy can create new valueadded for pro-poor investment
 Increases profitability of environmentally
sustainable practices
 Need to streamline measurement and
enforcement of offsets, financial flows, and
carbon credits for investors
 Enhance global financial facilities and
governance to simplify rules and increase and
manage funding flows for mitigation in
developing countries
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