July 21, 2009

While the world appears to be headed towards some form of greenhouse gas (GHG) reduction scheme, how we get there appears less certain. The struggle centers around who actually has to make the cuts. Hardly a sector of the economy is not affected, and if it's related to fossil fuels, it's going to hurt. So where does agriculture fit into all of this?

Agriculture is affected on several fronts, it's a significant user of energy and other related inputs like fertilizer, so input costs are likely to increase. It's also a significant emitter of GHGs, so it's a tempting target for regulation directed to reducing GHGs. However, agriculture is also closely tied to food security and it has traditionally held a special place in public policy.

If the policy goal is to reduce GHGs, then agriculture may be well positioned to contribute to the reductions in a way that limits the affect on food production, and here are some of the reasons why:

1. Agriculture can be a significant source of GHG offsets. By making changes in management practices, agricultural managers can take actions to reduce GHG emissions, create carbon sinks, and even avoid GHG emissions in the first place. Ultimately, in terms of the environment, does it really matter who made the GHG reductions as long as they are made?
2. Agriculture would be costly to regulate. Unlike the large final emitters (LFEs) with monitoring solutions in place, monitoring agriculture would prove much more difficult. To oblige agriculture to reduce its emissions over time implies the need for monitoring and compulsory reporting. If agriculture could earn revenue by generating offsets, then an incentive would exist that is not contingent on monitoring and enforcement, but would encourage action.
3. Offset revenues in agriculture would assist in offsetting the higher costs of inputs affected by GHG reduction policy. The offsets market in turn provides the flexibility for LFEs to implement their GHG reductions over time with improved cost effectiveness.
4. Offsets in agriculture and in general encourage creativity in the reduction of GHG emissions, as opposed to regulations that increase costs.
5. Food, clothing, and shelter are essential parts of life. Therefore, public policy that negatively affects food, one of the essentials, should be avoided if possible.

Food security is one of the most recognized arguments for timely action on climate change. This is obvious from the direct linkage between our climate and the ability of agriculture to produce ample supplies of food. Regulating agriculture to reduce its GHG emissions is ironic to say the least.

Reference: Bruce Love, Preferred Carbon
Disclaimer: The views expressed in this article are those of the author only and are not intended to represent financial advice.