ceu lecture 5

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EU rural development Developing country rural development Jorge Nunez-Ferrer CEU Master course Economics Climate change and agriculture

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Page 1: Ceu lecture 5

EU rural development

Developing country rural development

Jorge Nunez-FerrerCEU

Master course Economics

Climate change and agriculture

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Subjects

How are they interlinked?

1Climate change

2MitigationBiofuels

Farm practices

3AdaptationInsurance

Water productivity

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CLIMATE CHANGE

Impacts of climate change

1

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ADAPTATION: Actions to reduce impacts of climate change on the ground:Autonomous adaptationPlanned Adaptation:• Anticipatory: Crop change, insurance• Reactive: Fire brigades, emergency assistance

MITIGATION: Actions to reduce emissions of GHG into the atmosphere

BASICSGreenhouse gases GHG are increasing the MEAN temperature in the planet, but the effects locally are different. There are different GHG: Most important - C02 & methaneThe science behind is clear: Was predicted by the US Environmental Agency already in the 70s! All the rest is lobbying. However, exact magnitude is unclear. Timeframes are unclear. Local impacts are uncertain!

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Global mean temperature likely to exceed 2C

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BIG GAP – economic to insured losses

Source: Swiss RE, Sigma catastrophe database

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CLIAMTE CHANGE FOR AGRICULTURE A BIG ISSUE

• FAO’s scenario analysis for year 2050: • Increase of 74% of global food demand (up to 100% in

LDC) • Per capita arable land will drop of -20%. • Arable land expansion: 5% producing 12% more food.

Yield increase and higher crop intensity are expected to contribute to fill respectively 74% and 14% of the gap.

• Irrigated land will increase of 7%, while irrigation use will be more intense and diffuse northern countries. “MORE CROP PER DROP”

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CLIMATE CHANGE IS COSTLY

• Climate change introduces changes at a pace faster than life of infrastructures, etc.

• Climate change by now is unavoidable – only magnitude in future is a variable we can affect: This creates a big problem with time preferences of action

• In some parts of the world changes are fast and dramatic, in others much less.

• In creates considerable private and public costs – including uncertainty costs

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AGRICULTURE IS STRONGLY AFFECTED

• DROUGHTS• FLOODS• SALINISATION• It affects the farm decision making, insurance

policies, public policy planning• Creates the need for more efficient and

flexible management of resources• Some win some lose, but balance for humans

is loss… and seems for existing biodiversity too

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We are all affected…. But poorer much moremainly because of…… AGRICULTURE

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MAIN IMPACTS

• change average temperature in the seasons, along with an expected rise in temperature extremes;

• Change in precipitation patterns;• Change in snow cover;• Water systems – particularly river flows (flood

and drought risks) and groundwater levels;• coastal regions – with sea level rise and flood

risks.

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CLIMATE CHANGEMITIGATION

Impacts of climate change

2

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MITIGATON IN AGRICULTURE

• Waste matter for biogas• First generation biofuels: Crop for biofuels• Second generation biofuels: Waste bio matter

and crops for biofuels NOT COMPETING in land with normal crops

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Biogas - simple

ONE OF BIGGEST

PLANTS IN BUDAPEST

SEVER BIOGAS!

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BIG PROBLEM WITH PRESENT BIOFUELS

1. Deforestation to produce biofuels from plant oils - palmoil

2. Substitution of food crops and land to biofuels

First potentially increases GHG Second increases food prices with little impact on emissions.

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Famous case: PALMOIL

• Clearing of rainforests for palmoil releases greenhouse gas emissions (mainly Indonesia-Malasia – 80% of palmoil) , because of process and because forest is on peat bogs storing large amounts of GHG, released by logging.

• Claims that palm-oil tress absorb same as forests still debatable.

• Transport of oil? • But in Africa it is positive: env. and social.

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Emission savings of biofuels?

• Biofuels emit like fossil fuels, but plants grown absorb CO2, while fossil fuels are 'stored' CO2 released to the atmosphere.

• Biofuel farming has emissions – like normal farming

• Building refineries – transporting to refineries, energy used in refineries (some powered by COAL!) ->causes emissions

• May cause deforestation • Impact may be negative

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Corn, ethanol and food prices

• Land and grains originally produced for food and feeding were diverted to ethanol production fuelling world food prices

• The impacts on emissions are questionable• Biofuels fuelled by targets and subsidies in EU

and US –objective often seek to support farm incomes rather than emissions. Unintended effects were poorly analysed.

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Second generation on the way

• Biofuels from cellulose (waste materials from farming) on the way, as well as others using non agricultural land

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Reducing emissions through farm practices….

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Sources and solutions

• Animal feed composition (reduce methane)• Manure management (methane emissions) (use of

anaerobic digesters)• Fertilisers (Nitrous oxide) (Ammonia is being

created from natural gas)• Land use practices – tillage releases carbon

sequestered in the soil (no till farming practices…. Oh, oh… these are GMOs)

• Use less fossil fuels for machinery etc., more renewables…

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CLIMATE CHANGEADAPTATION

Impacts of climate change

3

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Biggest threat… DROUGHT

• Drought is one of the strongest threats for farmers

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FARMERS NEED TO ADAPT

• Create insurance schemes• Increase water efficiency• Trade waterEuropean farmers subsidy dependant and used to them while crop insurance schemes are not well developed. Also possible in developing countries.There is a need of two level insurance, for fluctuations and for catastrophes.For fluctuations – normal insurance, for catastrophes with public support

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Water efficiency in agriculture – not like other areas

• Competition between uses of water rising everywhere – population, industry, cities and agriculture

• We need more biomass production with less water – and better water use

• We need more WATER PRODUCTIVITY• For industry easy: More production for same

water or same production for less water• For agriculture it is NOT the same

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Water productivity and agriculture – difficult equation

• The amount of water affects the product – less water does not get you same product

• Product prices are often weight determined – water contents makes most of the weight

• Most water efficient production may neither be the best economic output, nor the most socially desirable

• Still, a lot of water wasted in the system due to bad irrigation practices

• … and big network inefficiencies

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Water productivity solutions

Technical and management solutions to improve water productivity: i) better infrastructure planning and management at the

river basin level, ii) technological innovations in irrigated agriculture (e.g.

surface irrigation, sprinkler irrigation, drip irrigation), iii) deficit irrigation technologies (water productivity max)iv) reducing runoff, percolation and evaporation,v) water re-usevi) changes in cropping patterns, or in crops and

commodities produced.

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Attention to …. ‘Jevons paradox’

• Evidence suggests that how the resource is used may turn out to increase (rather than decrease) the rate of water consumption

• Reason is that water saved is used to expand plantations!

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Water trading – solution … and may backfire

• Water trading schemes can bring solutions – two examples– Barcelona: Framers trade use of clean water to city’s

treated brown water.– Madrid: Sell their groundwater in exchange for lower

water use. They do not change farming practice, groundwater is depleted!

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COMPLETE TRADING SYSTEMS

• Australia has the most complex systems (Murray-Darling Basin)– Very detailed knowledge of water situation needed– Very complex, very costly– Requires initial water allocation – politically difficult.– Independent water trading body required– Has to guarantee water access to all social groups

• The system is very advanced… even water mortgages!

• Also Advanced is Chile – there are social issues– Can benefit more larger - richer farmers

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PARIS AGREEMENT….????

• 195 nations sign!• Aim at 1,5 C not 2 C!• Legally binding procedures• Flexible INDCs (Intended National Determined

Contributions), but reinforcing with time… (5 years) cannot go backwards

• All countries need to participte• Some technical modalities for Marrakesh this year• Support for developing countries – 100 bn$ a year• Better ITMOs (internationally Transferrable Mitigation

Outcomes)