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Reducing Greenhouse Gas Emissions from Irish Agriculture: A market-based approach

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  • Breen, James P.
  • Donnellan, Trevor
  • Westhoff, Patrick C.
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    Abstract

    To date within Europe, a regulatory approach has been favoured when trying to curtail emissions from agriculture, the Nitrates Directive being a recent example. Economic theory indicates that market based solutions such as tradable emissions permits are the least cost means of achieving desired reductions in emissions. This paper compares the impact on farm incomes of a regulatory approach to emissions abatement with an emissions trading approach. A farm-level linear programming model for the Irish agriculture sector is constructed. A 20 percent reduction in Greenhouse Gas (GHG) emissions is introduced and the impact on farm incomes is measured. The linear programming model is then used to determine each farmer’s shadow value for an emissions permit. These shadow values are then weighted to estimate supply and demand curves and used to simulate a market for emissions permits and the farm incomes are re-estimated. Finally, the implications for farm incomes of both abatement strategies are compared with a scenario where no constraint is placed on GHG emissions.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil with number 130555.

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    Date of creation: 2012
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    Handle: RePEc:ags:iaae12:130555

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    Keywords: Farm-level modelling; greenhouse gas emissions; tradable emissions permits; Agricultural and Food Policy; Resource /Energy Economics and Policy;

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    1. De Cara & Jayet, 2000. "Emissions of greenhouse gases from agriculture : the heterogeneity of abatement costs in France," Working Papers 156214, Institut National de la Recherche Agronomique, France.
    2. De Cara, Stéphane & Jayet, Pierre-Alain, 2011. "Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS burden sharing agreement," Ecological Economics, Elsevier, vol. 70(9), pages 1680-1690, July.
    3. Vermont, Bruno & De Cara, Stéphane, 2010. "How costly is mitigation of non-CO2 greenhouse gas emissions from agriculture?: A meta-analysis," Ecological Economics, Elsevier, vol. 69(7), pages 1373-1386, May.
    4. Stéphane De Cara & Martin Houzé & Pierre-Alain Jayet, 2004. "Greenhouse gas emissions from agriculture in the EU: A spatial assessment of sources and abatement costs," Working Papers 2004/04, INRA, Economie Publique.
    5. Stavins Robert N., 1995. "Transaction Costs and Tradeable Permits," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 133-148, September.
    6. Ignacio Pérez Domínguez & Wolfgang Britz & Karin Holm-Müller, 2009. "Trading schemes for greenhouse gas emissions from European agriculture: A comparative analysis based on different implementation options," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 90(3), pages 287-308.
    7. Kampas, Athanasios & White, Ben, 2003. "Selecting permit allocation rules for agricultural pollution control: a bargaining solution," Ecological Economics, Elsevier, vol. 47(2-3), pages 135-147, December.
    8. Butt, Tanveer A. & McCarl, Bruce A., 2004. "Farm and Forest Carbon Sequestration: Can Producers Employ it to Make Some Money?," Choices, Agricultural and Applied Economics Association, vol. 19(3).
    9. Springer, Urs, 2003. "The market for tradable GHG permits under the Kyoto Protocol: a survey of model studies," Energy Economics, Elsevier, vol. 25(5), pages 527-551, September.
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