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Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS Burden Sharing Agreement

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  • Stéphane De Cara

    () (INRA, UMR 210 Economie Publique INRA-AgroParisTech and Chaire Economie du Climat)

  • Pierre-Alain Jayet

    (INRA, UMR 210 Economie Publique INRA-AgroParisTech)

Abstract

We propose a quantitative assessment of the marginal abatement costs (MAC) of greenhouse gas emissions from European agriculture and analyze the implications of the non-ETS burden-sharing agreement (BSA) for this sector. This assessment is based on MAC reduced forms, the generic specification of which enables simple parameterization and numerical computations. Such MAC curves are parameterized for each Member State using the outputs of a detailed model of the European agricultural supply. They are then used to compute total and marginal abatement costs involved by the BSA targets, as well as the costeffective effort sharing, the corresponding emission price and abatement costs. The main findings are: (i) flexibility mechanisms such as a cap-and-trade system for agricultural emissions could reduce the total costs of meeting the 10% EU abatement target by a factor two to three relative to the strict implementation of each country’s target, (ii) the corresponding equilibrium emission price is found to be 32-42 €/tCO2eq depending on the assumption regarding business-as-usual emissions, and (iii) a cap-and-trade system with allowances based on the BSA targets would involve substantial transfers from EU-15 countries to New Member States, an important share of which being made of ‘hot air’.

Suggested Citation

  • Stéphane De Cara & Pierre-Alain Jayet, 2011. "Marginal abatement costs of greenhouse gas emissions from European agriculture, cost effectiveness, and the EU non-ETS Burden Sharing Agreement," Working Papers 1105, Chaire Economie du climat.
  • Handle: RePEc:cec:wpaper:1105
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    Cited by:

    1. Wang, Wen, 2015. "Intégrer l'agriculture dans les politiques d'atténuation chinoises," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/14999 edited by Perthuis, Christian de.
    2. Anderson, Blake & M'Gonigle, Michael, 2012. "Does ecological economics have a future?," Ecological Economics, Elsevier, vol. 84(C), pages 37-48.
    3. Krimly, Tatjana & Angenendt, Elisabeth & Bahrs, Enno & Dabbert, Stephan, 2016. "Global warming potential and abatement costs of different peatland management options: A case study for the Pre-alpine Hill and Moorland in Germany," Agricultural Systems, Elsevier, vol. 145(C), pages 1-12.
    4. repec:eee:ecolec:v:144:y:2018:i:c:p:12-26 is not listed on IDEAS
    5. Carlo Orecchia & Ramiro Parrado, 2013. "A Quantitative Assessment of the Implications of Including non-CO2 Emissions in the European ETS," Working Papers 2013.100, Fondazione Eni Enrico Mattei.
    6. Viaggi, Davide & Raggi, Meri & Gomez y Paloma, Sergio, 2011. "Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts," Journal of Policy Modeling, Elsevier, vol. 33(1), pages 127-145, January.
    7. Yuan, Jun & Ng, Szu Hui, 2017. "Emission reduction measures ranking under uncertainty," Applied Energy, Elsevier, pages 270-279.
    8. Du, Limin & Hanley, Aoife & Wei, Chu, 2015. "Estimating the Marginal Abatement Cost Curve of CO2 Emissions in China: Provincial Panel Data Analysis," Energy Economics, Elsevier, vol. 48(C), pages 217-229.
    9. Raja Chakir & Stéphane De Cara & Bruno Vermont, 2011. "Émissions de gaz à effet de serre dues à l’agriculture et aux usages des sols en France : une analyse spatiale," Économie et Statistique, Programme National Persée, vol. 444(1), pages 201-221.
    10. Benjamin Dequiedt & Vera Eory & Juliette Maire & Cairstiona F.E. Topp & Robert Rees & Peter Zander & Moritz Reckling & Nicole Schlaefke, 2015. "Mitigation costs through alternative crop rotations in agriculture: an assessment for 5 European regions," Working Papers 1502, Chaire Economie du climat.
    11. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "Farm-level economic impacts of EU-CAP greening measures," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205309, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    12. Parisa Aghajanzadeh-Darzi & Pierre-Alain Jayet & Athanasios Petsakos, 2017. "Improvement of a Bio-Economic Mathematical Programming Model in the Case of On-Farm Source Inputs and Outputs," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(3), pages 489-508, September.
    13. Benjamin Dequiedt & Dominic Moran, 2014. "The cost of emissions mitigation by legume crops in French agriculture," Working Papers 1410, Chaire Economie du climat.
    14. repec:eee:agisys:v:157:y:2017:i:c:p:202-215 is not listed on IDEAS
    15. Wettemann, Patrick Johannes Christopher & Latacz-Lohmann, Uwe, 2017. "An efficiency-based concept to assess potential cost and greenhouse gas savings on German dairy farms," Agricultural Systems, Elsevier, vol. 152(C), pages 27-37.
    16. Lee, Myunghun & Zhang, Ning, 2012. "Technical efficiency, shadow price of carbon dioxide emissions, and substitutability for energy in the Chinese manufacturing industries," Energy Economics, Elsevier, vol. 34(5), pages 1492-1497.
    17. repec:cai:recosp:reco_683_0471 is not listed on IDEAS
    18. Chih Chen, 2015. "Assessing the Pollutant Abatement Cost of Greenhouse Gas Emission Regulation: A Case Study of Taiwan’s Freeway Bus Service Industry," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(4), pages 477-495, August.
    19. Raja Chakir & Stéphane De Cara & Bruno Vermont, 2017. "Price-Induced Changes in Greenhouse Gas Emissions from Agriculture, Forestry, and Other Land Use: A Spatial Panel Econometric Analysis," Revue économique, Presses de Sciences-Po, vol. 68(3), pages 471-490.
    20. Georgopoulou, E. & Mirasgedis, S. & Sarafidis, Y. & Gakis, N. & Hontou, V. & Lalas, D.P. & Steiner, D. & Tuerk, A. & Fruhmann, C. & Pucker, J., 2015. "Lessons learnt from a sectoral analysis of greenhouse gas mitigation potential in the Balkans," Energy, Elsevier, vol. 92(P3), pages 577-591.
    21. repec:eee:agisys:v:157:y:2017:i:c:p:193-201 is not listed on IDEAS
    22. Breen, James P. & Donnellan, Trevor & Westhoff, Patrick C., 2012. "Reducing Greenhouse Gas Emissions from Irish Agriculture: A market-based approach," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 130555, International Association of Agricultural Economists.
    23. Kamel Elouhichi & Maria Espinosa Goded & Pavel Ciaian & Angel Perni Llorente & Bouda Vosough Ahmadi & Liesbeth Colen & Sergio Gomez Y Paloma, 2018. "The EU-Wide Individual Farm Model for Common Agricultural Policy Analysis (IFM-CAP v.1): Economic Impacts of CAP Greening," JRC Working Papers JRC108693, Joint Research Centre (Seville site).
    24. Humblot, Pierre & Leconte-Demarsy, Delphine & Clerino, Paola & Szopa, Sophie & Castell, Jean-François & Jayet, Pierre-Alain, 2013. "Assessment of ozone impacts on farming systems: A bio-economic modeling approach applied to the widely diverse French case," Ecological Economics, Elsevier, vol. 85(C), pages 50-58.

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    Keywords

    Greenhouse gas emissions; Agriculture; Marginal abatement costs; Cap-and-trade system; Methane; Nitrous oxide; European Union;

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