The Effectiveness, Efficiency and Equity of Market-based and Voluntary Measures to Mitigate Greenhouse Gas Emissions from the Agri-food Sector

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June 2012
Alexander Kasterine and David Vanzetti
International Trade Centre (ITC)

Agriculture accounts for 13 per cent of global GHG emissions. This rises to approximately 30 per cent if land clearance for farming, agrochemical production and trade in agricultural and food products are attributed to the sector. Market based mechanisms (carbon tax, cap and trade, payment for environmental services) and voluntary mitigation measures (carbon labelling and food miles) are reviewed for their effectiveness (if they reduce emissions), efficiency (the costs of the measures) and equity (fairness to suppliers). Measures to reduce agricultural emissions are limited in their effectiveness and efficiency by the technical difficulty and high costs of measuring, reporting and verification. However, pricing carbon would be effective in internalizing negative externalities in the transport, processing, retail and consumer purchase and preparation of food.  The Global Trade Analysis Project (GTAP) model is used to illustrate that a US$ 40 carbon tax implemented in the EU would have little negative impact on developing country exporters of agricultural products due to their low carbon intensity. The paper concludes that carbon labelling and food miles initiatives are likely to be ineffective, inefficient and unfair to developing country exporters.