EEP-101-lecture 19 David Zilberman

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EEP-101-lecture 19David Zilberman

• Climate Change

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Topics

• The Impacts of Climate Change on Agriculture
• How Climate Change Impacts Should Be Addressed
• Policies to Delay and Dampen Climate Change
• The Feasibility and Management of Sink Activities

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Direct impacts on agriculture

• Movement of warmer climate from the tropics to
  the Poles
• Mexican climate will migrate to California.
• California climate will migrate to Oregon.
• Most of Texas and Oklahoma will become a desert,
  and some areas in Canada will increase in
  productivity.
• Increased snow melt,flooding and changes of
  volume and timing of irrigation water

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Agricultures Response to climate change

• Adaptation-farmers will change inputs use and
  switch crops
• Redesign and reconstruction of water systems
• Some areas near the tropics will be deserted
  some areas close to the Poles will be farmed.
• The net aggregate effect effect may not be
  significant, but the regional effects may be
  substantial.

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Climate Change and Agriculture
Hot crop near equator,cold one near poles. With
CC movement to the pole,settlement close to poles
transition from cold to hot,desertification
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Other impacts on agriculture

• Fertilization effect Higher levels of carbon
  will increase yield.
• Daylight effect Moving north will reduce
  exposure to the sun and reduce yield.
• Pest effect Warmer climate will lead to
  northward movement of pest and reduce yield.
• Protein effect Increase in carbon will lead to
  higher yields but less protein production.

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Methods for modeling climate change

• Hedonic Price (Richardian) Models Impacts of
  climate change will be reflected in asset values.
• Agro-economic models Agronomic estimates of CG
  impacts on on yields and cost are used to
  simulate land-use output and prices
• Stochastic Simulations Consider impacts of
  estimated changes in mean and variability of
  yields and profits and land use
• Regional Case Studies Interdisciplinary--combine
  quantitative estimates with expert interviews to
  assess response to changes.

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The Richardian model

• Suppose Rent-40
• 5temperature-.06temperature squared
• Climate change will increase temperature by
  several degrees
• We have a distribution of lands with different
  initial temperatures
• How will they be affected by climate chagne?

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Problems of current impact models

• Food Prices reflect temporal market situations
• Currently there is excess supply of food.
• Future conditions depend on the race between
  population growth and productivity growth
• Rents reflect commodity support and hide
  variability among regions
• Models underemphasize pest, fertilization and
  similar effects
• Models ignore transition and infrastructure
  costs-they compares equilibria-but transition
  matters
• Under emphasize regional effects

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Fertilization and Pest Effects

• Higher amounts of carbon in the atmosphere will
  increase photosynthesis and plant productivity
  and thus increase overall supply.
• The fertilization effects may be associated with
  less production of protein.
• Pests will migrate with the warmer weather
  towards the Poles, causing damage to trees.
• Overall, productivity may decline if the pest
  effect is greater than the fertilization effect.
• There also will be high adjustment costs because
  developing new crop systems is costly.

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Transaction cost and uncertainty

• Uncertainty about timing of change is a major
  problem-uncertainty deters action.
• Zoning and environmental regulations slow
  responses
• Adjusting farming system is time
  consuminguncertain
• Flood control,rising water levels and relocation
  require
• Slow and costly adjustments
• Adjustment costs increase as the change
  accelerates.
• CC increases vulnerability to crisis - draught
  disease etc Quality of response is measured by
  ability to deal with extreme situation

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Shape and location matter
Pole
Winner
Loser
Equator

• Poorer countries with lower adjustment capacity
  and changing climate patterns will suffer most
• Trade and aid will reduce effect of change

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A Long-Term Perspective on Impact Analysis

• The impact of climate change depend on population
  growth and technological change.
• If population grows slower(faster) than food
  productivity, CC impacts are less (more) severe
• International arrangements to handle emergencies
  and relocations will improve response to climate
  change.
• introduction of rapid assessment and response
  institutions that will - design strategies
• develop and transfer technologies
• help developing countries with implementation

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• Warming not globally uniform
• High-latitude amplification ? Albedo feedback

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Global Climate Models used to project climate
change from different CO2 scenarios
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Fuel efficiency comparsions
country CO2/dollar GNP
Japan .25
France .29
UK .35
Germany .45
U.S .55
Canada .72
India 1.93
China 2.70

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UN Framework Convention on Climate Change

• Ultimate objective stabilizing greenhouse gas
  concentrations in the atmosphere that would
  prevent dangerous anthropogenic (human-induced)
  interference with the climate system
• Such a level should be achieved within a time
  frame to allow ecosystems to adapt naturally to
  climate change, to ensure that food production is
  not threatened, and to enable economic
  development to proceed in a sustainable manner

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1988 Intergovernmental Panel on Climate Change (IPCC) estab.
1990 IPCC 1st Assessment Report ? real threat that by mid 21st century human actions will have changed the basic conditions that permit life
1990 Intergov Negotiating Ctte (INC) estab.
1992 UN Framework Convention on Climate Change (UNFCCC) estab Earth Summit in Rio de Janeiro Convention open for signatures
1994 UNFCCC came into force recognition that climate change is a real problem
1995 IPCC 2nd Assessment Report ? evidence for human-induced climate change estimate permissible emissions to stabilize CO2 at 450 ppmv, 600 ppmv, ... assessment of impacts of climate change
1997 COP3 Kyoto Protocol developed countries to reduce their collective emissions of 6 GHGs (from 1990 levels) by at least 5 by 2008-2012
1998 Kyoto Protocol open for signatures 84 obtained in one year
2001 IPCC 3rd Assessment Report ? more evidence for human-induced climate change
2002 World Summit on Sustainable Development Johannesburg
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Principles of Climate Change Policies

• Incentives to develop capacity to deal with CC
• Emphasis on increased RD to develop
  resource-conserving technologies and improved
  monitoring technologies.
• Emphasis on adaptive management.
• Framework for relocation and resettlement.
• Emphasis on cost effective policies aimed to
  delay climate change.
• No regret policies.

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The Kyoto Protocol I

• A framework to reduce global greenhouse gases
• Signing is voluntary.
• Enters into force when ratified by 55 countries.
• Signatories establish an upper bound on
  greenhouse gas emissions based on their 1990
  emissions
• The U.S. target is 7 of 1990 emissions.
• Japans target is 6 of 1990 emissions.
• EU target is 8 of 1990 emissions.
• Russian and Ukrainian target is no reduction from
  1990 emission level. Since the economies of
  these countries collapsed, their emissions are
  smaller than in 1990s. They have hot air that
  they can fill or sell.
• Costa Rica and Argentina and some Atlantic Ocean
  island countries are the only developing
  countries to sign the Kyoto Protocol.

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The Kyoto Protocol II

• Many developing countries oppose it for several
  reasons.
• Some see it as new colonialism. They have not
  caused the mess and should not be pay to repair
  it
• They want criteria for emission limits that is
  more favorable to lesser developed countries.
  For example
• Nations emissions limits are proportional to
  population.
• National emission limits are based on a formula
  that combines 1990 emission base and population
  size.

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Elements of Kyoto

• Nations have sovereignty for domestic
  implementation
• Joint implementation projects in countries that
  sign the agreement. Such projects may enable
  countries to invest in low-cost, emission-
  reduction activities or provide a foundation for
  trading.
• Clean Development Mechanisms (CDMs) are emission
  reduction projects in LDCs that will provide
  credit to the developed nations that finance
  them.

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Banking and Bubles

• Banking is allowed but is limited to next
  period and restricted.
• Countries may form bubbles to combine their
  targets. The United States and Russia may form a
  bubble. The US may pay Russia tens of billions of
  dollars for its hot air.

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The Management of Sink Activities-soil carbon

• Can help in gaining time
• Are subject to uncertainty in terms of impact and
  measurement
• Issues of enforcements of contracts to modify
  behavior permanently.
• Decide whether voluntary or mandatory program
  (voluntary open to abuse)
• Monitoring of sink activities is difficult.
  Carbon flow measurement is impossible--need to
  measure proxies.
• Pay based on crop and technique selection
• Contribution depends on past activities-need base
  line measurement

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Payment schemes

• 1.Pay as you go-based on action and past
  activities -including penalties for emissions
• 2.Long term contracts- pay for a commitment to
  sequester a target level within a specific
  period- enforcement is tricky
• 3.Pay for conservation activities regardless of
  sequestration.
• Establishment efficient institutional set up-
• regional aggregators that will buy from farmers
  and sell to market
• A monitoring body-to oversee aggregators
• An exchange clearing house

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Sequestration is not a panacea

• Payment for carbon will be low (1-10/ton,net to
  farmer even smaller )
• Limit on contribution per acre (5-10 tons)
• Joining program will restrict flexibility
• Is useful on marginal land when contributes to
  other activities
• May entail paybacks to buy emission rights

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Kyoto for biotech

• Europe will be more accepting of use of GMO
• U.S. Will be more receptive to Kyoto.