Abstracts Economics

Climate change and agriculture: theory and application of mitigation policies

by Asta Ervola

Agriculture’s contribution to climate change is controversial as it is a significant source of greenhouse gases but also a sink of carbon. Hence its economic and technological potential to mitigate climate change have been argued to be noteworthy. However, social profitability of emission mitigation is a result from factors among emission reductions such as surface water quality impact or profit from production. Consequently, to value comprehensive results of agricultural climate emission mitigation practices, these co-effects to environment and economics should be taken into account. The objective of this thesis was to develop an integrated economic and ecological model to analyse the social welfare of crop cultivation in Finland on distinctive cultivation technologies, conventional tillage and conservation tillage (no-till). Further, we ask whether it would be privately or socially profitable to allocate some of barley cultivation for alternative land use, such as green set-aside or afforestation, when production costs, GHG’s and water quality impacts are taken into account. In the theoretical framework we depict the optimal input use and land allocation choices in terms of environmental impacts and profit from production and derive the optimal tax and payment policies for climate and water quality friendly land allocation. The empirical application of the model uses Finnish data about production cost and profit structure and environmental impacts. According to our results, given emission mitigation practices are not self-evidently beneficial for farmers or society. On the contrary, in some cases alternative land allocation could even reduce social welfare, profiting conventional crop cultivation. This is the case regarding mineral soils such as clay and silt soils. On organic agricultural soils, climate mitigation practices, in this case afforestation and green fallow give more promising results, decreasing climate emissions and nutrient runoff to water systems. No-till technology does not seem to profit climate mitigation although it does decrease other environmental impacts. Nevertheless, the data behind climate emission mitigation practices impact to production and climate is limited and partly contradictory. More specific experiment studies on interaction of emission mitigation practices and environment would be needed. Further study would be important. Particularly area specific production and environmental factors and also food security and safety and socio-economic impacts should be taken into account. Maatalous vaikuttaa ilmastonmuutokseen eri tavoin. Kotieläin- ja kasvintuotannosta syntyy merkittäviä määriä kasvihuonekaasupäästöjä, mutta toisaalta maaperä ja kasvillisuus pystyvät sitomaan hiiltä ja vähentämään ilmakehän hiilidioksidipitoisuutta. Maataloudella on siten nähty olevan mahdollisuus osallistua ilmastonmuutoksen hillitsemiseen, joko lisäämällä hiilen sitoutumista tai vähentämällä tuotannosta syntyviä päästöjä. Ilmastopäästöjen vähentämisen yhteiskunnalliseen kannattavuuteen vaikuttavat…