Mark W. Rosegrant Director, Environment and Production Technology Division, IFPRI 14th May 2008, Royal museum for Central Africa in Tervuren, Belgium

1. Including Agriculture in
Climate Change P li i
Cli t Ch Policies
Mark W Rosegrant
W.
Director
Environment and Production Technology Division
Presentation given to the “Agriculture, Development, and the Poor: Challenges, Stakes,
Opportunities”, Brussels, Belgium, May 14, 2008

2. Outline
Climate Change and Variability Impacts
on Agriculture and the Poor
Adaptation Strategies
Pro-
Pro-poor Mitigation: Constraints and
Opportunities
Conclusions: Investing in Climate
Change Policy for the Poor
Ch P li f th P
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3. Climate Change and
Cli t Ch d
Variability Impacts

4. Impacts and Vulnerability to
Climate Change & Variability
Rich countries emit majority of GHG
Poor countries are more vulnerable
P ti l bl
• Geography (hotter, less rain, more variation)
• G
Greater dependence on agriculture and natural
t d d i lt d t l
resources
• Limited infrastructure and low-input agriculture
low-
• Low income, poverty and malnutrition
• Thus, lower adaptive capacity (also including
, p p y( g
inadequate complementary services, like health
and education)
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5. Impact on agricultural productivity with
carbon fertilization (%)
( )
n.a.
n.a. – not applicable for Alaska, Northern Canada and Antarctica
Source: Cline 2007
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6. Percentage change in Wheat yield due to climate
change with hydrologic effects, 2050
Sou ce
Source: IFPRI IMPACT simulations for HadCM3/SRESB2 scenario ( t
C s u at o s o adC 3/S S sce a o (with
IMAGE temperature and CO2 fertilization effects), April 2008
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7. Global Wheat Price: Without biofuel demand,
w/o climate change and w/o water scarcity
Source: IFPRI IMPACT simulations for HadCM3/SRESB2 scenario (with
IMAGE temperature and CO2 fertilization effects), April 2008
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8. Adaptation Strategies

9. Climate Change Adaptation
“Many adaptations can be implemented at
low cost, but comprehensive estimates of
adaptation costs and benefits are currently
p y
lacking…. “ (IPCC 2007)
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10. Types of Adaptation
Autonomous or spontaneous adaptations
• Reactive response (after initial impacts are manifest)
to climatic stimuli without the directed intervention of
a public agency
• Initiatives by private actors rather than governments
governments,
triggered by market or welfare changes induced by
actual or anticipated climate change
Policy-
Policy-driven or planned adaptation
• Proactive response
• Result of deliberate policy decision on the part of a
R l f d lib li d i i h f
public agencies
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11. Adaptation Responses and Issues
Type of
Autonomous Policy-driven
Policy-
response
Improved
Crop choice, crop forecasting
area, planting dates Research on climate
Short run
Risk-
Risk-pooling risk
insurance Risk-
Risk-pooling
insurance
Large-
Large-scale public
Private investment
investment (water
Long run (on-
(on-farm irrigation)
storage, roads)
Private crop research
Public crop research
Adaptive capacity of
poor Uncertain returns to
Issues Social safety nets investment
Tradeoffs with Targeting
mitigation
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12. Much Adaptation is Extension of
Good Development Policy
Promoting growth and diversification
Investing in research and development,
development
education and health
Creating markets in water and
environmental services
Improving international trade system
Enhancing resilience to disasters and
improving disaster management
p g g
Promoting risk-sharing, including social
risk-
safety nets, weather insurance
y ,
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13. Effective Adaptation Strategies
Requires targeted adaptation within a policy context and
strategic development framework
Must go beyond good development policy to explicitly
target the impacts of climate change, particularly on the
poor
Market signals
• essential factor in determining the responses to a
changing environment
• but involves potentially expensive time lags and overlooks
equity
Climate change adaptation must therefore be proactive,
not merely reactive
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14. Pro-
Pro-Poor Mitigation:
Constraints and Opportunities

15. Critical Step: Post-Kyoto International Climate
Post-
Change Architecture
Emissions targets, rates of convergence, and
rates of growth in developing-country emissions
g developing-
p g y
Level of emission allowances for developing
countries
Level of caps by sector and industry
Sector-
Sector-specific mitigation options
Incentives for international carbon trade
Transparency and complexity of administration
Financing of adaptation and mitigation
All influence economic growth, agriculture, food
security, and poverty in developing countries
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16. Sources of GHG Emissions
Developed Countries Developing Countries
70
60%
% tota of GHG emissions
60
50
e
40
30
20 18%
al
14%
10
4% 4%
0
Energy Deforestation Agriculture Industrial Waste
(excluding land processes
use change)
Sources: World Resources Institute 2007; World Development
Report 2008
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17. Pro-
Pro-Poor Climate Mitigation Policy
Climate change policy can generate
income for small farmers and investment
flows for rural communities
Requires effective integration
from global governance of carbon trading,
to sectoral and micro-level design of
micro-
markets and contracts and
contracts,
investment in community management
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18. Estimated Potential Emission Savings
and Costs by Sector
Sector 2050 Annual Average Annual
Emissions Cost($/tCO2)
Savings (GtCO2) ~2025-
~2025-2050
Deforestation 3.5-5.0
3.5- 2 -4
Afforestation and Reforestation 1.0-2.0
1.0- 5-15
Land management practices 1.0-2.0
1.0- 20-27
20-
Agriculture (methane & nitrous 1.0 27
)
oxide)
Bioenergy 2.0-3.0
2.0- 25
Waste and fugitive emissions, 4.1 3 -5
industrial processes
Fossil fuel related, excluding 40.0 22-33
22-
bioenergy
Source: Adapted from various estimates, Stern Review, pp. 244-63
244-
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19. But minimal carbon trades in agriculture
in developing countries
Only 3-4% of carbon trading is sourced
y 3- % g
from agriculture, land use, land use
change, agroforestry and forestry
Only 3% of carbon trading is sourced
from Africa
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20. Constraints to Pro-Poor Mitigation
Pro-
1. High transaction costs of Clean Development
Mechanism (CDM) Conditions for Offset Projects
( ) j
in Developing Countries
• Additionality, measurability, permanence, leakage
prevention, social benefits, environmental benefits
• Information about carbon benefits to potential
buyers, obtaining information about project partners,
b bt i i i f ti b t j t t
organizing project participants, capacity building and
ensuring parties fulfill their obligations
• Transaction costs per unit of emission reduction are
higher for projects involving many smallholders and
forest communities
f t iti
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21. Constraints to Pro-Poor Mitigation
Pro-
2. Carbon sequestration from soil carbon and
avoided deforestation―i
id d deforestation―important areas for
d f t ti t t f
climate mitigation and for poor developing
countries––are excluded from CDM
countries––are
ti l d df
3. CDM-eligible assets from afforestation and
CDM- g
reforestation are excluded from European
Union-
Union-Emissions Trading Scheme
g
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22. Expanding Pro-Poor Mitigation
Pro-
1. Institutional innovations linking communities to
global markets - Establish regional centers for forest
carbon trading, soil carbon sequestration, specialized
business services and local intermediaries
2. Simplified standards (baseline and monitoring)
for small-scale projects - Make eligible for simplified
small-
modalities; simplified emission reduction credits calculated
using standardized reference emission rates
3.
3 Dealing with permanence issue in carbon
sequestration – Allow short term contracts, payment for
mass-
mass-time units of carbon
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23. Conclusions

24. Improve Knowledge for Agriculture and
Climate Change Policy
Better understanding of spatially-
spatially-
disaggregated impact of climate change on
agriculture and water
Inclusion of international trade and economic
effects in climate change impact analysis
Spatial targeting of types of adaptation and
costs and benefits of adaptation
Spatial targeting of potential benefits and costs
of mitigation
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25. Investing in Climate Change for the Poor
Preliminary estimates from World Bank:
• Annual Official Development Assistance = $100 billion
• Foreign direct investment in developing countries =
$150 billion
• Gross Domestic Investment = $1,500 billion
• Incremental annual investment requirements for
adaptation to climate risk = $40 billion
Potential Annual Cost of Emissions Reductions
in Developing Countries = $150-250 billion
p g $150-
Can be $150-250 billion value stream with
$150-
appropriate policies
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26. Investing in Climate Change for the Poor
Climate change policy can create new value-
value-
added for pro-poor investment in agriculture
pro-
Increases profitability of environmentally
sustainable practices
Employ advanced ICT to streamline
measurement and enforcement of offsets
offsets,
financial flows, and carbon credits for investors
Enhance global financial facilities and
governance to increase and manage funding
flows for both mitigation and adaptation
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