Bridges Trade BioRes Review • Volume 3 • Number 1 • June 2009
Climate change, agriculture and trade: Understanding the linkages
by Charlotte Hebebrand
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Climate change will impact agricultural production and productivity around the world and the agricultural sector will have to adapt to climate change if we are to achieve global food security. Indeed, food security features prominently in the UN Framework Convention on Climate Change (UNFCCC), which calls for a stabilisation of greenhouse gas (GHG) concentrations in the atmosphere to be “achieved within a time frame sufficient 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.”[1]
Agriculture, which is a significant emitter of greenhouse gas emissions, can also play an important role in climate change mitigation, but it is not yet clear how the sector will be included in a new international climate change regime. The trade of food and agricultural products can contribute to both climate change adaptation and mitigation, and trade measures will likely be used as carrots or sticks by policymakers to encourage mitigation. In this context of climate change and agriculture, it is imperative to identify and implement both correct international climate change and agricultural trade rules.
Impact of climate change on agriculture
Studies on the likely impact of global warming on agriculture differ in their conclusions, and there is a great deal of uncertainty about the localised impacts. Most recent studies point to the likelihood of small but beneficial impacts on cereal crop yields in middle-high latitude temperate zones, due to small temperature increases (1-2 °C). These positive effects would, however, be followed by subsequent losses as temperatures increase. There is a consensus that low latitude, tropical zones are most negatively affected, since they are already experiencing temperatures at levels that are close to or beyond a threshold at which further increases will reduce rather than increase agricultural yields. Not only are temperatures higher in low-latitude countries, but these countries have less capacity to adapt (i.e., increase irrigation) and derive a larger percentage of their GDP from agriculture.
Beyond warming, climate change is projected to increase the frequency and severity of extreme climate events (i.e., droughts, floods), which will impact agricultural production and food security. Elevated CO2 levels can lead to positive crop responses, but these are considered to be lower than previously thought.
Agriculture can play an important mitigating role.
While most human-induced GHG emissions derive from the use of fossil fuels, one third of the total comes from land use changes, which includes agriculture. The livestock sector alone is considered to contribute more GHGs than the transport sector[2]. Three major GHGs are involved in agriculture: carbon dioxide, methane and nitrous oxide. The agricultural sector provides significant potential for relatively cost-effective GHG emissions reduction through: 1) a reduction of its own emissions via improved management practices; 2) sequestering carbon in agricultural soils via improved agricultural practices; and 3) avoiding fossil fuel emissions (i.e., via biofuels if they are found to offer significant GHG savings).
Measuring emissions from agriculture, however, is more difficult than tracking emissions from industrial activities due to complex biological and ecological processes; monitoring methodologies need to be improved to more accurately calculate agricultural emissions. Under the Kyoto Protocol, developed countries can already count land use change, forestry activities and certain agricultural practices towards their emission reduction requirements. Under the Protocol’s Clean Development Mechanism (CDM), developing country producers can receive financing for specific afforestation and reforestation projects, emissions reductions from which can be used by developed countries as offsets. Given the significant mitigation potential found in the agricultural sector, UNFCCC negotiators will have to address whether and, if so, how to expand the role of agriculture in an international climate change regime.
The role of trade
The UNFCCC importantly calls upon parties to cooperate in preparing for adaptation to the impacts of climate change. The convention refers in particular to water resources and agriculture and calls for the promotion, application, and diffusion of technologies, practices, and processes to reduce or control emissions from agriculture and forestry. Financing for successful adaptation and mitigation in agriculture will figure largely in the international negotiations leading up to the UNFCCC’s much-anticipated climate change conference in Copenhagen.
An open trade regime for food and agriculture will also contribute to adaptation and mitigation efforts. At a most basic level, trade of food and agricultural products will be required to offset both climate- induced changes in agricultural production and shortages due to sudden climatic events. Moreover, an undistorted trading system will level the international playing field and facilitate increased investment in the agricultural sectors of countries, many of which have suffered from decades of neglect. Increased trade opportunities for poor countries, still heavily dependent on their agricultural sectors, will increase economic growth.
An open trade regime greatly improves access to inputs, which can trigger dramatic productivity increases on existing agricultural land and restore degraded lands, thus taking pressure off of forests. An elimination of trade-distorting domestic support by developed countries to their agricultural sectors should also lead to more environmentally prudent production choices.
Trade measures used as sticks and carrots
Climate change-related issues such as border tax adjustments are relevant to the trade of all products, and will have to be carefully considered. Questions about non-product related production and processing methods are especially important for food and agricultural products, given the preponderance of food standards and the increasing tendency to estimate the ‘carbon footprint’ or undertake ‘life-cycle analysis’ for biofuels and other agricultural products. WTO Director-General Pascal Lamy has rightly called for an international consensus on the relationship between international trade and climate change rules, without which, disparate national actions are unlikely to meet their objectives - in either the climate change or the trade arena.
There are additional issues to consider with regard to agricultural products, since there is a separate WTO Agreement on Agriculture. In particular, questions are likely to arise on how payments made to incentivise agricultural producers to mitigate or adapt to climate change, are to be classified. Will these fit squarely into the ‘green box’ category of minimally or non-trade distorting support? What if they emanate from private markets established under cap-and-trade regimes?
As the international community seeks to conclude a climate change agreement by the end of the year, it is well advised not to lose focus on the need for further agricultural trade liberalisation. The agricultural sector faces significant challenges, not least among them climate change and the need to double agricultural production by the year 2050. Given these challenges, policy coherence between international climate change and trade rules is vital.
Charlotte Hebebrand is Chief Executive of the International Food & Agricultural Trade Policy Council (IPC).
[1] Article 2
[2] FAO, 2006
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