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EEP-101-lecture 19 David Zilberman

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Title: EEP-101-lecture 19 David Zilberman


1
EEP-101-lecture 19David Zilberman
  • Climate Change

2
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

3
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

4
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.

5
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
6
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.

7
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.

8
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

12
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

15
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

16
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

19
Global Climate Models used to project climate
change from different CO2 scenarios
20
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

21
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

22
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.

35
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.

36
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.

37
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.

38
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.

39
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

40
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

41
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

42
Kyoto for biotech
  • Europe will be more accepting of use of GMO
  • U.S. Will be more receptive to Kyoto.
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