Requirements in the field of land use, agriculture and forestry in the context of the EU Strategy for sustainable development

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Requirements in the field of land use,
agriculture and forestry in the context of the EU
Strategy for sustainable development

• Pierre Valette, European Commission
• Daniel Deybe, National Detached Expert

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The notion of sustainable development

• To meet the needs of the present generation
  without compromising those of future generations

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Physical
Sustainability
Economic
Social
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• To evaluate sustainability, it is necessary to
  evaluate the impacts on the three main
  components
• environment
• social
• economic

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• There are no thresholds for any of them.
• But if it is possible to evaluate the impact on
  each of them, policy makers could consider the
  differentiated impact and decide according to
  their own goals, knowing the positive and
  negative effects.
• This justifies the Sustainable Impact Assessment
  of any major EU policy.

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What is expected from agriculture ?

• An agriculture that is competitive
• Production methods that are environmentally
  friendly and able to supply quality products
• Agricultural diversity, product variety and the
  provision of public goods linked to rural
  development and notable, the preservation and
  enhancement of the rural landscape.
• Simplicity in agricultural policy and shared
  responsibility for its implementation
  (subsidiarity)
• Justification of support through the provision of
  public services by farmers

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• Agenda 2000 introduced payments to farmers to use
  their privately owned resources or production
  factors for activities that go beyond good
  farming practices.
• The Göteborg Council endorsed the Commissions
  pledge to carry out a Sustainable Impact
  Assessment for major policy initiatives and
  legal proposals.

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Specific requirements concerning the CAP

• Shifting resources from market support to rural
  development, improving agri-environment measures
  (transparency), assessing the coherence of zoning
  and increasing funds for rural development.

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Conflicts and synergies with Ecology

• In some cases, environmentalist would prefer that
  strong support (and even priority) should be
  given to policies that minimize the negative
  impacts on the environment. This would imply that
  the other axis (economy and social impacts) are
  neglected.
• In some cases, this might be irrealistic.

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• But in some cases, several functions might
  contribute to environmental, economic and social
  goals

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Alternative environmentally concerned practices

• One way to deal with this problem is to identify
  and use environmentally concerned or
  environmentally neutral practices.
• In this case, the environmental impact could be
  low or nihil.
• But, are they economic or socially acceptable?
• Is there any way to introduce them?

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Role of landscape

• Landscape is a consequence of the natural
  endowment as well as of the human intervention.
  Several changes can take place infrastructure,
  industrial settings, agriculture, urban
  settlements, etc.
• Agriculture is one of the key issues, because it
  occupies an important portion of the space, but
  it is not the only one.

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• Policies can influence the type of agriculture
  and therefore the landscape.
• But landscape is also an amenity. It can
  contribute to human welfare and thus provide a
  positive externality (an extra function).
• Can a value be provided to this amenity?

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Land use

• Besides, as mentioned before, agriculture
  competes for land use. On one hand there is the
  incorporation of natural land into agriculture
  (and agro-forestry and forestry) and vice-versa.
  On the other hand, the trade-off with other land
  uses might not allow to obtain a sustainable
  balance.
• Agriculture can contribute to the functions of
  Land use, but Land use functions will drive
  agriculture.

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• How to evaluate alternative land-uses, how to
  promote them (eventually)?

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Employment

• In some cases and regions, agriculture is the
  main source of labor occupation, both family and
  employment.
• It also contributes to stabilize population on
  the country side.
• It helps avoiding overpopulation in some urban
  sites.

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• How can the benefits of the stabilization of the
  rural population be counted when undertaking SIA
  ?
• Are the available/proposed services sufficient
  enough to entertain the rural population and the
  level of employment? This can also be linked with
  land use issues.

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Income generation

• Agriculture can contribute to great extent in
  some cases to (direct and indirect) local and
  regional income generation and therefore have an
  impact on the level of development.
• Is this latter impact measurable in SIA? What is
  its role at the micro and macro-economic level?

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Carbon cycle

• Agriculture and forestry can contribute to
  capture greenhouse gases through the use of its
  sinking capacity (there are mainly two sources of
  sinks soil carbon and forestry) or to mitigate
  GHG through technological change or by replacing
  fossil fuels by bio-fuels

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• In the case of the sinks, an economic
  compensation can be estimated according to the
  amount of C captured and the final use of the
  consequent C stock.
• Emission trading could also be applied to GHG
  emitting activities, but it will be extremely
  difficult to implement.

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• Bio-fuels should be considered in the economic
  valuation both as a source of energy and as a
  replacement for uses of non-renewable C sources

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Other outcomes of agriculture

• Any other outcome of the agricultural sector,
  like providing for food security, social
  cohesion, should be taking into account in the
  SIA.

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Multifunctional aspects

• All these aspects can be summarized in what could
  be named as the multifunctional aspects of the
  sector.

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Contribution of the forestry sector

• Forestry can contribute in at least two ways
• as a source of diversification/income
  generation/employment/land use
• as a C sink

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Multifunctional forest

• But is also provides other functions
• hunting, fire wood, tourism, landscape, etc.
• How can these other functions be considered?

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Economic and social sustainable wood chains
Actors industries, public authorities, civil
society, international (trade, conventions,
partnership) Regulation (local, regional, EU,
World)
Society markets
Solid wood chain Fiber chain Bio energy chain Bio
composites chain
Forest, Forestry
Multifunctionalities rural development,
environment, sinks, landscape, bio-diversity
Forestry Wood Chain
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From micro to macro-economic impacts

• It is very important to evaluate the
  micro-economic impacts, in particular the
  structural effects of the different policies at
  the farm level. It can provide useful insights
  for policy makers and help in the decision
  making.

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• However, the evaluation of the macro-economic
  impacts is also required. In the process of
  policy making, several options can be
  contemplated and comparing the macro-economic
  impacts could provide arguments for the selection
  or rejection of a given one.
• Also, the spill-over effects to other sectors
  should be considered

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Relationship with externalities

• The externalities are the indirect or unexpected
  effects of policies. They can be negative or
  positive.

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Impact pathway analysis
Source
Dissemination
Response
Doses-Responses
Dose

Monetary evaluation
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• In particular, externalities happen on the
  environment and on health. But an integrated
  approach can be able to point them out in other
  sectors, quantify them (when possible) and
  eventually avoid them.

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RES vs coal electricity production cost
including external costs (cents/kWh)
Cost
Coal w/ext
Wind w/ext
Wind
Coal
time
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Can sustainability goals be established?

• This is part of the political process.
  Stakeholders participation, discussion and
  compromise are useful processes to identify
  sustainability goals from a societal perspective.
• In some case, some room for manoeuvre might have
  to be left open when the future impacts have not
  yet been identified (precautionary principle)

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Indicators and thresholds

• A possible way to proceed is to identify main
  sustainability indicators that can help in the
  process of monitoring whether the goals are being
  achieved (or not).
• For these indicators, thresholds can be
  identified and fixed (from the environmental,
  economic and social perspective) which point out
  the limits that can/should not be exceeded.

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Is it possible to account realistically for
policy impacts?

• An integrated framework that takes into account,
  modularly, the different sectors, combining
  bottom-up and top-down approaches, should be able
  to provide insights on possible impacts of
  policies.
• The combination of approaches (micro and macro)
  should be able to take into consideration the
  many levels (local, regional, global) concerned
  by the policies.

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From cost-efficiency to cost-benefit to
integrated analysis

• There is a need to evaluate the (direct)
  efficiency according to the fixed targets and the
  associated private costs of any policy in the
  decision making. In this case, the possibility of
  succeeding efficiently in attaining the goals is
  evaluated and quantified.

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• More difficult is to estimate the cost-benefit of
  any policy. In this case, all benefits (direct
  and indirect) of a policy have to be considered
  in the economic analysis. The outcome in this
  case is an internal rate of return of the policy.
  Usually, it is not always possible to evaluate
  the economic values of the indirect benefits (and
  cost), so usually they are only mentioned for
  information purposes.

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• An integrated framework, in which the
  relationships between the different sectors and
  stakeholders are been explicitly considered and
  stated might help overcoming part of the
  inconveniences and provide useful insights (even
  if not completely accurate) of the impacts of
  policies and contribute to the SIA.

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Some examples of how policies might not achieve
their goals and how integrated approaches can
detect the unexpected outcomes and help avoiding
them
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Case study 1

• In Africa, it is said that animals overgrazing
  enhance the erosion processes.
• It is tested for a village what could happen if
  the number of animals pasturing could be limited.

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1000 FCFA
Tn érodées
Strong impact on the village revenue Strong
impact on erosion with a limited constrain,
further constrain will not have any more impact
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Impact on the revenue
Better endowed
Less endowed
Less endowed farmers might face a strong impact
on their revenue
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Example 2

• In a certain region of south America, rotation
  are excluding fallow periods.
• What will happen if a subsidy is granted for
  fallowing?

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Impact of a compensation paid to extensify
production
100 ha
Tn érodées
The subsidy is used to increase livestock size
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Sustainability Impact Assessment(Methodology 1)

• ? Sustainability issues ? protection and
  renewal of stocks of resources ? efficiency
  with which resources are used ? equity between
  generations? Measuring impacts ?
  quantitative, qualitative and in money terms
  when reliable estimates are possible ? costs
  and benefits expressed in real terms
  taking into account discounting

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SIA Methodology
(2)Economic impacts macro- and micro-economic
impacts, notably in terms of economic growth and
competitiveness, innovation and technological
development, investment, market shares and trade
patterns, increases or decreases in consumer
prices.Social impacts human capital,
employment levels, ethic, gender equality, social
exclusion and poverty, acceptability, health,
safety, consumer rights, social capital,
security.Environmental impacts changing
status of climate change, air, water, soil
pollution, land-use, bio-diversity, changes in
public health.
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SIA Methodology (3)?
Tools for cost-effectiveness and cost-benefit
analysis multicriteria analysis, scenario
building, indicators building.? Treatment
of risk and uncertainty in order to apply
precautionary principle? ?
macro-econometric and general equilibrium
models ? sectoral models energy, transport,
agriculture and forests ? Impact Pathway
analysis for damage valuation ?
multi-agent models ? participatory approaches,
learning methods
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Methodological challenges for SIA

• ? Some tools (models, accounting frameworks for
  externalities, techno-economic databases) exist,
  but they are not dedicated to the SIA needs (and
  not sufficiently developed).
• ? Environment
• - damages of a technology or human activity on
  environment and health
• ? physical damages (Environment programme)
• ? monetary valuation (EXTERNE or GREENSENSE)
• - thresholds of sustainability issue a mix of
  natural science, economic and social aspects
  mainly sites level transferability issue for
  macro assessment
• - treatment of uncertainty for global issues
  (climate change)

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• ? Economy
• - private costs of measures (incl.
  technologies)
• - social cost (social cost private
  external costs) of measures
• - cost-effectiveness analysis means optimisation
  against an objective ? modelling framework
• - cost-benefit analysis ? includes external cost
• - micro-economic and macro-economic impacts ?
  different types of models
• - regional, national, global modelling with
  linkages for competitiveness and trade analysis
• - ex-ante impacts analysis of mix of economic
  instruments (e.g. emission trading emissions
  ceilings)

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• ? Society
• - distinction between social, legal and
  institutional aspects is necessary
• - social aspects are not explicitly taken into
  account in the traditional economic tools
• - understanding and expectations of behaviours
• - multi-agents models could help to represent
  the functioning of a social system
• - participatory approach and governance issue
  must be addressed
• - issue of transferability of results
• ? Trade-offs
• - difficult and political process at the final
  stage
• - monetary valuation should help, but not
  application to societal issue

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Integration of sustainability in the land use
modeling

• In the land use models it is possible to
  consider
• available resources
• different actors
• different regions
• it is also possible to account for
• environmental indicators

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• The last option can be used to measure and
  compare the impacts on environmental
  sustainability.
• Considering different stakeholders might help
  identifying structural and social impacts
• As these models also considers profitability,
  they can help measuring the economic impacts

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• Some of the accounting indicators can be
  transformed in constrains to represent thresholds
  or targets
• This allows to identify the economic cost or
  the welfare impact, according to the objective
  function defined and using the dual values, for
  evaluation and comparison purposes.

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Type of uses of the integrated framework

• Main types of analysis
• simulation
• econometric
• approximations until the equilibrium
• optimization
• general equilibrium
• foresight
• Scenario based
• Baseline

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Econometric

• Extrapolation of past trends through the use of
  response elasticities
• Very useful for short term analysis
• ex. Capri model

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Aproximation

• Trial and error mechanisms for each sector
  sequentially, until the equilibrium is reached,
  which is not the global equilibrium
• very pragmatic, gathering detail information on
  the different components
• ex. Poles-gecs, Agripol

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Optimisation

• Behaviour is the basis for model solving
• The solution is optimal, but might not be
  realistic
• ex Mata

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General equilibrium

• All the sectors and all the reactions are
  considered simultaneously
• very aggregated and static
• ex. GTAP, GEM-E3, Nemesis

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Scenario based

• Different large consistent sets of assumptions
  affecting science, technical schedules,
  environement, economy and social factors are
  compared in quantitative and qualitative terms.
• difficult to estimate the differential impacts of
  some of the measures

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Baseline based

• The comparison is undertaken on the basis of a
  probable evolution and the changes in some
  parameters
• the specific impacts can be identified