Transcript OECD Work on Trade and Agriculture - conference

Organisation for Economic Cooperation & Development
Agriculture and sustainable development in
OECD countries: a policy perspective
Wilfrid Legg
Trade and Agriculture Directorate
Integrated Assessment of Agriculture and Sustainable Development
Conference, Egmond aan Zee, The Netherlands, 10-12 March, 2009
Context
OECD Trade & Agriculture Directorate
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The OECD
The Organisation for Economic Cooperation and Development
is an inter-governmental organisation financed by its 30
member countries with increasing outreach to other countries
Aim is to foster global economic growth, sustainable
development and prosperity and act as a hub for globalisation
Addresses common policy issues through dialogue among
countries, based on analysis and comparative statistics
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OECD work on sustainable agriculture
Provides economic analysis and policy advice on the linkages
between agriculture and the environment to help governments
design and implement effective and efficient domestic and
international policies that can contribute to sustainability
Policy Analysis
Policy Dialogue
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Policy Advice
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Security or sustainability?
• Security issues are high on policy agendas:
 economic
 food
 energy
 environment
• Security and sustainability are closely linked and
challenge societies to “live within their means”
• Both involve trade offs and synergies
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Sustainable development and agriculture
 1987 Brundtland report on sustainable
development set the benchmark
 Sustainable development encourages us to think
about the linkages between the economic,
environmental and social dimensions in various
institutional settings
 Sustainable agriculture can be viewed at different
levels: spatial (farm, country, global), temporal
(time horizon) and sectoral (agriculture, agri-food)
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Agri-environmental overview
 Agriculture is the largest user of land and water in most OECD
countries and has a major impact on biodiversity and landscape
 Agriculture generates multiple positive and negative impacts on
the environment resulting from polices and other driving forces
 Many environmental impacts are either externalities or public
goods where markets are absent or poorly functioning
 Agri-environmental issues have risen up policy agendas in OECD
countries and not only direct agri-environmental policy
measures but also agriculture and environment policies matter
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Looking at what’s happened
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Support to farmers
(Producer Support Estimates as a percent of gross farm receipts)
50
45
40
35
30
25
20
15
10
5
0
% PSE
EU
OECD
USA
China
Brazil
Australia
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
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Trends in farm support in OECD Countries
Composition of Producer Support Estimate 1986-2007 (% share in PSE)
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Changes in ways of delivering producer support
OECD
100
EU
USA
80
60
%
40
20
0
8
19
88
6
0
20
07
5
8
19
88
6
0
20
07
5
Output Support
OECD Trade & Agriculture Directorate
8
19
88
6
0
20
07
5
Other Support
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Environmental Performance of Agriculture
• Land used for agriculture and soil loss decreased, but
agricultural water and energy use increased
• Reduction in nutrient surpluses in some countries, but
high concentration and water quality is a problem
• Less pesticide application, but risks are unclear
• Slow-down in decrease in biodiversity?
• Some reduction in greenhouse gas emissions
• Agricultural productivity (yields) has increased
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A range of policy measures in OECD countries
• Targets or thresholds for pesticides, water quality, ammonia and
greenhouse gas emissions
• Regulations intended to meet targets are widely used
• Payments include cost-sharing to meet regulations,
compensation for income lost by adopting specific practices, and
rewarding farmers for extra environmental services
• Cross-compliance important in EU, Switzerland, US
• Use of taxes and charges is very limited
• Market-based approaches, such as tradable permits, and
voluntary, co-operative efforts limited but growing
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But which policy measures are best?
• Agri-environmental indicators, inventory of agri-environmental
policies and classification of policy measures in the PSE data base
provide essential data
• Analysing the effect of different agricultural and agrienvironment policy measures on environmental outcomes using
the Stylised Agri-environment Policy Impact Model (SAPIM) is
nearing completion…
• …as are guidelines for cost-effective agri-environmental policies
• Thematic studies on water and climate change and agriculture
will add further insights
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Looking forward
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Markets: developments and projections
• Price hikes in 2007-8 caused by
–
–
–
–
–
Macroeconomic factors
Poor harvests
Biofuels
Policy responses
Expectations, speculation, panic?
• Price hikes are not new
• Prices projected above trend
– Demand in China and India
– Real prices lower than peaks
– Depends on policy assumptions
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Sustainable agriculture outlook
• By 2030 global food demand projected to rise by 50%
• Land for agriculture (currently 40% of total) will have
to increase by 10% - not including bioenergy
• Yields (output/land) will need to grow by 40%
• Global emissions of greenhouse gases will rise by 2%
due to land use changes
• Greater pressure on water (agriculture uses 70% of
global supplies) and energy - and farming will have to
adjust to climate change
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Topical questions
• Is the concern for food and energy security and climate
change an opportunity or an impediment to
environmentally and socially sustainable agriculture?
• Are current biofuels policies detrimental to the longterm sustainability of agriculture?
• Which structure of incentives and institutions will best
ensure global food security, provision of global public
goods from agriculture, and tackle climate change?
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Drawing conclusions for policy
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OECD policy reform scorecard
• Progress in decoupling support from production –
narrowing of domestic-world commodity price gaps
• Farmers have more flexibility in what to produce in
order to be eligible for support…
• …but more regulations to meet environment, animal
welfare and food safety concerns
• …and though targeted agri-environmental measures
account for only a small share of farm support, this is
not the complete indicator of policy priority
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Some results from OECD work
 Mixed agri-environmental performance and policy measures
 Costs of delivering agri-environmental improvements would be
lower with reductions in commodity-linked support but higher if
agricultural commodity prices rise in the future
 Cost-effective policy mixes to achieve sustainable agriculture
will vary by country
 Property rights and reference levels (defining who pays or is
paid for environmental outcomes not captured by markets) are
often poorly established or implemented
 Linking economics - science – policy is crucial (for example
through the OECD Co-operative Research Project)
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Markets and sustainable agriculture
 Markets do not always function efficiently in
providing food, fibre and societal needs – policy
distortions, externalities, public goods issues
 Markets do not necessarily deliver the distribution
of food and other goods that society desires
 Incomplete information, poor property rights and
uncertainty can mean markets give weak signals for
the allocation of resources to meet future needs
 Markets and trade crucial to ensure efficient
provision of commodities, but need to be
complemented by policies to provide public goods
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Major challenge
 Sustainable agriculture requires actions by private
and public sectors - and much diverse expertise:
 productivity – harnessing science, technology,
structures, and supply chain links
 practices – taking environmental outcomes and
resource pressures into account
 prices – providing the right signals to farmers
 policies – coherent approach to complement
markets at domestic, regional and global levels
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A final thought
“We can only assess sustainability after
the fact – it is a prediction problem
more than a definition problem”
(Heuting and Reijinders)
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Agriculture and the Environment
Trade and Agriculture Directorate
Visit our website – Sustainable Agriculture link:
www.oecd.org/agr/env
Contact:
[email protected]
The views expressed in this presentation do not necessarily reflect those of the OECD or its Member countries
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Reference levels and environmental targets
Environmental
Quality
Environmental Target
Costs to be borne by
society
Reference Level
Costs to be borne by
farmers
Farmers Economic
Optimum
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