Exports of Canadian forest products National Forestry Database. Revenues, Table 8. Statistics Canada. Merchandise trade data, monthly data special extraction, April 25, The classification of the exports of forest products is determined by the international Harmonized Sales codes. The further breakdown of these products is consistent with the nomenclature used in the Food and Agriculture Organization of the United Nations Joint Forest Sector Questionnaire. Date Modified: Thus, they are commonly used to evaluate climate change.
Crop models take the climate parameters from the GCMs to project future changes crop yields given soil and weather conditions, and choice of crop management practices Jones et al. Villoria et al. Livestock considers three categories: dairy farms, ruminant and non-ruminant livestock. Overall, crop yields were expected to decrease over time due to climate change in both RCPs.
In general, the adverse effects are higher almost twice as strong in RCP 8. This is partially due to the higher radiative forcing assumed in this scenario as well as higher variation in temperature and other climate variables Annex 2, Supp. In this paper we assumed that improvements in crop yields due to technological progress would roughly equal increases in demand for food due to population growth, higher income, and dietary transition. In the past, this assumption has generally hold over time. However, it may not hold in the future.
Crop Yield under Business as Usual CYBAU This case provides insights of the costs for the global economy of the adverse effect of climate change with no mitigation efforts. In this simulation, we implemented crop yield shocks by region and crop sector at the AEZ level in our model following the Representative Concentration Scenario 8. This tax is uniformly applied to all goods and services and primary factors of production at the global scale. This target of emission reduction follows the projections of the RCP4. This experiment captures the cost of emissions reduction when climate change affects agricultural productivity and is a better representation of the global agricultural sector.
Our simulations display a wide range of results in terms of economic and environmental variables at the sectorial and regional level. Here, we present the key results to highlight the interactions among mitigation policies, FCS, and climate change induced crop yield shocks, and their implications for food security. This value is consistent with the original set-up of the RCP4. Approximately 3 GtCO 2 e i. This occurs mainly in regions with vast forest, such as South America i.
Including climate change impacts on agriculture produces an overall decline in crop productivity for most of the agricultural sectors and regions of the world Supp. Tables1a and 1b. In addition, due to the absence of incentives for FCS and the small increase of the tax rate, production in all sectors declined proportionally, which kept their shares in GHG reduction relatively constant. Considering this competition for land, it is expected that the global afforestation would not be as high as before. This means that the mitigation effort must be greater in other industries, especially carbon-intensive sectors.
Thus, the FCS share of emissions reductions falls substantially Fig. This result clearly demonstrates that FCS becomes somewhat less attractive once climate induced crop yield changes come into the picture. At the regional level, many economies Europe, Japan, Canada and China are discouraged to afforest due to decline in agricultural productivity, which leads them to use more land for crop production to satisfy their domestic consumption and exports of agricultural commodities.
Thus, FCS is lower, forcing other industries Fig. In contrast, for regions with vast forest Brazil and Sub-Saharan Africa , the share of FCS is still one of the major contributions in GHG reduction due to the benefits of the sequestration subsidy. Hence, there is no significant land use change among cover types Supp.
The only region with significant land use change is Sub-Saharan Africa which has a reduction of pasture land due to decreases in livestock production. Nevertheless, the area variation across crop sectors in many regions is heterogeneous. This is to a great extent due to two factors. First, land is moved away from crops that are heavily penalized by the carbon tax. Thus, paddy rice area declines, especially in Asia i. China, India, and South East Asia , because land growing rice emits methane to the atmosphere. This leads to expansion in the other crop sectors, especially for coarse grain and oilseeds as well as vegetables, fruits and other products i.
The reduction of cropland in the Tax - Subsidy scenario drives up land rent for almost all crop sectors, AEZs, and regions of the world affecting especially economies that are more land intensive in production.
In addition, our modeling framework allows for technological adaptation in agriculture e. Thus, as an indirect result, there is also substitution of land by labor both skilled and unskilled and capital i. If agricultural industries cannot substitute land with capital and labor, the negative impacts on crop production could significantly increase.
This means that with no substitution, the FCS policy becomes more expensive. On the other hand, while area of cropland falls in many regions, crop outputs drop at lower rates. This is in part attributed to a boost in productivity through technological adaptation improvements to partially offset the land reduction.
Hence, forest expansion due to FCS incentives has two effects on agriculture, in our Tax - Subsidy experiment: 1 Forest expansion bids land away from agriculture and 2 It encourages improvements in land productivity by using more labor and capital to avoid sharp reductions in crop outputs. In fact, in this case, there is a significant increase in capital and labor in agriculture such that crop yields increase significantly. This substitution of other factors, capital and labor for land occurs in any CGE model. To test the sensitivity of the implied high degree of productivity increase, we repeated the Tax - Subsidy experiment with restricting crop yields to be fixed.
There are still some substitutions among primary inputs in this restricted case, but much less than the case without restriction. The result is that welfare decrease is much higher in the restricted case.
Discussion and Conclusions
One cannot be sure what degree of agricultural productivity increase would occur, but even with yield fixed, welfare falls less with the tax-subsidy case than with the tax-only case this is discussed overall in Sect. With decreased crop yields in many areas Annex 2 , the only possible responses to satisfy a given crop demand are either through extensification of agricultural land or importing products from other regions.
Thus, with the reduced crop yields, less land is available for FCS Fig. Hence, there is an expansion in global harvested area Fig. In addition, land becomes more valuable driving up its rent in many places of the world Annex 3. Here, we discuss both policies of tax and tax-subsidy under the effects of climate change on crop yield.
The global potential for carbon capture and storage from forestry
Overall, the burden of the carbon tax on outputs including goods and services together with the adverse effects on yields drives down crop production for many regions. We expand the context of the results by incorporating the crop yield shocks. This is caused by the overall reduction in harvested areas due to forest expansion together with losses in agricultural productivity. This drives down output for almost all the crops across the world, with few exceptions Central European countries and Canada , which increase their output to satisfy their self-consumption and export food commodities.
Because of the inelastic food demand, the changes in prices are higher than changes in output. Declines in GDP and private consumption vary among regions. In countries such as India and other developing regions, some production declines can be made up by foreign trade, but not all. This is a result of the land competition between forest and agriculture and low crop yields. Hence, the loss in productivity is expressed in higher commodity prices.
As a result, this further reduction in food supply and dramatic rise in food prices then acts as a major threat for food security. People, particularly low income groups, would have to spend a larger share of their income on food products, especially in emerging economies where agriculture is an important subsistence activity Sub-Saharan Africa, South East Asia, India, South and Central America. Livestock prices also increase dramatically under both scenarios. Trade balance is the difference between regional exports and imports. This drives up import prices, which motivates some regions United States, Central Europe and Oceania to increase their net food exports.
The results are similar under the other CY scenarios.
Percentage change in consumer price index right of diagrams and regional GPD. Both policies decrease real GDP which is endogenous in our model across the world. Likewise, it shows the benefits and cost of mitigating crop yield losses comparing the additional impact of RCP 4.
Our results also show that is unlikely, considering the adverse impacts on agriculture, that most developing regions would implement a carbon tax, which is also supported by Hussein et al. Likewise, our conclusions are consistent with the literature which considers FCS as a cost-effective method compared to other mitigation alternatives Adams et al.
Climate change provokes adverse impacts mainly in i technical efficiency i. Table 2.
2015 Forestry Economics Prize
As a consequence, the simulations suggest a significant underestimation of social welfare losses if the agricultural productivity change is not included in the analysis of both policies. In addition, incorporating the overall adverse effects on agriculture provides an important insight.
Under the presence of climate change, FCS becomes a less attractive alternative due to: 1 land use competition, 2 increased commodity prices and land rent, 3 larger reductions in private consumption and output production, and 4 lower real income in many regions. In other words, including crop yield shocks reverses the conventional wisdom and suggests that a carbon tax only is preferred to the tax combined with FCS in terms of overall economic well-being. In order to compare the welfare losses between RCP 4.
We do this calculation in order to isolate the effects of the additional losses from the adverse crop yields under the RCP4. The procedure is similar for the tax-subsidy regime. This net benefit is before considering all the other benefits of mitigation and adaptation in other sectors, so it is, even in isolation, a strong case for mitigation. The study assumes a constant annual-equivalent tree rotation. However, we are aware that harvesting and tree rotation can change in the future depending on the management practices of the region Sohngen and Mendelsohn Considering changes in rotation i.
Our study makes use of a specific combination of GCM-crop models. There are a vast number of combinations in the AGMIP tool that vary in productivity values depending on the assumptions of each model. Our choice was based on the number of crops available for the time-period evaluated. Other combinations have been evaluated and compared in the literature such as discussed in Moore et al. Their study confirms that, controlling for differences in methodologies and the representation of CO 2 fertilization effect, there is little evidence for statistical differences in the yield response to warming.
Our current work does not implement transfer payments from developed to emerging economies. This is an important aspect for regional development, but this does not affect our major global results, it only affects the distributional effects. FCS has been suggested in the literature as a good alternative to mitigate climate change effects.
We evaluated the effects of a carbon tax and sequestration subsidy to understand their role in the GHG emission reduction. We also included the effects of climate change on crop yields from GCM-crop modeling to analyze how the economic situation could change under these adverse impacts using both policy regimes. Our estimates without climate induced yield losses support previous findings in terms of the importance of FCS as a mitigation method for climate change: The cost of implementing FCS in terms of income and welfare through sequestration subsidy is lower than using only a carbon tax regime when the crop yield losses due to climate change are not considered.
However, our findings add an important dimension: when we incorporate the overall adverse effects of climate change on agricultural productivity—the cost for society of providing FCS incentives can become a threat for food security because it increases the competition for land between forestry and agriculture and that significantly boosts crop prices and land rent.
This shows the importance of including climate change crop yield impacts when evaluating the benefits of FCS as a mitigation method.
It also shows very clearly that impacts of any policy can change significantly as its application increases. Unexpected outcomes are not seen at small scale but can be substantial as scale increases. There are four important implications of this research. First, developing countries are affected much more severely than developed. Second, because of the severity of the estimated impacts, it may prove quite difficult to negotiate stringent emissions reductions policies.
This research highlights an important trade-off between food security and GHG reduction, especially for developing countries. Politically, it will be nearly impossible for developing countries to accept the food price increases and GDP losses.
Third, the results cry out for investment in agricultural research on climate adaptation. The outcome of the paper is clearly undesirable, but it could be softened with improvements in agricultural productivity in the face of climate change, as suggested by recent literature Magnan and Ribera ; Neumann and Strzepek ; Weyant Finally, our results suggest that mitigating the adverse effects on climate change could result in an economic benefit compared to a business as usual scenario.
In other words, mitigation pays even in this likely worst case comparison. This net benefit is valid even without considering all the other mitigation and adaptation efforts in other sectors.
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We are also thankful for the suggestions by Dr. Thomas Hertel who provided important insights that improved our study. Skip to main content Skip to sections. Advertisement Hide. Download PDF. Open Access. First Online: 19 March To fulfill our objectives, we elaborate a multidisciplinary approach Fig.
This model is used to evaluate the economic and land use impacts of emissions reduction targets and policies under alternative climate scenarios. The examined climate scenarios are RCP8. The first scenario represents the case of business as usual with no mitigation effort. To take into account the impacts of climate change on crop yields, we collected data on the existing projections for future changes in crop yields for the examined climate change scenarios. These projections were obtained from the existing estimates developed by the agricultural model intercomparison and improvement project AgMIP Villoria et al.
These projections and the emissions reduction target were introduced as exogenous shocks to the CGE model for each alternative policy either tax or tax-subsidy. We chose a comparative static framework because using a dynamic framework requires many exogenous assumptions that, in turn, impact the results of the analysis. Our objective was to isolate the impacts of climate change shocks and the carbon tax and FCS subsidy policies over an intermediate time horizon.
Open image in new window. In integrating these models, we made the following modifications [for further reference please see Pena-Levano et al. We collected information for eight different crops: maize, soybeans, millet, rice, rapeseed, sugarcane, sugar beets, and wheat by irrigation type i. Finally, we utilized the data to calculate our crop yield shocks. This procedure is described in more detail in Annex 2, and the exogenous crop yield shocks are presented in the Supp.
The calculated shocks in crop yields are then used in our experiment as explained in the next section. The study objectives are accomplished by implementing the following scenarios Fig. This is a large value, but is consistent with results from previous studies which utilize entirely different models and analytical structures e. This global uniform tax on emission forces many economies to either use cleaner technologies or move away from carbon-intensive sectors. With no subsidy, FCS contribution to emissions reduction is negligible Fig.
This can dramatically affect the livestock sector, especially in regions with high carbon intensity emissions, a result which is supported by Avetisyan et al. Our results align with their conclusions. The main increase in forest cover occurs in the tropical and temperate climates with long growth periods e.