Reducing Greenhouse Gas Emissions from Irish Agriculture: A market-based approach

James P. Breen, Trevor Donnellan and Patrick C. Westhoff

No 130555, 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil from International Association of Agricultural Economists

Abstract: To date within Europe, a regulatory approach has been favoured when trying to curtail emissions from agriculture, the Nitrates Directive being a recent example. Economic theory indicates that market based solutions such as tradable emissions permits are the least cost means of achieving desired reductions in emissions. This paper compares the impact on farm incomes of a regulatory approach to emissions abatement with an emissions trading approach. A farm-level linear programming model for the Irish agriculture sector is constructed. A 20 percent reduction in Greenhouse Gas (GHG) emissions is introduced and the impact on farm incomes is measured. The linear programming model is then used to determine each farmer’s shadow value for an emissions permit. These shadow values are then weighted to estimate supply and demand curves and used to simulate a market for emissions permits and the farm incomes are re-estimated. Finally, the implications for farm incomes of both abatement strategies are compared with a scenario where no constraint is placed on GHG emissions.

Keywords: Agricultural and Food Policy; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Pages: 34
Date: 2012
New Economics Papers: this item is included in nep-agr and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae12:130555

DOI: 10.22004/ag.econ.130555

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