Working Papers in Economics,
University of Bergen, Department of Economics

Abstract: Norwegian agriculture makes a disproportionate contribution to the country’s emissions of greenhouse gases (GHG) relative to its contribution to gross domestic product (GDP) – a picture that is repeated globally. Using a detailed economic model we examine what impacts an assumed 30 per cent cut in GHG emissions from agriculture may have on food production. We find that a CO2 tax on agricultural activity would result in a reduction of agricultural production, particularly of GHG-intensive commodities such as beef and sheepmeat. The use of feed and fertilizer would fall. There would be an extensification of production and emissions per hectare would decline. In contrast, if farmers are rewarded for carbon sequestration through agroforestry, this would lead to intensification. More inputs would be applied to land that remained in agriculture and emissions per unit of agricultural land would increase. Although the numerical results are specific to the Norwegian setting, they are illustrative of global issues. If agriculture is to meet the food needs of an expanding world population while simultaneously contributing to mitigation of GHG emissions, this will require the intensification of production - higher output per unit of land with higher emissions per unit of land area, but with lower emissions per unit of agricultural production.

Keywords: agricultural sector model; GHG emission; carbon tax

JEL-codes: C68; Q18; Q52

18 pages, April 24, 2013

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