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| Rural Industries |
Objective
Background
Based on agreements reached at the Toronto conference
on Atmospheric Change and Global Security, the Australian government
proposed to reduce aggregate emissions of all greenhouse gases
to their 1988 levels by the year 2000 and by a further 20 per
cent by the year 2005.
This proposal, which may be modified before final policies are put in place, is subject to similar action being taken by other countries provided such action will not substantially affect the comparative advantage of Australian industries.
Research
The effects of reducing emissions of greenhouse gases
on the agricultural sector in Australia were analysed using a
non-linear agricultural sector model. A preliminary and highly
aggregated version of the proposed model had already been developed
by ABARE.
A disaggregated version of this model was developed that allowed analysis at a state-by-agricultural-zone-level, thus giving sixteen regions in Australia. The model was used to explore the impact of a hypothetical emissions tax on Australian broadacre agriculture and the practicability of reducing greenhouse gas emissions by technical changes such as increased adoption of minimal tillage for crops, and alteration of methane emissions from ruminants by changing livestock and pasture management.
Outcome
On average, the effect of reducing greenhouse gas
emissions from Australian broadacre agriculture by 20%, using
an emissions tax, would be to reduce farm cash incomes by 36%.
There would be considerable variation in the impact on regional
farm incomes. The least affected region is the high rainfall zone
of Western Australia while the most affected regions would be
the Northern Territory where the average loss of farm cash income
is estimated to be $ 50,345 per farm. Thus an emissions tax is
likely to lead to major structural adjustment in the longer term
as a result of the estimated short term changes in farm cash incomes.
Changes in cultivation practice can reduce the loss of soil carbon associated with cropping, and changes to ruminant nutrition and stocking rates can reduce methane emissions. Changes such as these are unlikely to produce very large individual reductions in greenhouse gas emissions but there may be potential for a useful cumulative reduction if greenhouse gas emissions are taken into account in planning for research and extension in livestock and cropping industries.
Implications
The main implication of this analysis is that policies
designed specifically to reduce greenhouse gas emissions from
agriculture, in all states and regions, should concentrate first
on encouraging the adoption of low emission technologies and the
build up of carbon sinks. This is because a direct approach to
reducing emissions from crops and livestock, such as the emission
tax simulated in this analysis, would impose large costs on farmers
to achieve the target level of greenhouse gas emissions with current
technology.
It can be inferred from the simulations presented
that substantially reducing greenhouse gas emissions from Australian
broadacre agriculture by an emissions tax would be costly. However,
some reduction could be achieved at a relatively low cost by adjusting
farm management practices. On this basis, an emissions reduction
policy for Australian broadacre agriculture would be best directed
toward research and extension to encourage the adoption of low
emission practices and to build up carbon sinks rather than be
directed at industry specific emission taxes.
RIRDC Project No: BAE-6A
RESEARCHER: Dr Nigel Hall
ORGANISATION: ABARE
Edmund Barton Building Broughton Street BARTON ACT 2600PHONE: 06 272 2037
FAX 06 272 2001PUBLICATIONS:
Phipps, S. and Hall, N. 1994 Potential Impacts of Reductions in Greenhouse Gas Emissions on Australian Agriculture: a regional analysis, ABARE Research Report 94.5, AGPS, Canberra.
P. Anandahayasekeram, et al. 1992. 'Implication for Australian agriculture of reductions in greenhouse gas emissions',
S.M. Howden, D.H. White and P.J. Bowman. 1993. 'Managing sheep grazing systems in southern Australia to minimise greenhouse gas emissions: adaptation of an existing simulation model'.
Last updated: 10 October 1996
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