CCAFS Science Meeting Item 06 Jeimar Tapasco - Economic framework

Eco-Efficient Agriculture for the Poor WWW.ciat.cgiar.org

Jeimar Tapasco

Andy Jarvis

Economic analysis for

adaptation/mitigation alternatives

Eco-Efficient Agriculture for the Poor

Eco-Efficient Agriculture for the Poor

Types of costs and benefits (explicit and implicit) :

- Direct outlays (explicit)

- Partial equilibrium

- General equilibrium

- Environmental and social

Financial costs (outlays) are

the most intuitive

Eco-Efficient Agriculture for the Poor

Financial vs. Economic cost

Eco-Efficient Agriculture for the Poor

After costs/benefits are identified, then:

• Cost Benefit Analysis (CBA)

– Basis of comparison for decision-making

– Determine if a project, policy, investment is worthwhile

OR • Cost Effectiveness Analysis (CEA)*

– OUTCOMES

* CAE (US$/tCO2eq)

Eco-Efficient Agriculture for the Poor

Adaptation

Cost Benefit Analysis (CBA)

•But you can use Cost Effectiveness Analysis (CEA) to analyze other objectives

Mitigation

Cost Effectiveness Analysis (CEA)

•But you should be use Cost Benefit Analysis (CBA) to calculate net benefits or costs

Eco-Efficient Agriculture for the Poor

Technicalities: - Uncertainty - Social discount rate - First or second best

Complications:

- Constrained markets (micro-level) - Environmental cost (externalities) - Social cost (they ignore equity issues)

IPCC Expert Meeting on

Economic Analysis, Costing

Methods, and Ethics. Lima, Peru

(2011)

Eco-Efficient Agriculture for the Poor

Economic

efficiency is not the

only objective for society.

Eco-Efficient Agriculture for the Poor

CIAT Work

Colombia

Eco-Efficient Agriculture for the Poor

Business as usual: Agriculture (Colombia)

Business as usual: Livestock

(Colombia)

Eco-Efficient Agriculture for the Poor

Identifying alternatives • Expert workshop

• Regional workshop with local stakeholders

• Consult crop/agricultural federations

• Meet with government officials to determine political feasibility

• Prioritize – focus on WIN-WIN alternatives

• Identify potential barriers (social, cultural, economic)

Eco-Efficient Agriculture for the Poor

Mitigation and adaptation measures Livestock Rice

• Improved irrigation systems

• Silvo- and agro-pastoral systems

• Testing alternatives to efficient use of N-

Fertilizer

• Improved pasture

• Research (focus on animal genetics)

• Water efficiency

• Efficient use of N-fertilizers

• Clean Development Mechanism

project formulation

• Agricultural insurance programs

• Research (focus on biotechnology)

• Land leveling

• Improved irrigation systems

Eco-Efficient Agriculture for the Poor

Direct outlay cost

Mitigation and Adaptation

Eco-Efficient Agriculture for the Poor

Mitigation

Adaptation

Eco-Efficient Agriculture for the Poor

Current policies New policies A

DA

PTA

TIO

N

MIT

IGA

TIO

N

Eco-Efficient Agriculture for the Poor

Is it feasible for

the private sector to bear

the costs of adaptation & mitigation?

Eco-Efficient Agriculture for the Poor

Cost Effectiveness Analysis

Mitigation

Eco-Efficient Agriculture for the Poor

Alternative Potential area

(ha)

Carbon

Potential

Abatement

(Thousand

tCO2eq/year)

Cost

effectiveness

($US/tCO2eq)

Min Max

Silvopastoral systems

(SSPi) 3.739.109 28.895 -49 0.6

Improved pasture 51,487 54 -103 -62

Fruits (replacing

pasture) 359,320 1,938 -188 -25

Efficient use of N-

Fertilizer 170,000 38 -267 145

Potential area, Cost and Potential mitigation

from alternatives (2012-2040)

Eco-Efficient Agriculture for the Poor

Silvopastoral systems: A mini-revolution in

Colombia and Central America

Initial state: July 17, 2007

August15, 2008

13 months

October 22, 2008

15 months

Eco-Efficient Agriculture for the Poor

MAC curve showing the potential CO2e capture for the implementation of SSPi in different regions of Colombia

Eco-Efficient Agriculture for the Poor

N-fertilizer on rice

Eco-Efficient Agriculture for the Poor

Measure

Potential area

(ha) tCO2e/year

Leveling land Cucuta 16,900 197,052

Technical assistant Tolima and Huila 67,049 84,785

Leveling land Jamundi 5,113 66,812

Crop residues management Espinal 13,900 26,271

Technical assistant Meta 74,005 14,754

Technical assistant Cucuta 11,404 10,161

Technical assistant Bajo Cauca 47,346 5,705

Technical assistant Casanare and Arauca 64,897 4,726

Technical assistant Cesar, Magdalena and Guajira 12,068 4,241

Crop residues management Yopal 6,985 3,300

Crop residues management Valledupar 3,035 3,278

Technical assistant Casanare 13,488 1,934

Technical assistant Jamandi 1,300 1,060

Potential CO2e to reduce

Eco-Efficient Agriculture for the Poor

MAC curve for more efficient N-fertilizer on rice

Eco-Efficient Agriculture for the Poor

Work wrong Work well

Eco-Efficient Agriculture for the Poor

Cost (benefit) -1.000.000 -1.000.000

Carbon capture 1 1.000.000

Eco-Efficient Agriculture for the Poor

Private perspective

Public perspective

Eco-Efficient Agriculture for the Poor

Economic tools

must be appropriate for the problem at

hand.

CAUTION!!

Eco-Efficient Agriculture for the Poor

Others CIAT work

Ongoing • GIZ / CONANP Mexico (Programming)

• ESPA Colombia (Programming)

Upcoming • DNP – Colombia (Econometric as input for a GEM)

• PNUMA Colombia, Ecuador y Perú (Assessing impact and prioritizing)

• FONDO de ADAPTACION Colombia (CBA direct outlays)

Eco-Efficient Agriculture for the Poor

Some gaps…

• More programming work

– Better understanding of implication of mitigation and adaptation measures on small farmers

• Environmental and social cost

• Links between mitigation and adaptation

Eco-Efficient Agriculture for the Poor

Thanks! [email protected]