Q. What is the Kyoto Protocol to the United Nations
Framework Convention on climate dhange and what are its
implications for U.S. agriculture?
A. The international community is addressing
the challenges posed by global climate change through
the United Nations Framework
Convention on Climate Change (UNFCCC). Ratified by
the United States in 1992, it now has over 170 member
countries. The Convention seeks to stabilize atmospheric
concentrations of greenhouse gases (GHG's) at safe levels.
Covered gases include carbon dioxide (CO2),
methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons,
perfluorocarbons, and sulfur hexafluoride.
The Kyoto Protocol
to the UNFCCC, signed by over 80 counties in November 1998,
formalizes this commitment by setting specific emissions reduction
targets for developed countries, Eastern Europe, and the former
Soviet Union (listed in Annex B). Across countries, the reductions
in national GHG emissions average about 5 percent below 1990 levels
over the first commitment period (2008-2012). U.S. emissions over
this period are to average 7 percent below their 1990 level.
To enter into force, the Kyoto Protocol must be ratified by 55
Annex B countries that account for at least 55 percent of global
carbon dioxide emissions (Article 25). As of September 7, 2000,
the treaty had been ratified by 29 countries, none of which is listed
in Annex B. A number of key issues remain to be negotiated by the
Parties to the UNFCCC, including the use of carbon sinks to offset
emissions, the framework for implementing and monitoring international
emissions trading, and the structures and procedures for verification
and enforcement.
Of particular interest to U.S. farmers is the upcoming 6th Conference
of Parties (COP6) set for November 2000 in the Hague. Negotiations
there will try to determine:
- How will afforestation, reforestation, and deforestation be
defined under Article 3.3?
- Will other land use change activities—such as forest, cropland,
and grazing land management—be included as carbon sinks under
Article 3.4?
- How will a unit of carbon sequestered in terrestrial carbon
sinks (i.e., emissions offsets) compare with an equivalent amount
(i.e., in atmospheric warming potential) reduction in greenhouse
gas emissions?
The economic impact of the Kyoto Protocol on U.S. farmers will
depend on how the Parties resolve all outstanding issues and, assuming
U.S. ratification, the mix of domestic policies
chosen to achieve compliance. About 81 percent of U.S. GHG emissions
are related to fossil fuel combustion (EPA,
1998), so any national strategy to reduce GHG emissions will
likely include some system of charges levied on the carbon content
of energy-intensive inputs (e.g., fossil fuels, fertilizers, pesticides,
and electricity). This would raise farm production costs through
higher prices for these inputs.
Estimates of the carbon charge needed to achieve compliance with
the Kyoto Protocol in 2010 range from $14 to $200 per metric ton
of carbon emitted. Estimates at the lower end of this range assume
widespread international emissions trading and the participation
of developing countries (Lewandrowski et
al., 2000). Upper-end estimates assume all countries meet their
reduction commitments internally.
The United States strongly favors a Kyoto Protocol framework that
includes both emissions trading and participation of developing
countries. Hence, to the extent that the U.S. position is reflected
in the final treaty, any related charge on the carbon content of
energy-intensive inputs would likely be at the lower end of the
estimated range. For a carbon charge of $14 per metric ton, McDowell
et al. (1999) estimate an initial increase in total variable
costs for U.S. farmers of less than 2 percent. Still, due to agriculture's
dependence on energy and its competitive structure, many farmers
are concerned that even a relatively small carbon charge could hurt
their ability to compete internationally.
The Kyoto Protocol, for example, places no restrictions on the
GHG emissions of developing countries, many of which compete with
U.S. producers in global commodity markets - such as Argentina for
wheat, coarse grains, corn, soybeans, and cotton; Brazil for soybeans;
Thailand and Vietnam for rice; and India for cotton. Developing
countries also compete for shares of many U.S. commodity markets.
In 1998, for example, U.S. vegetable imports from Mexico were valued
at over $1.7 billion (ERS,
1998). If efforts to reduce U.S. GHG emissions by increasing
energy prices significantly raise U.S. farm production costs relative
to those in certain developing countries, some U.S. producers could
become uncompetitive.
U.S. agriculture could also benefit from a national program to
implement the Kyoto Protocol if the treaty assigns a significant
role to terrestrial carbon sinks and if farmers are paid to convert
or better manage land (e.g., expanding the use of no-till systems,
eliminating summer fallow, and increasing use of winter cover crops).
References
- Economic Research Service. 1998. U.S.
Agricultural Trade Update. Monthly Supplement to Foreign Agricultural
Trade of the United States. U.S. Department of Agriculture,
October 23.
- Lewandrowski, J., H. McDowell, R. House,
and M. Peters. 2000.Mitigating Greenhouse Gas Emissions: Implications
of the Kyoto Protocol for U.S. Agriculture and U.S. Agricultural
Policy, World Resources Review. Vol. 12, No. 1, pp. 126-148.
- McDowell, H., J. Lewandrowski, R. House,
and M. Peters. 1999. "Reducing
Greehouse Gas Buildup: Potential Impacts on Farm-Sector Returns".
Agricultural Outlook, U.S. Dept. Agr., Econ. Res. Serv.,
AGO-263, Aug., pp. 19-23.
- U.S. Department of Agriculture. 1997. Economic
Analysis of U.S. Agriculture and the Kyoto Protocol.
Office of the Chief Economist.
-
U.S. Environmental Protection Agency. 2000.
Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-1998.
EPA 236-R-00-001, April.
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