Template-Type: ReDIF-Paper 1.0
Author-Name: Levente Timar
Author-X-Name-First: Levente
Author-X-Name-Last: Timar
Author-Email: levente.timar@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Title: Does money grow on trees? Mitigation under climate policy in a heterogeneous sheep-beef sector
Abstract: I use simulations from the Land Use in Rural New Zealand model to consider mitigation for different classes of sheep-beef farms under climate policy. Farmers in the model can respond to carbon prices by abandoning or afforesting marginal land. In assessing carbon credits against liabilities, I consider only the income a farmer would be able to get with certainty without taking a carbon price risk. Farmers in intensive farm classes tend to bear the costs of emissions because their opportunity cost of exiting pastoral agriculture is high. The dominant land-use response in more extensive systems is land abandonment or afforestation, depending on location. Less profitable farm classes generally face higher average liabilities in relation to profits, both before and after the land-use response. Results indicate that farmers in North Island hill country may benefit most from afforestation opportunities. In this farm class, income from rewards could offset over half of farmers’ emission liabilities.
Length: 23 pages
Creation-Date: 2016-05
File-URL: https://motu-www.motu.org.nz/wpapers/16_09.pdf
Number: 16_09
Classification-JEL: Q52, Q54, Q58, R14
Keywords: Climate change policy, sheep-beef farming, farm classes, mitigation, cost distribution
Handle: RePEc:mtu:wpaper:16_09