Comparing climate pledges and eco-taxation in a networked agricultural supply chain organisation

Abstract

Abstract This paper examines the effectiveness of climate pledges and eco-taxation as strategies for mitigating climate change within a networked agricultural supply chain organisation. We utilise variational inequality techniques within a multicriteria decision-making framework and validate our theoretical findings through numerical simulations using a machine learning augmented algorithm. By employing this approach, we position the Agricultural Sector Roadmap, aimed at capping global warming at 1.5°C, within the wider agricultural sector’s climate action framework. Our results demonstrate that environmental taxation emerges as the most effective approach for addressing climate change. Eco-taxation leads to a 57.87 per cent reduction in global emissions, whereas climate pledges only account for a 20.59 per cent reduction at the same level of production. Furthermore, eco-taxation results in a 45.68 per cent greater reduction in emission intensity compared to climate pledges. In contrast to climate commitments, an eco-fiscal policy is capable of achieving the objectives established by the European Union.