Reforming Agricultural Support for Improved Environmental Outcomes

Abstract

AbstractAgricultural support has changed substantially in both rich and poor countries in recent years. In rich countries, there has been a strong move to decoupled subsidies and a fall in average rates of protection. In developing countries, market price support remains the dominant form of protection, and average rates of support have risen—breaking the traditional pattern of taxing agriculture. Emissions from agriculture and land use change have contributed up to a third of total greenhouse gas emissions, with beef, milk and rice production accounting for more than 80% of agricultural emissions. Agricultural support was biased against emission‐intensive goods until recent years and is now only slightly biased toward them. Although emission intensities are relatively higher in the developing countries, they have fallen far more rapidly in developing countries than in the rich countries in the past quarter century, as agricultural productivity has grown in developing countries. Policy reform will be challenging given the strong political‐economy support for the current structure of protection. Increasing investments in research and development to raise productivity and lower the emissions intensity of agricultural output would help agriculture and the environment.JEL CLASSIFICATIONF18; F64; Q18; H23; Q58