The R&D Cost of Climate Mitigation in Agriculture

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AbstractAgriculture is responsible for about one-quarter of global emissions of greenhouse gases (GHGs). Supply-side approaches for reducing emissions from agriculture rely on emissions-saving technological change and the environmental protection of carbon-rich areas. We investigate how productivity policies, in the form of agricultural research and development (R&D) spending, might affect GHG emissions from agriculture compared to environmental policies that restrict agricultural land use or production practices that may cause environmental harm. Using a global economic model, we project outcomes from policy scenarios involving R&D, environmental policies, and combinations of both. At the global level, more R&D spending to accelerate productivity growth reduces GHG emissions from land-use change less effectively than targeted environmental policies. However, accelerated productivity growth reduces emissions intensity of agricultural production and reduces the cost of the environmental policy. Moreover, higher levels of productivity permanently lower agricultural GHG emissions and generally improve global food security. Policies that restrict agricultural factor inputs in order to reduce local environmental costs may increase global agricultural GHG emissions and worsen food insecurity. These consequences could be avoided by increasing R&D spending to accelerate agricultural productivity growth that is either factor neutral or biased toward saving production factors associated with negative environmental externalities.