Trade, food security and climate change: conceptual linkages and policy implications

Background paper for The State of Agricultural Commodity Markets (SOCO) 2018 Trade, food security and climate change: conceptual linkages and policy implications

Background paper for The State of Agricultural Commodity Markets (SOCO) 2018

Andrea Zimmermann, Julian Benda, Heidi Webber and Yaghoob Jafari

Food and Agriculture Organization of the United Nations Rome, 2018 Required citation: Zimmermann, A., Benda, J., Webber, H. and Jafari, Y. 2018. Trade, food security and climate change: conceptual linkages and policy implications. Rome, FAO. 48 pp. Licence: CC BY-NC-SA 3.0 IGO.

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Cover photograph: ©FAO/Giulio Napolitano Contents Acronyms ...... v Summary ...... vi 1 Introduction ...... 1 2 Climate change and food security ...... 2 3 Trade effects on climate change and trade for mitigation ...... 4 3.1 Conceptual linkages ...... 4 3.2 Empirical evidence ...... 5 3.3 Policy implications ...... 6 4 Climate change effects on agricultural trade and trade as an adaptation measure ... 7 4.1 Conceptual linkages ...... 7 4.2 Quantifying the impacts of climate change on trade ...... 8 4.2.1 Overview of the methodology ...... 8 4.2.2 Climate change impacts on agricultural trade ...... 11 4.2.3 Trade policy for adapting to climate change ...... 12 4.2.4 Discussion ...... 14 4.3 Policy implications ...... 15 5 Climate and trade policy ...... 16 5.1 Patterns of Nationally Determined Contributions (NDCs) ...... 16 5.2 Reconciling climate and international trade policies ...... 17 6 Conclusions ...... 20 References ...... 21 Annex: NDC Factsheet ...... 28

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Acronyms AR4 Fourth IPCC Assessment Report AR5 Fifth IPCC Assessment Report BAMs Border adjustment measures CGE Computable General Equilibrium model ETSs Emissions Trading Schemes EKC Environmental Kuznets Curve GDP Gross Domestic Product GHG Greenhouse gas IPCC Intergovernmental Panel on Climate Change RCPs Representative Concentration Pathways PE Partial Equilibrium model SRES Special Report Emission Scenarios SSPs Shared Socioeconomic Pathways

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Summary Agriculture is not only a contributor to climate change, it will also be severely affected by climate change. Some effects of warming on crop yields, increased weed and pest occurrences and the effects of extreme events (e.g. floods, storms, droughts) on agricultural production are already observed. These are likely to intensify in the future leading to declines in agricultural production in many parts of the world, fluctuations in world market prices and an increased number of people at risk of food insecurity. The paper provides an overview of the complex relationships between climate change and agricultural trade, their connection with food security and possible policy implications. While there is no clear evidence on the net effect of trade on Greenhouse Gas (GHG) emissions, trade could play an important role in climate change adaptation for ensuring food security. High-latitude countries can expect productivity gains from climate change and could export a part of their surpluses to adversely affected countries. Low-latitude countries will be most severely affected in terms of production losses and may need to buffer these losses through increased food imports. Open markets could ease the exchange between food surplus and food deficit regions. Potential environmental externalities and financial and distributional impacts on developing countries would need to be further investigated and, if necessary, accounted for through targeted policy measures. The first domestic climate policies proposed by the countries as part of their obligations under the Paris Agreement suggest close interlinkages with World Trade Organization (WTO) rules. They would need to be coordinated and reconciled at international level to promote climate change mitigation, while, at the same time, ensure the free tradability of food as a crucial adaptation measure to climate change.

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1 Introduction “The 2015 Paris Agreement […] has liberated climate research from discussing what is already known — the world is warming and humans are largely responsible” (Marotzke et al., 2017). Around 24 percent of all climate change causing greenhouse gas (GHG) emissions come from agriculture, forests and other land uses (IPCC AR5, 2014). However, agriculture is not only a contributor to climate change, it will also be severely affected by climate change. Some effects of warming on crop yields, increased weed and pest occurrences and the effects of extreme events (e.g. floods, storms, droughts) on agricultural production are already observed (Lobell et al., 2011b, 2011a, 2013). These are likely to intensify in the future leading to declines in agricultural production in many parts of the world, fluctuations in world market prices and an increased number of people at risk of food insecurity (Hertel et al., 2010). Agricultural trade could contribute to GHG emissions, but it could also help adapt to climate change by moving food from surplus to deficit regions. The paper aims is to provide an overview of the complex relationships between climate change and agricultural trade, their connection with food security and possible policy implications. We (1) provide an overview of climate change impacts on food security, (2) review the impacts that trade could have on GHG emissions and (3) review recent quantitative integrated climate change impact assessments for the impacts of climate change on agricultural trade. Having shown the interlinkages between climate change, trade and food security, we also (4) discuss potential interlinkages between international trade policy with recently proposed climate policies.

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2 Climate change and food security Climate change affects food security in many ways. While climate change is expected to also directly impact human health and incomes, we focus on climate change effects on food security through its effects on the agriculture sector only. One can distinguish two distinct types of risks (Baldos and Hertel, 2015). The first pertains to the occurrence of extreme weather events such as heat stress, droughts or flooding which result in disproportionately large losses in crop yields or declines in animal health (Porter, J.R. et al., 2014). As any warming is expected to increase the frequency and severity of extreme weather events (Kirtman et al., 2013), it becomes critical to understand and quantify how these extremes will translate into impacts on food production and risks to food security (Battisti and Naylor, 2009; Porter, J.R. et al., 2014). Across regions, observational evidence suggests that maize yields are already declining as the number of days with high temperatures increases (Lobell et al., 2011; Hawkins et al., 2013; Lobell et al., 2013). The resulting crop yield variability is associated with crop price spikes (Tadasse et al., 2016) and likely to contribute to increased commodity price volatility (Diffenbaugh et al., 2012). Price spikes and volatility both constitute increased vulnerability of the poor to poverty and malnutrition (Ahmed et al., 2009). The second type of food security risk posed by climate change is that which results from long run changes in average temperature and precipitation as GHGs accumulate in the atmosphere. As these changes will be gradual, there is greater scope for incremental adaptation of management to maintain current systems (Zimmermann et al., 2017). More transformational adaptations requiring long-term investments such as introducing irrigation are also possible when the change is anticipated (Hertel and Lobell, 2014) though the high degree of uncertainty and risk of maladaptation serves as a barrier to these more fundamental changes. Long run climate change effects will not equally affect world regions. Whereas most tropical regions will suffer from severe production losses with warming, temperate producing regions are expected to benefit from higher temperatures (Rosenzweig et al., 2014) and potentially longer growing seasons (Zimmermann et al., 2017). A further source of disparity between tropical and temperate regions is related to the fertilization effect of elevated CO2 concentrations which is expected to bring large yield increases to C3 crop production in temperate regions with minimal drought. However, C4 crops such as millet, sorghum and maize dominate in the tropics and these crops are only expected to benefit from elevated CO2 in cases of low to moderate water limitation (Faye et al., 2018). Whereas research on the long run climate change impacts is already quite extensive, research on the impacts of extreme events and their risk posed to agriculture is much less developed (Porter, J.R. et al., 2014). In the long-run, climate change will affect all four dimensions of food security, namely food availability, access to food, food utilization and stability of food supplies (Schmidhuber and Tubiello, 2007; Box 1).

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Box 1: Climate change impacts on the four dimensions of food security Food security is “a situation that exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life” (FAO, 2001). Based on this definition, the four dimensions of food security are defined as: food availability, economic and physical access to food, food utilization and stability of access to food over time. Availability: Crop production will be heavily affected by climate change. Crop models project that global mean crop yields of rice, maize and wheat could decrease between 3 and 10 percent per degree of warming above historical levels (Challinor et al., 2014). Livestock systems will be affected through reduced feed quantity and quality, changes in pest and disease prevalence, and direct impairment of production due to physiological stress. Growth and meat, egg and milk yield and quality decrease as temperatures go beyond 30 °C due to reduced feed intake (Thornton and Gerber, 2010). Barange et al., 2014 project potential fish catch to decrease by 5 to 10 percent in tropical marine ecosystems by 2050 (though with much spatial variation). Access: Climate change will affect people's access to food through impacts on prices, as affected by production and land relocation, trade flows, but also through broader impacts on incomes. While higher food prices make food more expensive for consumers, higher prices could translate to higher incomes for farmers, many of whom are currently food insecure (Stevanović et al., 2016). Physical access to food may be disrupted by climate change via effects on transport systems (Bailey and Wellesley, 2017). Utilization: Climate change impacts food safety and quality. Climate change is likely to reduce food safety due to higher rates of microbial growth at higher temperatures (Hammond et al., 2015), particularly in fresh fruit and vegetables (Liu et al., 2013) and fisheries supply chains (Marques et al., 2010). Food quality could be affected due to decreases in protein and macro- and micronutrient (Fe, Zn, Mn, Cu) concentrations associated with increased CO2 concentrations and more variable and warmer climates (DaMatta et al., 2010). Extreme events such as flooding are also expected to aggravate food safety and health challenges (Hashizume, M. et al., 2008). Stability: Climate change effects the stability of food security as extreme weather events reduce crop yields or damage physical infrastructure resulting in limited food availability and driving food price shocks (Tadasse et al., 2016) limiting food access (Wheeler and Braun, 2013). Also, bioenergy policies as mitigation efforts to combat climate change are thought to have contributed to food price volatility (Wheeler and Braun, 2013).

Sources: Based on Campbell et al. (2016) and Schmidhuber and Tubiello (2007).

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3 Trade effects on climate change and trade for mitigation

3.1 Conceptual linkages Trade and global trade opening could contribute to or mitigate climate change. Evidence tends to be mixed, but some studies find that general (not just agricultural) trade openness of a country may lead to increased GHG emissions, mainly through increased production, consumption and transport (WTO-UNEP, 2009). Recently, Cristea et al. (2013) found that transportation is responsible for 33 percent of worldwide trade- related emissions. This is equivalent to 3.5 percent of total emissions (OECD/ITF, 2010). Considering the production aspect of international trade, there are three noted effects as introduced by Grossman and Krueger (1993): the scale effect, by which increased economic activity results in greater emissions, the composition effect, by which increased trade may affect the sectoral composition of an economy through changes in relative prices, and the technique effect, or the effect on environmental quality of technology spill- overs resulting from increased trade. The scale effect states that free trade necessarily creates additional output and if the nature of the activity remained unchanged, resource depletion and pollution will increase proportionally along with output, and thus negatively affect climate change. The impact of trade through the composition effect depends on whether the country has a comparative advantage in emission-intensive sectors and whether these sectors are contracting or expanding. The sources of comparative advantages could be different: capital endowments, natural resource endowments and regulation. First, trade patterns could be determined by endowments of capital and labour, as in the standard neoclassical theory of trade. In this context, the “factor endowment” hypothesis claims that pollution-intensive industries are normally capital-intensive and that the availability of capital will determine the location of the pollution-intensive industries. Second, comparative advantage can be determined by the endowment of natural resources. A country with abundant forest resources is expected to export forest-based products, and therefore trade is likely to damage the environment of such countries. The comparative advantage might also be determined by the difference in environmental regulations. According to the “pollution haven” hypothesis, high-emission industries may relocate to countries with less stringent emission regulation policies.1 Under this hypothesis, trade opening has an impact on the distribution of pollution across countries, rather than on the overall average. However, policymaking with the "pollution haven" hypothesis in mind could lead to the imposition of less stringent environmental regulations (race to the bottom). The “race to the bottom” hypothesis claims that international trade and investment create downward pressure on countries’ environmental standards and thus damage the environment

1 A contrary to the “pollution haven” hypothesis is the “Porter” hypothesis, suggesting that more stringent environmental policies in the home country lead to improved comparative advantage for domestic industries.

4 across the globe. The net effect of changes in the composition of sectoral output resulting from trade depends on the strength and interplay of these changes.2 While the scale effect almost certainly leads to higher emissions and the composition effect is ambiguous, the technology effect can be expected to have climate mitigating outcomes. The technique effect reduces the emission per unit of output produced or consumed through multiple channels. Trade can increase the income level and with it the demand for cleaner a environment. Further, trade induces technological change, encourages technology transfer; speeds up the adoption of frontier technologies and best-practice management. The interaction of these effects explains the Environmental Kuznets Curve (EKC), which assumes a loose inversely U-shaped relationship between income and environment. Recall that because of opening to trade the scale of the economic activity expands. If the scale of the activity is growing while the nature of the activity is unchanged then trade opening leads to a proportional increase in pollution and resource depletion. However, the EKC suggests that the nature of the economic activity does change, either in terms of change in the composition of activity, the development or transfer of new technologies, or increasing income levels leading to higher demand for a cleaner environment. In contrast, Grossman and Krueger (1991) suggest an N-shaped relationship between income and GHG emissions. This relationship indicates that emissions increase as country income increases, decrease once a threshold income level is reached, and then begin to rise again when a second income turning point is passed.

3.2 Empirical evidence Since Grossman and Krueger (1993) first studied the environmental impact of trade openness, several econometric studies on the matter have emerged. Antweiler et al. (2001) and Grether et al. (2007), for the example of sulphur dioxide, find that the technique effect was strong enough for trade opening to result in environmental improvements. Cole and Elliott (2003) on the other hand, by taking into consideration CO2, show that the scale effect outweighs the technology effect meaning more trade openness would likely result in a CO2 emissions increase. Frankel and Rose's (2005) empirical study on almost 150 countries finds similar results, but after controlling for endogeneity the positive relation between trade openness and environmental quality becomes statistically insignificant. In the context of agricultural trade, Schmitz et al. (2012) predict higher economic benefits from further trade liberalisation at the expense of environment and climate by the middle of the century, if no pertinent regulations are implemented. Ederington et al. (2004) find no evidence of a causal link between trade liberalization and a compositional shift towards cleaner technologies in US manufacturing. However, they note thatthis compositional shift is also present in US

2 Leaving aside the possibility of a race to the bottom effect, Frankel (2009) suggests that the composition effect might positively affect the environment. Frankel (2009) further found little support that trade induces the race to the bottom.

5 imports, discrediting the hypothesis that increasing trade openness may lead to the production of emission intensive goods in so-called pollution havens. These findings are contradicted by Cole (2004), who finds evidence of pollution haven effects, albeit relatively small compared to the role played by other variables and not widespread. Evidence on pollution haven effects were also found by several other studies (Kellenberg, 2009; Levinson and Taylor, 2008; Solarin et al., 2017). Recently, Jafari et al. (2017) find an N-shaped relationship between GDP and GHG emissions (in CO2 equivalents per capita) in developed countries, while an U-shaped relationship between these variables exists in developing countries, countries in transition and least developed countries. However, trade in goods and foreign direct investment show no significant impact on the level of GHG emissions. Rafiq et al. (2016) specifically consider the agriculture sector and international (merchandise) trade in their analysis. Their results show that industrialization increases pollution levels, whereas both service and agriculture value added help reduce emissions. Their results regarding the effect of trade openness on GHG emissions are mixed. A linear model does not show any significant effect, while a nonlinear model specification shows that trade liberalization significantly contributes to emission reductions.

3.3 Policy implications Overall the empirical evidence on the climate change mitigating effects of international trade is mixed. However, the scope for trade in climate change mitigation exists, as underlined by the presence of potential trade policy changes implicit in the Nationally Determined Contributions (NDCs), the documents submitted by each member country in the context of the Paris Agreement and stating their commitment to tackling climate change. Agricultural trade could help to mitigate climate change by (i) allowing to move agricultural (food) production to most efficient regions in terms of GHG emissions and (ii) using dedicated (most suitable) regions for the production of (new) energy crops (Elbehri et al., 2015). Trade in general (merchandise trade) could help mitigate climate change by fostering the exchange and distribution of climate friendly technology (WTO- UNEP, 2009). Trade policies should be complemented by targeted environmental measures for reaping trade benefits in terms of economic growth and climate change mitigation, but at the same time addressing potential trade-related environmental externalities.

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4 Climate change effects on agricultural trade and trade as an adaptation measure

4.1 Conceptual linkages Climate change may lead to significant trade disruptions in the short-term (through extreme events) and long-term changes in trade patterns through altering countries’ comparative advantages. Trade could help countries adapt to short-term supply disruptions and long-term changes in comparative advantages triggered by climate change (Baldos and Hertel, 2015; Havlík et al., 2015; Nelson et al., 2014a; WTO-UNEP, 2009). Short-term supply disruptions through extreme events in parts of the world and subsequent price volatility could be mitigated by increased imports or food aid from regions that were not or less affected by these events. Open markets could facilitate the movement of agricultural products from surplus to deficit regions and mitigate price volatility in the countries struck by the climate extremes. While extreme events are difficult to predict, the balancing impact of open market on price volatility is well- researched (Anderson, 2012; Anderson and Nelgen, 2012; Martin and Ivanic, 2016; Porteous, 2017). However, food price volatility may also be imported from the world market, especially in highly trade-dependent developing countries (Ceballos et al., 2017). Here, we focus on the slow-onset, long-term, effects of climate change on the agriculture sector. Conceptually, the initial effect of climate change that reduces yields (given existing practices) would lead to reduced production. The reduced supply in turn triggers price rises. Due to the higher prices, consumers reduce consumption, especially of relatively expensive crop and livestock products, and turn to relatively cheaper foods. At the same time, producers respond to higher prices by allocating more land to the affected crops and changing farm-level management practices to optimize production, partly or fully off- setting the initial yield-reducing effect of climate change (Nelson et al., 2014a). In addition, climate change affects agricultural trade through non-uniform effects on agricultural production across countries. Since countries will be affected unevenly, their trade patterns will change to compensate for production losses and surpluses. (OECD, 2015). This autonomous (or “endogenous” as per Ahammad et al., 2015) adaptation determines the effect of climate change on trade. However, how well markets can adapt to climate change will also be determined by the extent of their openness to trade. Trade barriers make access to the world markets more difficult, rendering the regional impacts of climate change relatively more important for regional food security (Baldos and Hertel, 2015). In short, a negative productivity effect from climate change would likely cause prices to increase and trigger more intensive management practices, area expansion, reallocation through international trade, and reduced consumption. While increased trade may help to alleviate pressures from combined socioeconomic and/or climate impacts on agricultural production and prices, it may also entail other

7 impacts and externalities potentially linked to them – both positive, for example increases in productivity embedded in increased inputs or investments (Huang et al., 2011) and negative, for example increases in greenhouse gas emissions due to deforestation (Schmitz et al., 2015; c.f. section 3).

4.2 Quantifying the impacts of climate change on trade Although assessments of climate change impacts on the agriculture sector in specific countries or regions are plenty, only a relatively limited number of studies consider impacts on international trade. We review global integrated climate change impact assessments that include at least one economic model. All of the reviewed studies use either Computable General Equilibrium (CGE) or Partial Equilibrium (PE) models. Typically these are long-term foresight analyses, which do not consider extreme weather events or price volatility.

4.2.1 Overview of the methodology Common to all studies considered here is that in a first step (usually as part of preexisting biophysical studies) climate impacts on the agriculture sector were simulated by coupling climate and crop growth models. The resulting impacts on crop yields are in a second step used to shift yields in line with the simulated climate change impact in the economic models. The economic models then simulate the effects of climate change adjusted yields on food production and subsequent changes in trade and demand. Usually, this is done for the long-term (often for the year 2050) and, to some extent, reflecting uncertainty in future development paths by considering a range of different climate change and socioeconomic scenarios. All of the studies use scenario assumptions based on the climate and socioeconomic pathways adopted by the Intergovernmental Panel on Climate Change (IPCC). Two studies use the Special Report Emission Scenarios (SRES, Arnell et al., 2004) of the Fourth IPCC Assessment Report (AR4). The other studies use the Representative Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs) developed for the Fifth IPCC Assessment Report (AR5) (O’Neill et al., 2017; van Vuuren et al., 2011). The assumptions within the SSPs are currently being refined and regionalized and are often interpreted somewhat differently in the individual economic models. However, their basic assumptions are harmonized and refer to future world population and Gross Domestic Product (GDP) as main driving forces of the agriculture and food system. Some studies reviewed include additional trade policy scenarios, these are considered in section 4.2.3. Table 1 provides an overview of the reviewed studies and the scenarios used therein. Counterfactual scenario results are usually compared to a baseline scenario, often a projection of current trends into the future. In addition to the exogenous effect on yields from climate change, most studies also consider a yield-increasing effect through technological change over time, which varies across scenarios and regions.

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Table 1. Global studies considering climate change impacts on international trade

Authors Year Main objective Type of economic Combination of climate, economic and trade scenarios model

Nelson et al. 2014a/2014b Economic impacts of Multi-model (5/6 Baseline: SSP2; Scenarios: SSP2 with RCP8.5, no CO2 fertilization climate change CGE, 4 PE)

von Lampe et al. 2014 Economic impacts of Multi-model (6 CGE, Baseline: SSP2; Scenarios: SSP2 with RCP8.5, no CO2 fertilization; climate change, model 4 PE) SSP3 no climate change; bioenergy scenarios comparison

Ahammad et al. 2015 Role of international Multi-model (6 CGE, Baseline: SSP2; Scenarios: SSP2 with RCP8.5, no CO2 fertilization; trade under climate 4 PE) SSP3 no climate change; bioenergy scenarios change

OECD 2015 Economic impacts of CGE Baseline: SSP2; Scenarios: SSP2 with RCP8.5, no CO2 fertilization climate change

Havlík et al. 2015 Climate change impacts PE SSP4 no CC; SSP5 no CC; SSP4/RCP2.6 w/wo mitigation; and mitigation in the SSP4/RCP8.5; SSP5/RCP2.6 w/wo mitigation; SSP5/RCP8.5, RCP2.6 developing world with CO2 fertilization, RCP8.5 w/wo CO2 fertilization

Blanco et al. 2017 Climate change impacts PE SSP2/RCP8.5 w/wo CO2 fertilization on agriculture

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Wiebe et al. 2015 Climate change impacts Multi-model (3 CGE, SSP1 no CC; SSP1/RCP4.5; SSP1/RCP4.5/trade liberalized; SSP2 no on agriculture 2 PE) CC; SSP2/RCP6.0; SSP3 no CC; SSP3/RCP8.5; SSP3/RCP8.5/trade restricted

Baldos and 2015 International trade in PE SSP2 no CC; SSP2/RCP8.5 w/wo CO2 fertilization; SSP2/RCP8.5 Hertel managing food security w/wo CO2 fertilization/full trade liberalisation risks from climate change

Costinot 2016 Climate change impacts GE SRES A1FI with CC/free allocation of production/free trade; A1FI on comparative with CC/allocation of production restricted/free trade; A1FI with advantages CC/free allocation of/trade restricted

Stevanović et al. 2016 Climate change impact on PE SRES A2 w/wo CC w/wo liberalized trade; no CO fertilization agricultural welfare

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4.2.2 Climate change impacts on agricultural trade Impacts on trade at global level The multi-model analysis of Nelson et al. (2014a) shows that all nine models considered in the study transfer a large part of the climate change shock to production-side and trade responses - at least three quarters of climate change responses occur through land use change, management intensity, and trade adaptation. The share of global trade in world production increases by 1 percent on average compared to a no climate change baseline in 2050. Despite these endogenous adaptations, average producer prices increase by 20 percent, whereas consumption responses are relatively small and differ little across the models. The models tend to disagree on whether area or yield responses would be most important locally, and on trade-responsiveness.3 The multi-model analysis of von Lampe et al. (2014) predicts higher prices for agricultural commodities caused by climate change in general, and for crops in particular. Average prices of a crops aggregate change between 2 percent and 79 percent across models and scenarios compared to a no climate change baseline in 2050. However, contrary to Nelson et al. (2014a), von Lampe et al. (2014) also find demand effects in terms of a reduced per capita calorie availability across the world (with few exceptions). Climate change is also predicted to result in substantially higher net food imports. The multi-model analysis of Ahammad et al. (2015) projects lower global production for all considered crops under climate change. Ahammad et al. (2015) also suggest an increasing role of trade under climate change as most models project exports to decrease by much less than the projected decline in production or to even increase against declining production. Havlík et al. (2015) find that climate change effects in 2030 remain limited at the global level and aggregated across crops. However, as climate change progresses, trade becomes an important contribution to adaptation. In 2080, agricultural trade due to climate change increases by 0.4 percent and 1.2 percent of the global production under RCP 8.5 with and without CO2 effects, respectively, between the ten different macro-regions considered in the study.

Impacts by region Climate change affects world regions unevenly, leading to changes in regional comparative advantages and changes in trade patterns. Although most studies do not explore changes in trade systematically, some regions are repetitively found to increase their net imports, whereas others are expected to increase their net exports (Table 2). Increasing net imports are expected for the Republic of India (von Lampe et al., 2014) and South Asia (Baldos and Hertel, 2015; Havlík et al., 2015) as well as for sub-Saharan Africa (Ahammad et al., 2015; Baldos and Hertel, 2015; Havlík et al., 2015; OECD, 2015). Havlík et al. (2015) find also increasing net imports in Southeast Asia and the Pacific, whereas the OECD study (OECD, 2015) projects increasing net exports in some ASEAN

3 Further analysis is also provided in Nelson et al. (2014b).

11 countries. Mixed results are also projected for the United States of America. Ahammad et al. (2015) expect decreasing exports (increasing net imports) of coarse grains and oilseeds,4 while Blanco et al. (2017) find increasing net exports of wheat. Canada (Blanco et al., 2017; von Lampe et al., 2014), Latin America (Havlík et al., 2015; OECD, 2015; von Lampe et al., 2014), and Eastern Europe and Central Asia (Ahammad et al., 2015; Havlík et al., 2015) are projected to increase their net exports, a result that is also found by two studies for the Middle East and North Africa (Havlík et al., 2015; OECD, 2015). Blanco et al. (2017) also project increasing net wheat imports for Europe, Australia and New Zealand. While trade will clearly play an important role in adapting to climate change in some regions (von Lampe et al., 2014), the net trade status of the key exporting and importing countries and commodities is usually predicted to remain unchanged (Ahammad et al., 2015).

Table 2. Climate change impacts on trade at regional level

Study More net imports (less net More net exports (less net exports) imports) von Lampe et al. (2014) India Canada Brazil

Ahammad et al. (2015) Sub-Sahara Africa (rice and China (coarse grains and oilseeds) wheat) (increase imports) (decrease imports) United States of America Former Soviet Union (wheat) (coarse grains and oilseeds) (decrease exports) OECD (2015) (general, India Chile not just agriculture) African countries Brazil United States of America Middle East Some ASEAN countries

Havlík et al. (2015) South Asia Latin America Sub-Sahara Africa Middle East and North Africa Eastern Asia and Pacific Eastern Europe and Central Asia

Blanco et al. (2017), European Union United States of America Example: wheat Australia and New Zealand Canada

Baldos and Hertel (2015) Sub-Sahara Africa South Asia

4.2.3 Trade policy for adapting to climate change Few global climate change impact assessments so far have included dedicated trade policy scenarios. Wiebe et al. (2015) simulate, among other scenarios, a scenario in which

4 Ahammad et al. (2015) state that some uncertainty is related to this as the United States are usually projected to be less affected by climate change than other regions.

12 all tariffs and export subsidies on agri-food trade are removed and a scenario in which trade is more restricted by doubling import tariffs between three main trade blocks (East and South Asia; a block including Western and Eastern Europe, Central Asia, the Middle East and Africa; and a Western Hemisphere block with North, Central and South America). When trade is liberalized, trade increases considerably and prices increase by 4.3 percent on average for an aggregate of five commodities and four economic models due to climate change compared to an 8 percent increase without adjusting trade policies in a moderate climate change scenario (SSP1 and RCP4.5). When trade is restricted, options for adjustment to climate shocks are limited and prices increase by 25.2 percent on average compared to 15.5 percent with ‘business-as-usual’ trade policies in a more extreme climate change scenario (SSP3 and RCP8.5). Havlík et al. (2015) show that the different trade policy specifications for the two SSPs considered in their analysis are well reflected in the trade results. Under SSP4, trade is considered relatively constrained (trade barriers increase considerably compared to today’s situation between all large regions of the world) and trade adjustments remain low. As a result, crop prices in sub-Saharan Africa, a severely affected region under climate change, are predicted to increase by up to 11.9 percent in 2030. Under SSP5 where trade costs remain unchanged compared to today’s situation, observed responses are much larger and partly help to mitigate price impacts, for instance in sub-Saharan Africa where they are predicted to increase by only 5.6 percent due to climate change, or provide export opportunities to relatively less affected regions (Latin America, Eastern Europe and Central Asia). Baldos and Hertel (2015) find that, globally, market barriers have significant implications for future food security under climate change. The number of undernourished is predicted to increase by up to 30 percent when markets are tightly integrated, but could rise to up to 55 percent when trade costs are high, e.g. due to trade barriers, in 2050. Running a no climate change and three counterfactual scenarios, Costinot et al. (2016) find that, under climate change and free trade, world GDP decreases by 0.26 percent compared to the no climate change baseline. When export patterns are held fixed, the loss in world GDP would be 0.27 percent. They also explore a scenario in which countries can trade freely, but farmers cannot adjust their production patterns in order to adapt to climate change. In this case, GDP would even fall by 0.78 percent. A study by Stevanović et al. (2016) suggests that under a scenario that allows for almost entirely free trade by the end of the century, global agricultural welfare losses due to climate change could be reduced by around 65 percent compared to a counterfactual scenario which restricts trade to the pattern prevailing in 1995. Producers in northern temperate zones would benefit from liberalized markets under climate change because their exports could increase faster than under trade restrictions. In lower latitudes, consumers would benefit from liberalized trade through relatively lower global agricultural prices.

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4.2.4 Discussion Although scenarios have been aligned to some extent, a systematic comparison of model results appears to be difficult as most of the studies focus on different model outcomes. Whereas most studies show climate change impacts on model exogenous and/or endogenous yields, socioeconomic model outcome variables discussed in the studies vary, e.g. malnutrition count (Baldos and Hertel, 2015); welfare indicators (Costinot et al., 2016; Stevanović et al., 2016), with only price changes being assessed in a majority of the reviewed studies (Havlík et al., 2015; Nelson et al., 2014a; von Lampe et al., 2014; Wiebe et al., 2015). Nelson et al. (2014a and 2014b), von Lampe et al. (2014) and Wiebe et al. (2015) provide excellent reviews of the range of price changes (and other model results) across the economic models used in the respective analyses. Nonetheless, von Lampe et al. (2014) find that, despite substantial differences in the scenario results across models, the ten global economic models considered in their analysis “revealed a number of largely common outcomes, including on relative hotspots for future growth in agricultural demand and production, the relative importance of productivity progress as compared to” expanding the utilized agricultural area, and an increasingly important role for international trade as an endogenous adaptation mechanism of the global agriculture system. Nelson et al. (2014a) add that analyses that limit climate change impacts to biophysical effects alone likely significantly underestimate the international capacity to respond to climate change. One should however bear in mind that, in particular for trade related issues, the results of most models have only focused on few important traded commodities and major exporters and importers (Ahammad et al., 2015). A general finding of multi-model studies is that the relative magnitude of the responses to climate change varies widely across the models, reflecting differences in model structure and parameterization (Nelson et al., 2014a; von Lampe et al., 2014; Wiebe et al., 2015). Nelson et al. (2014a) and von Lampe et al. (2014) both emphasize that spatial equilibrium models, which are often based on the Armington assumption (Armington, 1969), typically assume more segmented global markets with resulting lower price transmission and less responsive trade patterns which could lead to larger price changes following exogenous shocks than in models that are less trade-restrictive. Although the global climate change impact assessments reviewed here provide a good overview of the overall direction of the impacts that climate change could have and some broad adaptation mechanisms, they neglect many others. A number of factors through which climate change may affect agriculture and the general economy are typically not accounted for. For example, extreme events and the resulting increased probability of yield failures and changes in yield and price variability, sea level changes, effects on energy demand, health, and labour productivity (Nelson et al., 2014a; von Lampe et al., 2014). Many forms of adaptations to climate change that might alter its final impacts are also not considered, e.g. changing crop and livestock management practices (Zimmermann et al., 2017), and the impacts of targeted investments and research and development.

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Many studies also highlight that, although climate change is a critical factor for regional food security, the contribution of climate change to global future food security could be relatively small when compared to other drivers, e.g. population and income changes, of the global farm and food system (Ahammad et al., 2015; Baldos and Hertel, 2015; Schmidhuber and Tubiello, 2007). Whereas climate and crop models are largely based on fundamental biophysical relationships, economic models try to capture ever-changing human decision making and there outcomes are thus by definition more volatile and uncertain. This uncertainty accumulates over the long projection time horizon and needs to be reflected in the model parameterization. A review of methods and parameterization applied in current global economic models used for long-term projections of agriculture sector developments is provided by Hertel et al. (2016).

4.3 Policy implications Following the clear pattern of the quantitative simulation studies that international trade may play an important role in adapting to long-term climate change, most authors call for a further opening of markets in agriculture in order to transfer food more easily and efficiently from surplus to deficit regions (e.g. Baldos and Hertel, 2015; von Lampe et al., 2014). Under deteriorating conditions for agricultural production from climate change, food imports of low-latitude (often developing) countries will have to come from high-latitude (often developed) countries. Whereas open markets would allow this to happen more easily, an increasing dependence on imports to meet food needs may also increase the risk of “importing” higher market and price volatility from other world regions (Elbehri et al., 2015). It also leads to the question of the future financial capability of developing countries to buffer their production losses through imports from other world regions.

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5 Climate and trade policy Given the role that agricultural trade could play in re-balancing supply and demand between regions under climate change, the question arises if and how trade is reflected as adaptation measure in the Intended Nationally Determined Contributions (INDCs) and Nationally Determined Contributions (NDCs) submitted by the Parties to the Paris Agreement and how the proposed climate policies interact with existing World Trade Organization (WTO) regulation.5 We first review general patterns of a sample of NDCs and then broadly set them into context with WTO regulation.

5.1 Patterns of Nationally Determined Contributions (NDCs) In the absence of instructions on how NDCs were to be formulated, these tend to be highly heterogeneous in terms of content, length and level of detail. In order to identify some common patterns, we analysed the NDCs of 35 countries.6 The sample was selected to be as representative as possible geographically, and across the income and development spectrums. The methodology for sample selection is described in the Annex: NDC Factsheet. In general, we find that developed countries’ NDCs tend to be very vague, only specifying their general commitment on mitigation (usually a GHG emission reduction with respect to a base year or a business-as-usual scenario). For developing countries, the mitigation plans in the NDCs can be relatively more elaborate and detailed, often building on climate policies implemented already prior to the Paris Agreement. Adaptation measures are hardly ever mentioned in developed countries’ NDCs, as opposed to those of developing countries where they figure extensively. This might reflect the findings from the foresight analyses mentioned above that developed countries are less likely to experience losses in agricultural production from climate change.. Developing countries’ NDCs also often feature fairness and ambition considerations stating they bear lower responsibility in the creation of the climate change phenomenon and referring to the climate justice argument (Okereke, 2006). Consequently, their general commitments are usually split into an unconditional, lower GHG reduction target, and a higher one that is conditional on the receipt of international support (e.g. in the form of financing, technology transfer and/or capacity development). Developing

5 The agreement entered into force in November 2016 and has, as of 13 July 2018, been ratified by 179 of 197 parties. The Paris Agreement aims to reduce GHG emissions such that global warming in the 21st century will reach no more than 2°C above pre-industrial levels, and ideally no more than 1.5°C (UNFCCC, 2017). In addition, the agreement aims to strengthen the climate change adaptation and mitigation ability of developing countries through financial support, transfer of technology and related capacity building activities.

6 Since the first screening the United States of America announced its withdrawal from the Paris Agreement and was removed from the sample.

16 countries also often specify that certain development objectives limiting the scope for climate action may be in place, in particular in the absence of foreign support.

5.2 Reconciling climate and international trade policies In addition to the potential role of trade and trade policy in climate change mitigation and adaption, international trade itself may be affected by climate policies, which may thus become subject to international trade rules under WTO legislation. The first domestic mitigation and adaptation plans submitted by the countries in response to the Paris Agreement, the NDCs, confirm strong interlinkages between climate and international trade policy. While the NDCs are under development, many of the policy measures under discussion for the Paris Agreement have been applied (e.g. carbon or energy taxes in several countries; agriculture often exempted) or discussed in the context of other climate change negotiations (e.g. the Kyoto Protocol) and the climate change literature before. Domestic policies in response to climate change can generally be divided into: (1) Policies to internalize environmental costs through price and market mechanisms (internal taxes on GHG emissions and emission trading schemes); (2) Policies to promote the development and use of climate-friendly goods and technologies (often subsidies); and (3) Technical requirements (regulations and standards) to promote the use of climate- friendly goods and technologies (WTO-UNEP, 2009). The Paris Agreement additionally provides for assistance to developing countries in their adaptation and mitigation efforts (4). Table 3 gives an overview of potential climate policies and related WTO disciplines.

Table 3. Overview of climate policies and related WTO disciplines Policy Potential climate policy Related WTO positions and category disciplines (1) Taxes • Aim: Internalize environmental costs of • Legality of carbon tariffs has not and GHG emissions been tested in a WTO dispute emission settlement trading • Examples: Carbon taxes, emission schemes trading schemes • Main WTO disciplines: GATT, Article XX; Agreement on Agriculture (AoA) è Disparities in domestic levels of carbon - Market access pricing and risk of ‘carbon leakage’ (increased imports from countries without carbon policy through cross- border relocation of production) è Border measures to counterbalance these disparities may be implemented (e.g. carbon tariffs) (2) • Aim: Promote the development and use • Main WTO disciplines: Agreement Subsidies of climate-friendly goods and on Subsidies and Countervailing technologies Measures (SCM); AoA - Domestic support • Examples: Expenditures on research and development, support for biomass production as a measure to mitigate

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climate change, payments for environmental services with objectives linked to climate change (3) • Aims: Promote the use of climate- • WTO encourages the use of Regulations friendly goods and technologies, international standards to reduce and promote food safety (climate change the likelihood of dispute standards may lead to higher pest and disease settlements pressure on crops with potential effects • Main WTO disciplines: Technical on food safety) Barriers to Trade agreement (TBT); • Examples: Carbon labelling initiatives Sanitary and Phytosanitary (e.g. based on carbon footprint), measures (SPS) agreement regulations concerning food safety

è Problem if these discriminate against imports (4) Support • Assistance for climate change • Main WTO disciplines: Special and to mitigation/adaptation to developing Differential Treatment (SDT) for developing countries is explicitly provided for in the developing countries; in particular, countries Paris Agreement SDT in the AoA provides for special treatment of domestic support (as • Examples: Support for development of part of development programmes) drought resistant crops, more efficient for investment subsidies and irrigation systems agricultural input subsidies

Sources: Authors’ overview based on Blandford (2013) and WTO-UNEP (2009).

As current NDCs provide little detail on implementation mechanisms of certain policy goals, it is difficult at this point in time to assess potential discrepancies between the NDCs and WTO rules. First screenings of the already submitted NDCs find a relationship between trade and climate change policies (TradeLab, 2017) and highlight that, while most NDCs do not present a strong focus on trade or trade-related measures, many refer nonetheless to important trade-related elements (Brandi, 2017). One of the only explicit mentions of taxes is the Republic of South Africa’s proposal to develop a carbon tax among other policy instruments for climate change mitigation.7 About a third of NDCs surveyed present stated or potential participation in international Emissions Trading Schemes (ETSs), while slightly fewer of them include potential tariffs and border measures, and payments or cash transfers. Disparities in domestic levels of carbon pricing due to carbon taxes and emission trading schemes and the resulting risk of carbon leakage (increased imports from countries without carbon policy through cross-border relocation of production) may evoke border adjustment measures (BAMs), e.g. carbon tariffs, to counterbalance these disparities. The challenge with BAMs within the context of the Paris Agreement is that they could imply the discrimination of ‘like’ products that differ only in their carbon footprint. This is in contrast to the prohibition, as of the General Agreement on Tariffs and Trade (GATT), of tariff differences and regulatory discrimination among members. In the sample analyzed there is only one concrete instance of border measures proposed, namely in the United

7 South Africa’s Intended Nationally Determined Contribution (INDC), p.6.

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Arab Emirates’ NDC which states that “authorities […] gradually adjust tariffs for commercial customers, so as to reflect the cost of generation” as part of initiatives to reduce inefficiencies and promote low-carbon development8. While the trade distorting consequences of subsidies and other forms of domestic support are well known there are distinctions to be made. This is illustrated by the subdivision of subsidies into amber, blue and green “boxes” within the WTO framework of the Agreement on Agriculture, based on their repercussions on international trade and their purpose. One of the main challenges will be to reconcile climate smart subsidies9 with WTO rules in a non-discriminatory fashion, taking into account the different needs of certain countries based on wealth, economic development and geographic circumstances. Commitments to promote or mainstream sustainable practices or technologies, formulated in a variety of ways that would easily allow for subsidies, are present in most NDCs. Canada, for instance proposes to invest significantly in a low- carbon economy, green infrastructure and clean technology;10 the People’s Republic of China intends to make efforts to achieve zero growth of fertilizer and pesticide utilization;11 the United Mexican States wants to strengthen the diversification of sustainable agriculture;12 the Socialist Republic of Viet Nam has included the development of sustainable agriculture as a means for emission reduction;13 and so forth. While subsidies generally apply at producer level, the adoption of standards and consumer information tools such as information labels may be a policy instrument to ‘nudge’ consumer behavior towards healthier or more sustainable ways. No ‘climate label’ proposal has as of yet come to the fore, although calls for increased consumer information and awareness appear sparsely throughout our sample, such as the Federal Republic of Nigeria’s commitment to “significantly increase public awareness and involve private sector participation in addressing the challenges of climate change”.14 The Republic of Honduras refers to food safety in the context of climate change by aiming to introduce “new improved pest and disease control practices”. As shown in section 5.1, foreign support to developing countries is often mentioned in developing countries’ NDCs. However, they usually broadly refer to knowledge and technology transfer without further specifying the sectors or measures this would apply to.

8 Intended Nationally Determined Contribution of the United Arab Emirates, pp. 2-3. 9 Definition of climate-smart agriculture: agriculture that sustainably increases productivity, resilience (adaptation), reduces/removes greenhouse gases (mitigation), and enhances achievement of national food security and development goals. 10 Canada’s 2017 Nationally Determined Contribution Submission to the United Nations Framework Convention on Climate Change, p.8. 11 Enhanced Actions on Climate Change: China’s Intended Nationally Determined Contributions, p.9. 12 Mexico’s Intended Nationally Determined Contribution, p.8. 13 Intended Nationally Determined Contribution of Vietnam, p.6. 14 The Federal Republic of Nigeria’s Intended Nationally Determined Contribution, p.4.

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Conclusions Climate change could severely impact future food security in all its dimensions. Global food prices are projected to rise and the number of undernourished to increase. While there is no clear evidence on the net effect of trade on GHG emissions, trade could play an important role in climate change adaptation for ensuring food security. The share of global trade in world agricultural production is projected to increase by around one percent. High-latitude countries can expect productivity gains from climate change and could export a part of their surpluses to adversely affected countries. Low-latitude countries will be most severely affected in terms of production losses and may need to buffer these losses through food imports. An opening to trade could be beneficial for easing the exchange between food surplus and food deficit regions. Global price rises and losses in GDP due to climate change are both projected to be lower under open markets. However, potential negative environmental externalities and the financial and distributional impacts on developing countries including adequate policy responses require further research. Even though current NDCs remain vague, it is evident that climate and trade policies are closely interlinked. They need to be reconciled to allow for and promote climate change mitigation through internationally coordinated domestic climate policies and, at the same time, ensure the free tradability as a crucial climate change adaptation measure. For an ideal outcome, this has to be coordinated at international level.

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Annex: NDC Factsheet Following the conclusion of the Paris Agreement15 all Parties were required to put forward their best efforts through “nationally determined contributions” (NDCs)16 and to strengthen these efforts in the years ahead. The countries’ NDCs are very recent documents (some Parties to the Agreement are yet to submit theirs) and do not follow a common structure or template. In order to understand the challenges underlying this global coordinated effort, they need to be summarized and the individual contributions and policy proposal mapped against each other. This factsheet moves a first step in this direction by providing an overview of the NDCs of a selected number of countries. The NDCs were screened for their main characteristics, in particular in the context of their implications for the agriculture sector and international commodity trade. Given the sheer number of NDCs available (at the time of writing 167 out of 197 Parties have submitted their NDC)17, a sample of NDCs providing a first overview relevant to agricultural trade was reviewed. Overall the sample consists of 35 countries. It includes all nine countries classified as developed economies by the UN Country Classification methodology,18 the five major emerging economies (BRICS countries) as well as the ten countries most affected by long-term climate change according to the Climate Risk Index compiled by Germanwatch,19 a non-profit organization focusing on social, economic and environmental issues. In addition, the world’s largest commodity importers and exporters not already covered by the two previous groups were included as well as the largest exporters and importers of agricultural commodities among the countries listed as Least Developed Countries by the United Nations.20 The countries’ commitments brought forward in the NDCs have been divided into five broad categories in Table A 1: (1) their general commitments, present in the vast majority of NDCs analysed and usually expressed as an emissions reduction target, (2) commitments related to taxes and emission trading schemes (ETS) including tariffs and border adjustment measures, (3) subsidies at their broadest definition, (4) regulations and standards, and (5) support to developing countries, expressed usually as a request for support. Subsidies, the broadest class, includes domestic support as defined in the WTO Agreement on Agriculture, but also everything

15 Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC). Retrieved on 31.10.2017 at http://unfccc.int/files/essential_background/convention/application/pdf/english_paris_agreement.pdf 16 The basis for negotiations at COP21 and the consequent foundation for the Paris Agreement on climate change are actually the documents known as “intended nationally determined contributions” (INDCs). Only upon ratification by the submitting party these become NDCs. At the time of writing 174 out of 197 parties have ratified the Agreement. For the sake of simplicity this distinction has been ignored through this paper. 17 NDC Registry (interim). Retrieved on 01.11.2017 at http://www4.unfccc.int/ndcregistry/Pages/All.aspx 18 UN World Economic Situation and Prospects 2017. Retrieved on 01.11.2017 at https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/2017wesp_full_en.pdf 19 Kreft, S., Eckstein, D. and Melchior, I. (2017). Global Climate Risk Index 2017. Briefing paper. Bonn: Germanwatch, p.6. Available at: http://germanwatch.org/eng/cri. 20 United Nations Committee for Development Policy List of Least Developed Countries (as of June 2017). Retrieved on 24.11.2017 at https://www.un.org/development/desa/dpad/wp- content/uploads/sites/45/publication/ldc_list.pdf

28 else that could possibly qualify as or lead to a subsidy, e.g. an intended increase in the mechanization in agriculture or an increase in the use of low-emission crops. Given the very general character and the breadth of most countries’ NDCs, it is difficult to identify which commitments could pertain to agriculture. It is also not always necessarily straightforward to identify the most appropriate category under which to classify each climate action. The categorization of the climate actions can therefore only provide a best guess on what these broad commitments could eventually translate into. The categorization rather provides a dynamic assessment framework that should be updated as more information on concrete climate policies becomes available.

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Table A 1. Commitment made in the NDCs Country Policy category Climate action Explicit Type of agricultural effort policy Argentina (1) General Unconditional effort to reduce greenhouse gas emissions by 18 percent compared to a Business as Commitment usual (BAU) scenario. Effort to reduce greenhouse gas emissions by 37 percent compared to a BAU scenario, conditional on international support (2) Taxes and ETS Participation in international transfers of mitigation results referred to in the Paris Agreement, Mitigation Article 6, Paragraphs 2 and 4. (3) Subsidies Support the recovery and rehabilitation of lands, including the adaptation based in ecosystems Adaptation

Boosting R&D and technologies projects as well as good productive practices Adaptation

Using finance instruments or market risk transfer and production of the agricultural sector to reduce Adaptation vulnerability Australia (1) General Reduce greenhouse gas emissions by 26 to 28 per cent below 2005 levels by 2030

Commitment (2) Taxes and ETS Participating in international abatement trading schemes through the established Emissions

Reduction Fund Bangladesh (1) General Unconditional effort to reduce its GHG emissions by 12 MtCO2e by 2030 or 5 percent below BAU

Commitment emissions Conditional effort to reduce its GHG emissions by 36 MtCO2e by 2030 or 15 percent below BAU

emissions (3) Subsidies Increase mechanisation in agriculture leading to a reduction in numbers of draft cattle (and therefore Mitigation YES lower methane emissions) Increase the share of organic Mitigation YES manure in the used fertilizer mix Scale up rice cultivation using alternate wetting and drying irrigation YES Mitigation Brazil (1) General Reduce greenhouse gas emissions by 37 percent below 2005 levels in 2025, and by 43 percent below

Commitment 2005 levels in 2030. (2) Taxes and ETS Brazil reserves its position in relation to the possible use of any market mechanisms that may be Mitigation established under the Paris agreement

(3) Subsidies Compensating for greenhouse gas emissions from legal suppression of vegetation by 2030 NO Mitigation (forestry)

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Canada (1) General Canada is committed to reduce greenhouse gas emissions by 30 percent below 2005 levels by 2030

Commitment (3) Subsidies Significant investments in a low-carbon economy, green infrastructure, and clean technology Mitigation

Chile (1) General Unconditional reduction in CO2 emissions per GDP unit by 30 percent below their 2007 levels by 2030 Commitment

Reduction in CO2 emissions per GDP unit by 2030 until it reaches a 35 percent to 45 percent

reduction with respect to the 2007 levels, conditional on the grant of international monetary funds

(2) Taxes and ETS CO2 emission tax approved by the Tax Reform, Law 20.780 dated October 2014, which shall become Mitigation

effective on January 1, 2017, and be equivalent to 5 USD per CO2 ton.

(3) Subsidies Sustainable development and recovery of 100,000 hectares of forest land, mainly native, which will Mitigation NO account for greenhouse gas sequestrations and reductions (Forestry) To reforest 100,000 hectares, mostly with native species, which will account for greenhouse gas NO Mitigation sequestrations and reductions (Forestry) China (1) General Lower carbon dioxide emissions per unit of GDP by 60 percent to 65 percent from the 2005 level

Commitment To increase the share of non-fossil fuels in primary energy consumption to around 20 percent Mitigation

To increase the forest stock volume by around 4.5 billion cubic meters on the 2005 level NO Mitigation (Forestry) (2) Taxes and ETS To advance the reform in the pricing and taxation regime for energy- and resource-based products Mitigation

Gradually establishing the carbon emission trading mechanism so as to make the market play the Mitigation decisive role in resource allocation (3) Subsidies To actively push forward the appropriate scale production and industrialization of agriculture in Mitigation YES Major Agricultural Production Zones To promote the low-carbon development in agriculture, making efforts to achieve zero growth of Mitigation YES fertilizer and pesticide utilization by 2020 To construct a recyclable agriculture system, promoting comprehensive utilization of straw, Mitigation reutilization of agricultural and forestry wastes and comprehensive utilization of animal waste YES

To vigorously enhance afforestation, promoting voluntary tree planting by all citizens, continuing the NO Mitigation implementation of key ecological programs, and restoring forest and grassland from farmland (Forestry)

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To continue to restore grassland from grazing land, to promote mechanism of maintaining the Mitigation balance between grass stock and livestock, to prevent grassland degradation, to restore vegetation of YES grassland

To improve the construction of water conservation facilities for farmlands, to vigorously develop water-saving agricultural irrigation and to cultivate heat resistant and drought-resistant crops YES Adaptation

To develop technologies on biological nitrogen fixation, green pest and disease prevention and YES Adaptation control and protected agriculture To improve green government procurement policy systems including that on procurement of low- Mitigation carbon and energy-conservation products (4) Regulations To develop mechanisms for the reporting, verifying and certificating of carbon emissions and to and standards improve rules and regulations for carbon emission trading to ensure openness, fairness and justice in Mitigation the operation of the carbon emission trading market

Egypt (2) Taxes and ETS A national market for carbon trading may be established Mitigation (3) Subsidies Changing cultivars to those that are more tolerant to heat, salinity and pests, and changing crop YES Adaptation pattern Activate genetic diversity of plant species with maximum productivity YES Adaptation Achieve biological diversity of all livestock, fishery, and poultry elements to protect them and ensure YES Adaptation food security Develop agro-economic systems and new structures to manage crops, fisheries and animal production, which are resilient to climate changes YES Adaptation

Increase the efficiency of irrigation water use, while maintaining crop productivity and protecting YES Adaptation land from degradation Mitigation measures in the agricultural sector: enteric fermentation, manure management, rice cultivation, agricultural soils, and field burning of agricultural residues YES Mitigation

Increasing water storage capacity, improving irrigation and draining systems, and changing cropping YES Adaptation patterns and farm irrigation systems Ethiopia (1) General 64 percent greenhouse gas emissions reduction from the BAU scenario by 2030

Commitment (2) Taxes and ETS Ethiopia intends to sell carbon credits during the period to contribute towards achieving its Green Mitigation Economy Strategy (3) Subsidies Improving crop and livestock production practices for greater food security and higher farmer YES Mitigation incomes while reducing emissions

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Improve and diversify economic opportunities from agroforestry and sustainable afforestation of YES Adaptation degraded forest areas Breeding and making available improved crop varieties, primarily from among those in Ethiopia that suit all agricultural areas where varieties that were grown in the past have become unsuitable YES Adaptation

Digging wells and enhancing water harvesting techniques and thereby making available dependable watering points in all rural woredas (districts) YES Adaptation

Enhance irrigation systems through rainwater harvesting and conservation of water, including improved water use efficiency YES Adaptation events Developing one or more insurance systems to enable citizens, especially farmers and pastoralists, to rebuild economic life following exposure to disasters caused by extreme weather Adaptation events

Strengthening capacity to deal with the expansion and emergence of human, animal, crop and plant diseases known to occur in and around Ethiopia and in similar environments elsewhere and make YES Adaptation available medicines in a sufficient quantity to deal with these diseases

Strengthening and increasing the capacity for breeding and distributing disease resistant crop and fodder varieties to farmers and other land users in order to deal with the emergence and expansion of YES Adaptation diseases and pests

(5) Support to The full and effective implementation of the Green Economy Strategy requires an estimated developing expenditure of more than USD 150 billion by 2030. This highlights the need for significant capital countries investments. European (1) General Absolute reduction in greenhouse gas emissions to at least 40 percent below 1990 levels by 2030

Union Commitment (2) Taxes and ETS EU ETS scheme for intra-regional carbon trading: Absolute reduction in greenhouse gas emissions to 20 percent below 1990 levels by 2020, and to at least 40 percent below 1990 levels by 2030. No contribution from International Market Based Mechanisms, Agriculture explicitly not covered by the Mitigation EU ETS

Guatemala (1) General Unconditional effort towards a 11.2 percent greenhouse gas emissions reduction from a BAU scenario

Commitment by 2030 Effort to reduce greenhouse gas emissions by 22.6 percent from a BAU scenario by 2030, conditional on additional support, both public and private

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(2) Taxes and ETS Guatemala reserves its position in relation to the possible use of any market mechanisms that may be established under the Paris agreement Mitigation

(3) Subsidies Development of a multi-stakeholder crop monitoring system promoting production for subsistence and auto-consumption in priority zones YES Adaptation

Implementation of an irrigation policy YES Mitigation Haiti (1) General Unconditional effort to reduce greenhouse gas emissions by 5 percent with respect to a BAU scenario

Commitment by 2030 To reduce greenhouse gas emissions by a further 26 percent with respect to a BAU scenario by 2030,

conditional on foreign support (2) Taxes and ETS Haiti intends to participate in international carbon trading schemes to partly finance the implementation of the measures outlined in the NDC Mitigation

(3) Subsidies Pasture improvement, in particular for beef herds, through the introduction of pulses and legumes YES Mitigation Promotion of agroforestry practices YES Mitigation To develop climate smart and organic forms of agriculture YES Adaptation Promote the conservation of agricultural genetic resources YES Adaptation Development of aquaculture YES Adaptation Development of cultures adapted to saltwater YES Adaptation To restore, valorize and extend existing agroforestry systems by a minimum additional surface of YES Adaptation 60'000 ha Development of cultures and agricultural techniques adapted to climate change YES Adaptation Improve the efficiency of water usage techniques YES Adaptation Development of technologies geared towards the conservation, the transformation and the YES Adaptation valorization of agricultural products Honduras (1) General 15 percent greenhouse gas emissions reduction from a BAU scenario by 2030

Commitment (3) Subsidies Promotion of organic agriculture systems, including through fiscal and financial incentives YES Adaptation Introduction of a set of best practices in agriculture, including reduction in the use of chemical fertilizers, the use of indigenous seeds and the abolition of agricultural burning practices YES Adaptation

(4) Regulations Introduction of new improved pest and disease control practices YES Adaptation and standards

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Iceland (1) General 40 percent reduction of greenhouse gas emissions by 2030 compared to 1990 levels as a collective

Commitment effort with European countries (2) Taxes and ETS Iceland takes part in the EU Emissions Trading Scheme, as part of the European Economic Area; this participation is seen as continuing after 2020, regulating over 40 percent of Iceland’s emissions. Mitigation

India (1) General Copenhagen emission reduction pledge; since 2010: voluntary goal of reducing the emissions Commitment intensity of its GDP by 20–25 percent over 2005 levels by 2020

Ratification of the Copenhagen pledge to reduce emissions intensity of GDP by 33 percent to 35

percent below 2005 levels by 2030 (3) Subsidies Promotion of clean biomass energy YES The Waste to Energy capacity is sought to be enhanced. Government is also encouraging conversion of waste to compost by linking it with sale of fertilizers and providing market development assistance Mitigation

Enhancing food security and protection of resources such as land, water, biodiversity and genetics YES Mitigation Scheme under which soil cards are issued to farmers which will carry crop-wise recommendations of nutrients and fertilizers required for the individual farms to help farmers to improve productivity YES Adaptation through judicious use of inputs

Enhancing livelihoods in the rural areas YES Adaptation Electrification of rural areas based on a decentralized renewable energy system YES Adaptation (4) Regulations Improve standards for over 2000 industries focusing on reducing quantity of waste water generation, and standards conservation of water, promote Zero Liquid Discharge (ZLD) and use of treated effluent for irrigation YES Mitigation

(5) Support to Climate friendly technologies, adapted and deployed in India are also being utilized in other countries, Mitigation/ developing particularly in developing countries, through bilateral cooperation adaptation countries Indonesia (1) General To reduce emissions by 26 percent on its own efforts against the business as usual scenario by 2020

Commitment To reduce unconditionally 29 percent of its greenhouse gasses emissions against the business as

usual scenario by the year of 2030 Further reduce emissions up to 41 percent by 2030, subject to availability of international support

(3) Subsidies Promote sustainable agriculture and plantations YES Mitigation Increase the use of low-emission crops YES Mitigation

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Implementation of water-efficient concept in water management YES Mitigation Feed supplement for cattle YES Adaptation Implementation of water-efficient concept in water management YES Adaptation (5) Support to International support from developed country parties is required to increase ambition in reducing Mitigation/ developing GHGs emission, including in the preparation of NDC implementation (pre 2020) in all sector adaptation countries categories Japan (1) General Absolute reduction in greenhouse gas emissions to 26 percent below 2013 levels by 2030 YES Commitment (3) Subsidies Promotion of soil management leading to the increase of carbon stock in cropland NO Mitigation (Forestry) Promotion of revegetation NO Mitigation (Forestry) Malaysia (1) General Unconditional effort to reduce GHG emissions intensity by 35 percent below 2005 levels by 2030

Commitment Effort to reduce GHG emissions intensity by 45 percent below 2005 levels by 2030, conditional on the

receipt of support from developed countries (3) Subsidies Strengthening resilience against climate change and natural disasters Adaptation Intensifying research and development for improving agriculture production YES Adaptation New granary areas and adequate and efficient irrigation and drainage infrastructure will be YES Adaptation developed to increase the production of rice (4) Regulations Adoption of sustainable consumption and production Mitigation and standards Mexico (1) General Reduce unconditionally 25 percent of its Greenhouse Gases and Short Lived Climate Pollutants

Commitment emissions from BAU by 2030 Further conditional 40 percent GHG emissions reduction subject to a global agreement addressing a set of crucial topics. Topics include international carbon price, carbon border adjustments, technical cooperation, access to low-cost financial resources and technology transfers

(3) Subsidies Diversification of sustainable agriculture by conserving germplasm and native maize species, thermal comfort for livestock, development of agro-ecosystems YES Adaptation

Myanmar (1) General The information required to estimate GHG emissions was collected and an estimate produced, but Commitment was not included the estimate in the INDC, as deemed not sufficiently reliable

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(3) Subsidies Recovery of areas affected by climate change through livestock management, loans for farmers, animal feed management research and provision of training to minimize risk of disease YES Adaptation

To mitigate GHG emissions from the agriculture sector from combustion of agricultural residues and YES Mitigation growing rice in paddy fields Implementing climate smart agriculture approaches through implementation actions such as legume crops diversification, measures in the agro-forestry sector and systematic control of soil quality and YES Adaptation irrigation water

Improve disaster management capabilities, namely on the basis of the Law of Protection of Farmers’ Rights and Enhancement of their Benefits (2013) Adaptation

To reduce climate change vulnerability and reduce poverty in rural areas and for subsistence farmers YES Adaptation as a priority (5) Support to The implementation of the presented actions will be contingent to support for capacity-building, developing technology development and transfer, and financial resources from the international community Mitigation countries New (1) General Absolute reduction in greenhouse gas emissions to 30 percent below 2005 levels by 2030

Zealand Commitment (2) Taxes and ETS New Zealand intends to use international market mechanisms, cooperative approaches and carbon markets that enable trading and use of a wide variety of units/emission reductions/mitigation Mitigation outcomes

Norway (1) General 40 percent reduction of greenhouse gas emissions by 2030 compared to 1990 levels. The emission Commitment reduction target will be developed into an emissions budget covering the period 2021-2030.

(2) Taxes and ETS Norwegian emissions are covered by the EU ETS, and Norway will through our participation in the ETS contribute to the necessary emission reduction Mitigation

Pakistan (1) General To reduce up to 20 percent of its 2030 projected GHG emissions subject to availability of international

Commitment grants to meet the total abatement cost (2) Taxes and ETS Use of Clean Development Mechanism (CDM) and other market mechanisms to support climate Mitigation change activities (3) Subsidies Rationalizing the use of fertilizers and improving soil carbon management YES Mitigation Promoting use of biogas as a fuel or as organic fertilizer YES Mitigation Manage water in rice cultivation to control release of methane from agricultural soils and introduce YES Mitigation low water dependent rice varieties

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Promote use of green manure, better manure storage and management YES Mitigation Reduce nitrous oxide release from agricultural soils by efficient and targeted use of chemical YES Mitigation fertilizers Introduce feedstock mixes, dietary oils, and additives for livestock, to reduce methane production YES Mitigation from enteric fermentation Introduce genetically modified crops that are more carbon responsive YES Mitigation Improving the irrigation system through actions such as lining of canals and irrigation channels YES Adaptation Development and optimization of water resource allocation, implementation of strict water management regulations and utilization of unconventional water resources such as YES Adaptation recycling of used water and harvesting rain water and flood water Strengthening risk management system for the agriculture sector YES Adaptation Implement agroforestry practices through plantation of multipurpose and fast growing tree species YES Mitigation Promote no-till farming to improve soil carbon storage YES Mitigation Develop and adopt new breeds of cattle which are more productive in terms of milk and meat, and have lower methane production from enteric fermentation YES Mitigation

Identify and implement ideal cropping patterns to manage soil nitrogen and reduce needs for YES Mitigation chemical fertilizers Implementing a comprehensive Climate Smart Agriculture program YES Adaptation (5) Support to Financing of climate change regime using national and international resources Mitigation/ developing adaptation countries Republic of (1) General The Republic of Korea plans to reduce its greenhouse gas emissions by 37 percent from the business- Korea Commitment as-usual (BAU, 850.6 MtCO2eq) level by 2030 across all economic sectors.

(2) Taxes and ETS The Republic of Korea will partly use carbon credits from international market mechanisms to achieve its 2030 mitigation target, in accordance with relevant rules and standards. Mitigation

Saudi (1) General To achieve mitigation co-benefits ambitions of up to 130 million tons of CO2eq avoided by 2030 Arabia Commitment annually through contributions to economic diversification and adaptation

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(3) Subsidies Water and waste water management Adaptation with mitigation co-benefits Reduce desertification Adaptation with mitigation co-benefits Integrated water management planning Adaptation South Africa (1) General Peak, Plateau and Decline (PPD) GHG emission trajectory from 2020 year-end.

Commitment (2) Taxes and ETS Development of a carbon tax Mitigation (4) Regulations Policy instruments under development include a carbon tax, desired emission reduction outcomes and standards (DEROs) for sectors, company level carbon budgets, as well as regulatory standards and controls for Mitigation specifically identified GHG pollutants and emitters

Singapore (1) General To reduce its Emissions Intensity by 36 percent from 2005 levels by 2030, and stabilize its emissions

Commitment with the aim of peaking around 2030 To reduce emissions to 7 percent to 11 percent below its business-as-usual (BAU) level by 2020

(2) Taxes and ETS Singapore intends to achieve the mitigation objectives under its INDC through domestic efforts, but will continue to study the potential of international market mechanisms Mitigation

(3) Subsidies To diversify sources for food supply resilience. This is supplemented by limited local production of YES Adaptation key food items and rice stockpiling Food security research and development, and to incentivise the adoption of technology to increase productivity and resilience of local farms YES Adaptation

Sudan (3) Subsidies Integration of renewable energy in the power system of the Sudan Mitigation Diversification of income generating activities in order to increase adaptive capacity of vulnerable farmers’ communities in order to achieve food security/reduce poverty YES Adaptation

Introduction of agroforestry in areas vulnerable to climate change to enhance agriculture production as well as empower vulnerable communities through their involvement in community forests YES Adaptation activities/products

Establishment of range’s enclosures/ranches to increase resilience of vulnerable communities YES Adaptation

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Restocking animal herds in areas affected by climate change YES Adaptation Crop diversification and introduction of improved drought-resistant varieties/early maturing varieties (both field and YES Adaptation horticultural crops) in areas affected by rainfall decease/ variability Replanting and rehabilitating of vulnerable areas with palatable range species and management of YES Adaptation animal routes Improving veterinary services (including, mobile clinics provision of vaccines etc.) to enhance the YES Adaptation adaptive capacity in vulnerable areas Switzerland (1) General Reduce its greenhouse gas emissions by 50 percent by 2030 compared to 1990 levels, corresponding Commitment to an average reduction of greenhouse gas emissions by 35 percent over the period 2021-2030

(2) Taxes and ETS Switzerland will realize its INDC mainly domestically and will partly use carbon credits from Mitigation international mechanisms Switzerland intends to use the Clean Development Mechanism (CDM) and, as appropriate, the new market Mitigation mechanisms under the Convention (NMM, activities under the FVA) Thailand (1) General Reduce greenhouse gas emissions by 20 percent from the Commitment projected business-as-usual (BAU) level by 2030

The level of contribution could increase up to 25 percent, subject to adequate and enhanced access to technology development and transfer, financial resources and capacity building support

(2) Taxes and ETS Thailand will continue to explore the potentials of bilateral, regional and international market Mitigation mechanisms (3) Subsidies Promote sustainable agriculture and Good Agricultural Practice (GAP) YES Adaptation (5) Support to Securing adequate means of implementation including finance, technology development and transfer Mitigation/ developing and capacity building for adaptation will be necessary in the new global agreement under the UNFCCC countries adaptation

Uganda (1) General Reduction in greenhouse gas emissions by approximately 22 percent by 2030.

Commitment (2) Taxes and Uganda intends to use international market mechanisms where appropriate, building ETS upon the experience of the Clean Development Mechanism and other existing market Mitigation mechanisms (3) Subsidies Expanding rangeland management YES Adaptation Encouraging agro-forestry NO (Forestry) Adaptation

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Expanding Climate Smart Agriculture (CSA) techniques for cropping YES Mitigation/adaptation Expanding diversification of crops and livestock YES Adaptation Expanding value addition, post-harvest handling and storage and access to markets, YES Adaptation including micro-finances Expanding small scale water infrastructure YES Adaptation Expanding research on climate resilient crops and animal breeds YES Adaptation Extend electricity to the rural areas or expanding the use of off-grid solar system to YES Adaptation support value addition and irrigation Ensuring water supply to key economic sectors, especially agriculture, and domestic use, Adaptation including water harvesting and storage Livestock breeding research and manure management practices YES Mitigation Ukraine (1) General Greenhouse gas emissions reduction of 40 percent with respect to 1990 levels

Commitment (2) Taxes and Ukraine will participate actively in the development of existing international market Mitigation ETS mechanisms and implementation of new ones United Arab (2) Taxes and Tariff reform: authorities have introduced a number of initiatives and policies, and Emirates ETS revised the country’s tariffs over the years and gradually adjust the tariffs for Mitigation commercial and industrial customers, so as to reflect the cost of generation by 2021

(3) Subsidies Improving energy efficiency by increasing the share of clean energy in the energy mix to Mitigation 24 percent by 2021 The UAE has been diversifying its sources of food and investing in agriculture projects YES Adaptation and technologies Viet Nam (1) General With domestic resources reduction of GHG emissions by 8 percent by 2030 compared to

Commitment the business-as-usual scenario 25 percent GHG emissions reduction by 2030 compared to the business-as-usual

scenario, conditional to the receipt of foreign support (2) Taxes and Vietnam participates in Clean Development Mechanism (CDM) projects and trades in Mitigation ETS Certified Emission Reduction (CER) credits Viet Nam is developing and preparing for the implementation of carbon credit projects according to the Verified Carbon Standard (VCS) and the Gold Standard (GS) Mitigation

(3) Subsidies Reduce GHG emissions through the development of sustainable agriculture; improve effectiveness and competitiveness of agricultural production YES Mitigation

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ISBN 978-92-5-131110-3

9 789251 311103 CA2370EN/1/11.18