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Green Economy Sector Study on Agriculture in Kenya

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Green Economy Sector Study on Agriculture in Kenya Green Economy Sector Study on Agriculture in Kenya Working Document 2015 ©United Nations Environment Programme, 2015 This publication may be produced in whole or in part and in any form for educational or non-profit purposes without special permission from the copyright holder, provided acknowledgement of the source is made. UNEP would appreciate receiving a copy of any publication that uses this publication as a source. No use of this publication may be made for resale or for any other commercial purpose whatsoever without prior permission in writing from the United Nations Environment Programme. Citation UNEP. (2015). Green Economy Sector Study on Agriculture in Kenya. 34 p. Disclaimer The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Environment Programme, nor does citing of trade names or commercial processes constitute endorsement. This publication has been produced with the assistance of the European Union. The contents of this publication are the sole responsibility of UNEP and can in no way be taken to reflect the views of the European Union. Table of Contents LIST OF TABLES ..................................................................................................................................................... 1 LIST OF ACRONYMS ............................................................................................................................................... 1 KEY MESSAGES ..................................................................................................................................................... 4 1. INTRODUCTION .............................................................................................................................................. 5 1.1 GREEN ECONOMY IN KENYA ........................................................................................................................................ 5 1.2 GREEN ECONOMY NATIONAL STUDY AND THE PURPOSE OF THIS REPORT .............................................................................. 5 1.3 MACRO-ECONOMIC AND COUNTRY PROFILE .................................................................................................................... 6 2. THE AGRICULTURE SECTOR IN KENYA ......................................................................................................... 10 2.1 SECTOR PROFILE .................................................................................................................................................... 10 2.1.1 Performance of the agriculture sector............................................................................................................... 10 2.1.2 Characteristics of the agriculture sector ............................................................................................................ 12 2.1.3 Strategies and policies ................................................................................................................................... 13 2.2 GREENING THE AGRICULTURE SECTOR ........................................................................................................................ 15 3. MODELLING A GREEN AGRICULTURE SECTOR ............................................................................................. 16 3.1 MODEL DESCRIPTION AND DATA SOURCE ..................................................................................................................... 16 3.2 SECTOR MODELING OF THE AGRICULTURE SECTOR ........................................................................................................ 18 3.3 SCENARIO SETTING FOR THE SIMULATION OF GREEN ECONOMY INTERVENTIONS .................................................................. 19 3.4 SIMULATION RESULTS .............................................................................................................................................. 23 4. DISCUSSION OF POLICY-ENABLING CONDITIONS ......................................................................................... 26 4.1 POLICY AND LEGAL FRAMEWORK ................................................................................................................................ 26 4.2 TAXATION SYSTEM .................................................................................................................................................. 26 4.3 INCREASING PRODUCTIVITY, COMMERCIALIZATION AND COMPETITIVENESS ........................................................................ 27 4.4 PROMOTING PRIVATE SECTOR PARTICIPATION IN AGRICULTURE ...................................................................................... 27 4.5 PROMOTING SUSTAINABLE LAND AND NATURAL RESOURCES MANAGEMENT....................................................................... 28 4.6 REFORMING DELIVERY OF AGRICULTURAL SERVICES ..................................................................................................... 28 5. CONCLUSION ............................................................................................................................................... 30 REFERENCES ....................................................................................................................................................... 31 ANNEX 1 THREE SPHERES IN THE T21-KENYA MODEL .......................................................................................... 33 ANNEX 2 MODELLING STRUCTURE FOR GREEN AGRICULTURE SECTOR ............................................................... 34 List of tables Table 1 Macroeconomic indicators for Kenya ...................................................................................................... 7 Table 2 Environmental indicators for Kenya ........................................................................................................ 8 Table 3 Social indicators for Kenya .................................................................................................................... 8 Table 4 Performance of the agriculture sector in Kenya (2008-2012) .................................................................. 12 Table 5 Kenya’s targets for growth, food security and poverty reduction by 2020 ................................................. 14 Table 6 Modules, sectors and spheres of the T21-Kenya model ......................................................................... 18 Table 7 Green economy investment simulated .................................................................................................. 21 Table 8 Main results of the quantitative scenario analysis in selected years ......................................................... 25 List of figures Figure 1 Contribution of agricultural sub-sectors to AGDP and agricultural exports ............................................... 10 Figure 2 Trends in agricultural and economic growth (1960-2008) ...................................................................... 11 Figure 3 Impacts on GDP growth under BAU, BAU2% and GE2% scenarios. ...................................................... 23 Figure 4 Agricultural yield under BAU, BAU2% and GE2% scenarios. ................................................................. 24 List of Acronyms AGDP Agricultural gross domestic product ASAL Arid and Semi-Arid Lands ASDS Agricultural Sector Development Strategy 2010-2020 BAU Business-as-usual BOP Balance of payment CAADP Kenya comprehensive Africa Agriculture Development Programme ERS Economic Recovery Strategy for Employment and Wealth Creation FDI Foreign direct investment GE Green economy GEA Green Economy Assessment GESIP Green Economy Strategy and Implementation Plan GHG Greenhouse gas GKI Greening Kenya Initiative GNI Gross national income GoK Government of Kenya IGES Institute for Global Environmental Strategies IMF International Monetary Fund KBS Kenya Bureau of Standards KEPHIS Kenya Plant Health Inspectorate Service KIPPRA Kenya Institute for Public Policy Research and Analysis KSh Kenyan shilling 1 MDG Millennium Development Goal MEWNR Ministry of Environment, Water and Natural Resources MTIP Medium-Term Investment Plan 2010-2015 NASEP National Agricultural Sector Extension Policy NCCRS National Climate Change Response Strategy NEMA National Environment management Authority PPP Purchasing power parity ROW Rest of the world SAM Social Accounting Matrix SAP Structural Adjustment Programmes SD System dynamics SRA Strategy for Revitalizing Agriculture T21 Threshold 21 model TFP Total factor productivity UNEP United Nations Environment Programme USD US dollar 2 Acknowledgements This study was commissioned by the United Nations Environment Programme (UNEP) under the ‘Green Economy and Social and Environmental Entrepreneurship Development in Africa’ Project. It builds on the Green Economy Assessment of Kenya (UNEP, 2014). The study was prepared by Zhou Xin of the Institute for Global Environmental Strategies (IGES), under the overall supervision of Joy Kim, Senior Economic Affairs officer in the UNEP Economics and Trade Branch. Within UNEP, Dambudzo Muzenda, Jose Pineda and Rhoda Wachira contributed to the report with valuable comments. Administrative support was provided by Desiree Leon, Fatma Pandey and Rahila Somra. The report was edited by Elizabeth Kemf. UNEP is grateful for the financial support provided by the European Commission. 3 Key Messages Kenya has established fundamental
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