Greenhouse with envy: Emissions vs subsidies

Agricultural policies generally pursue a number of objectives: increase productivity, reduce rural poverty and boost climate resilience. It is not inconceivable that some of these goals sometimes would conflict. Providing subsidies to bolster the productivity of CO2-intensive activities such as livestock, for instance, is bound to generate more emissions. Applying an innovative approach in the case of Jamaica, the Inter-American Development Bank recently tried to figure out whether policy support often goes against climate metrics.

The bank did find that sectors receiving subsidies – poultry, sugar and beef – are among those that emit most. But it encouraged taking a broader view by looking at how much particular activities emit compared to their contribution to the country’s GDP – so as to allow for a mix of objectives: cut emissions at the lowest cost in terms of farm output. This would involve constraints on production of milk, cocoa, beef, pig meat and sugar, the IDB said – but not poultry.

If one wanted to use the subsidy lever to reduce emissions while safeguarding production, then two strategies were possible, according to the bank: either target high-emissions, high-protection crops or increase support for sectors with a high value of output net of carbon costs. Candidates for the latter would include oranges, tomatoes, coffee, pineapple and a basket of “other products” (essentially vegetables and condiments). The graphs below assess sectors per output value, emissions and value net of emissions.