Climate Change and Agricultural and Rural Development in Asia Mark W. Rosegrant Director Environment...

Climate Change and Agricultural Climate Change and Agricultural and Rural Development in Asiaand Rural Development in Asia

Mark W. RosegrantMark W. RosegrantDirectorDirector

Environment and Production Environment and Production Technology DivisionTechnology Division

Presented during the Conference on “Agricultural and Rural Development for Reducing Poverty and Hunger in Asia: In Pursuit of Inclusive and Sustainable Growth”, Asian Development Bank, Manila, Philippines, August 9-10, 2007

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

OutlineOutline

Climate Change and Variability Climate Change and Variability

Impacts on Agriculture and the PoorImpacts on Agriculture and the Poor

Pro-poor Mitigation: Constraints and Pro-poor Mitigation: Constraints and

OpportunitiesOpportunities

Investing in Climate Change for the Investing in Climate Change for the

PoorPoor

Climate Change and Climate Change and Variability ImpactsVariability Impacts


Impacts and Vulnerability to Impacts and Vulnerability to Climate Change & VariabilityClimate Change & Variability

Rich countries emit majority of GHG Rich countries emit majority of GHG

Poor countries are more vulnerablePoor countries are more vulnerable

• Geography (hotter, less rain, more variation)Geography (hotter, less rain, more variation)

• Greater dependence on agriculture and natural Greater dependence on agriculture and natural resourcesresources

• Limited infrastructure and low-input agricultureLimited infrastructure and low-input agriculture

• Low income, poverty and malnutritionLow income, poverty and malnutrition

• Thus, lower adaptive capacity (also including Thus, lower adaptive capacity (also including inadequate complementary services, like health inadequate complementary services, like health and education)and education)

Vulnerability of Key Sectors to the Impacts of Climate Change by Vulnerability of Key Sectors to the Impacts of Climate Change by Sub-regions in AsiaSub-regions in Asia

Sub-Sub-regionsregions

Food and Food and FibreFibre

BiodiversitBiodiversityy

Water Water ResourceResource

Coastal Coastal EcosystemEcosystem

Human Human HealthHealth

SettlementSettlement Land Land DegradationDegradation

North North AsiaAsia

+1 / H+1 / H -2 / M-2 / M +1 / M+1 / M -1 / M-1 / M -1 / M-1 / M -1 / M-1 / M -1 / M-1 / M

Central Central Asia and Asia and West West AsiaAsia

-2 / H-2 / H -1 / M-1 / M -2 / VH-2 / VH -1 / L-1 / L -2 / M-2 / M -1 / M-1 / M -2 / H-2 / H

Tibetan Tibetan PlateauPlateau

+1 / L+1 / L -2 / M-2 / M -1 / M-1 / M NANA NINI NINI -1 / L-1 / L

East AsiaEast Asia -2 / VH-2 / VH -2 / H-2 / H -2 / H-2 / H -2 / H-2 / H -1 / H-1 / H -1 / H-1 / H -2 / H-2 / H

South South AsiaAsia

-2 / H-2 / H -2 / H-2 / H -2 / H-2 / H -2 / H-2 / H -2 / M-2 / M -1 / M-1 / M -2 / H-2 / H

South South East AsiaEast Asia

-2 / H-2 / H -2s / H-2s / H -1 / H-1 / H -2 / H-2 / H -2 / H-2 / H -1 / M-1 / M -2 / H-2 / H

Vulnerability: -2 – Highly-1 – Moderately0 – Slightly or Not+1 – Moderately Resilient+2 – Most Resilient

NA – not applicable; NI – no information

Level of Confidence:VH – Very HighH - HighM – MediumL – LowVL – Very Low Source: IPCC, unpublished

Geographical Distribution of Vulnerability, 2100Geographical Distribution of Vulnerability, 2100with and without mitigation along an A2 emissions scenario with a with and without mitigation along an A2 emissions scenario with a

climate sensitivity of 5.5°Cclimate sensitivity of 5.5°C

Source: Yohe et al. (2006)Source: Yohe et al. (2006)

Panel D - combined complementary effects of mitigation to the same 550 ppm concentration limit and enhanced adaptive capacity

Panel A - vulnerability with a static representation of current adaptive capacity

Panel B - vulnerability with enhanced adaptive capacity worldwide

Panel C - geographical implications of mitigation designed to cap effective atmospheric concentrations of GHG at 550 ppm

Panel D - combined complementary effects of mitigation to the same 550 ppm concentration limit and enhanced adaptive capacity

Panel A - vulnerability with a static representation of current adaptive capacity

Panel B - vulnerability with enhanced adaptive capacity worldwide

Panel C - geographical implications of mitigation designed to cap effective atmospheric concentrations of GHG at 550 ppm

Pro-Poor Mitigation: Pro-Poor Mitigation: Constraints and OpportunitiesConstraints and Opportunities


Pro-Poor Climate Mitigation PolicyPro-Poor Climate Mitigation Policy

Climate change policy can generate Climate change policy can generate income for small farmers and income for small farmers and investment flows for rural communitiesinvestment flows for rural communities

Requires effective integration from Requires effective integration from global governance of carbon trading, to global governance of carbon trading, to sectoral and micro-level design of sectoral and micro-level design of markets and contracts, and investment markets and contracts, and investment in community managementin community management


Estimated Potential Emission Savings Estimated Potential Emission Savings and Costs by Sector and Costs by Sector

SectorSector 2050 Annual 2050 Annual Emissions Emissions

SavingsSavings (GtCO (GtCO22))

Average Annual Average Annual Cost($/tCOCost($/tCO22))

~2025-2050~2025-2050

Deforestation Deforestation 3.5-5.03.5-5.0 22

Afforestation and ReforestationAfforestation and Reforestation 1.0-2.01.0-2.0 5-155-15

Land management practicesLand management practices 1.0-2.01.0-2.0 20-2720-27

Agriculture (methane & nitrous Agriculture (methane & nitrous oxide)oxide)

1.01.0 2727

BioenergyBioenergy 2.0-3.02.0-3.0 2525

Waste and fugitive emissions,Waste and fugitive emissions,

industrial processesindustrial processes

4.14.1 3-53-5

Fossil fuel related, excludingFossil fuel related, excluding

bioenergybioenergy

40.040.0 22-3322-33

Source: Adapted from various estimates, Stern Review, pp. 244-63.Source: Adapted from various estimates, Stern Review, pp. 244-63.


CDM Conditions for Offset Projects – High CDM Conditions for Offset Projects – High Transaction CostsTransaction Costs

1.1. Additionality Additionality • Must demonstrate that carbon sequestration or Must demonstrate that carbon sequestration or

emission reductions would not have occurred if it were emission reductions would not have occurred if it were not for the incentives provided by CDMnot for the incentives provided by CDM

2.2. Measurable Measurable • Carbon sequestration or emission reductions of Carbon sequestration or emission reductions of

projects must be quantifiable ex-ante and monitorable projects must be quantifiable ex-ante and monitorable ex-postex-post

3.3. PermanencePermanence• Sequestered carbon must remain sequestered Sequestered carbon must remain sequestered

indefinitely (or for at least as long as to be equivalent to indefinitely (or for at least as long as to be equivalent to reducing atmospheric GHG by emission reductions)reducing atmospheric GHG by emission reductions)

4.4. Leakage preventionLeakage prevention• Prevent (or account for) direct or indirect GHG Prevent (or account for) direct or indirect GHG

emissions from CC mitigation projectemissions from CC mitigation project


5. Social benefits5. Social benefits

• Evidence of contribution to a country’s sustainable Evidence of contribution to a country’s sustainable development development

• If cost-effective and practicable social benefits should be If cost-effective and practicable social benefits should be quantified, verified and certified together with the carbon quantified, verified and certified together with the carbon sequestration or emission reductionssequestration or emission reductions

6. Environmental benefits6. Environmental benefits

• Carbon project with inherent local environmental benefits Carbon project with inherent local environmental benefits stands a higher chance of being sustained in the long runstands a higher chance of being sustained in the long run

7. Cost effectiveness7. Cost effectiveness

• Land Use, Land Use Change and Forestry activities and Land Use, Land Use Change and Forestry activities and monitoring must monitoring must be cost effective and practical if they are to be cost effective and practical if they are to be appliedbe applied

CDM Conditions for Offset Projects – High CDM Conditions for Offset Projects – High Transaction CostsTransaction Costs


Constraints to Pro-Poor MitigationConstraints to Pro-Poor Mitigation

1.1. High transaction costs of Clean Development High transaction costs of Clean Development

Mechanism (CDM) Conditions for Offset Mechanism (CDM) Conditions for Offset

Projects in Developing CountriesProjects in Developing Countries • Information about carbon benefits to potential Information about carbon benefits to potential

buyers, obtaining information about project partners, buyers, obtaining information about project partners,

organizing project participants, capacity building and organizing project participants, capacity building and

ensuring parties fulfill their obligationsensuring parties fulfill their obligations

• Transaction costs per unit of emission reduction are Transaction costs per unit of emission reduction are

higher for projects involving many smallholders and higher for projects involving many smallholders and

forest communitiesforest communities

• Projects with smaller land areas may lack economies Projects with smaller land areas may lack economies

of scaleof scale


2.2. Carbon sequestration from soil carbon and Carbon sequestration from soil carbon and

avoided deforestation––important areas for avoided deforestation––important areas for

climate mitigation and for poor developing climate mitigation and for poor developing

countries––are excluded from CDMcountries––are excluded from CDM

3.3. CDM-eligible assets from afforestation and CDM-eligible assets from afforestation and

reforestation are excluded from European reforestation are excluded from European

Union-Emissions Trading Scheme Union-Emissions Trading Scheme

Constraints to Pro-Poor MitigationConstraints to Pro-Poor Mitigation


Expanding Pro-Poor Mitigation Expanding Pro-Poor Mitigation

1.1. Establish international capacity building Establish international capacity building and advisory servicesand advisory services

• Capacity-building and advisory services for Capacity-building and advisory services for potential investors, project designers and potential investors, project designers and managers, national policymakers and managers, national policymakers and leaders of local organizations and leaders of local organizations and federationsfederations

• Establish regional centers to assist Establish regional centers to assist countries and communities involved in countries and communities involved in forest carbon trading, soil carbon forest carbon trading, soil carbon sequestration, otherssequestration, others


Measures to Reduce Transaction CostsMeasures to Reduce Transaction Costs

2.2. Institutional innovations Institutional innovations • Companies or agencies offer specialized business Companies or agencies offer specialized business

services for low-income producers (for example, in services for low-income producers (for example, in negotiating deals or design of monitoring systems)negotiating deals or design of monitoring systems)

• Locally accountable intermediary organizations can Locally accountable intermediary organizations can manage projects and mediate between investors and manage projects and mediate between investors and local people (e.g., local environmental group in the local people (e.g., local environmental group in the Scolel-Té project, Mexico)Scolel-Té project, Mexico)

• Transaction costs reduced by developing carbon Transaction costs reduced by developing carbon projects in communities with active local organizations projects in communities with active local organizations in placein place– E.g. a proposed carbon project in Harda, India, relies on existing E.g. a proposed carbon project in Harda, India, relies on existing

hamlet and federation institutions established for community hamlet and federation institutions established for community forestryforestry



3.3. Simplified standards (baseline and Simplified standards (baseline and

monitoring) for small-scale projects (annual monitoring) for small-scale projects (annual

emission offsets are < 15,000 t COemission offsets are < 15,000 t CO22))

• Agroforestry and community forestry projects Agroforestry and community forestry projects

should be specified as eligible for simplified should be specified as eligible for simplified

modalitiesmodalities

• Simplified emission reduction credits calculated Simplified emission reduction credits calculated

using standardized reference emission rates for using standardized reference emission rates for

agroforestry and forestry activities in specific agroforestry and forestry activities in specific

locations, determined and verified by locations, determined and verified by

independent bodiesindependent bodies

• Similar for soil carbon sequestrationSimilar for soil carbon sequestration


4.4. Adequately dealing with permanence issue of Adequately dealing with permanence issue of carbon sequestrationcarbon sequestration• Ton-year approach: Payment for mass-time units of Ton-year approach: Payment for mass-time units of

carbon avoids the need for "locking up" land in carbon avoids the need for "locking up" land in forest land uses for prolonged periods because forest land uses for prolonged periods because credits are calculated according to carbon storage credits are calculated according to carbon storage durationduration– Reduced risk of project failure as a result of management Reduced risk of project failure as a result of management

problem or natural disasterproblem or natural disaster

– Enables greater participation by local communities on CDM Enables greater participation by local communities on CDM projectsprojects

– Larger areas under projectLarger areas under project

– Increasing overall GHG benefits and proportion of benefits Increasing overall GHG benefits and proportion of benefits accruing to local communities accruing to local communities



Example: Chicago Climate Exchange Example: Chicago Climate Exchange Agricultural Soil Carbon Offsets Agricultural Soil Carbon Offsets

Simple, standardized rules for issuing credits Simple, standardized rules for issuing credits for agricultural carbon emission reduction and soil for agricultural carbon emission reduction and soil sequestrationsequestration

Offset projects involving less than 10,000 mt COOffset projects involving less than 10,000 mt CO22 equivalent equivalent

per year register and sell through Offset Aggregator per year register and sell through Offset Aggregator

Eligible projects include continuous conservation tillage Eligible projects include continuous conservation tillage and grass planting and grass planting

• 5-year contractual commitment to continuous no-till or strip till 5-year contractual commitment to continuous no-till or strip till (conservation tillage) on enrolled acres(conservation tillage) on enrolled acres

• Tillage practice must leave at least two-thirds of the soil Tillage practice must leave at least two-thirds of the soil surface undisturbed and at least two-thirds of the residue surface undisturbed and at least two-thirds of the residue remaining on the field surfaceremaining on the field surface

• CCX contracts issued for conservation tillage at a rate CCX contracts issued for conservation tillage at a rate between 0.2 and 0.6 metric tons CObetween 0.2 and 0.6 metric tons CO22 per acre per year based per acre per year based

on carbon sequestration ability of the soils on carbon sequestration ability of the soils


ADB’s Carbon Mitigation ApproachADB’s Carbon Mitigation Approach

Clean Development Mechanism Facility (CDMF), Clean Development Mechanism Facility (CDMF), Carbon Market Initiative, Asian Pacific Carbon Carbon Market Initiative, Asian Pacific Carbon FundFund

• Assists developing member countries (DMCs) to Assists developing member countries (DMCs) to source funds for emission reductions;source funds for emission reductions;

• Helps DMCs to process CDM requirements for Helps DMCs to process CDM requirements for identified projects; andidentified projects; and

• Provides information and advice on emerging carbon Provides information and advice on emerging carbon marketsmarkets

Offers project co-financing facility, carbon credit Offers project co-financing facility, carbon credit marketing programs, and technical support for marketing programs, and technical support for project preparation and implementation of CDM-project preparation and implementation of CDM-eligible projectseligible projects


ADB’s Carbon Mitigation ApproachADB’s Carbon Mitigation Approach

Seeks to correct the general lack of Seeks to correct the general lack of financial and technical capacity in financial and technical capacity in governments, regulatory authorities, and governments, regulatory authorities, and private sectorprivate sector

Provides capacity building, due Provides capacity building, due diligence, documentation, and diligence, documentation, and implementation supportimplementation support

Expansion and greater emphasis on Expansion and greater emphasis on agricultural and forest carbon could agricultural and forest carbon could have large payoffshave large payoffs


Investing in Climate Change for the Poor Investing in Climate Change for the Poor

Climate change policy can create new value-Climate change policy can create new value-added for pro-poor investmentadded for pro-poor investment

Increases profitability of environmentally Increases profitability of environmentally sustainable practicessustainable practices

Need to streamline measurement and Need to streamline measurement and enforcement of offsets, financial flows, and enforcement of offsets, financial flows, and carbon credits for investors carbon credits for investors

Enhance global financial facilities and Enhance global financial facilities and governance to simplify rules and increase and governance to simplify rules and increase and manage funding flows for mitigation in manage funding flows for mitigation in developing countriesdeveloping countries

Climate Change and Agricultural and Rural Development in Asia Mark W. Rosegrant Director Environment...

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