Cost-effectiveness of farm- vs. regional-level climate change mitigation policies

Abstract

Abstract Agriculture is a significant source of global greenhouse gas (GHG) emissions, making reduction targets crucially needed. Worldwide, countries have set agricultural GHG reduction goals and discussed methods to reach them. A crucial aspect is, whether the policy target level is set at the individual farm or at a regional level. In this context, we assess the advantages regarding cost-effectiveness and GHG-reduction potential of targets at the regional level. First, we use the bioeconomic farm-level model FarmDyn to simulate the changes in income and GHG emissions of 65 Swiss dairy farms. Secondly, we develop an optimisation algorithm to compare the efficiency and efficacy of these two target approaches. Our analysis reveals that regional targets, which consider the heterogenous abatement costs of the sector, are more cost-efficient than farm-level ones. Specifically, they enable a 10 per cent GHG reduction at 88 per cent lower costs, suggesting they might be a more cost-effective alternative to taxation.