Emissions from land use change immediately preceding cattle ranching is the source of the vast bulk of GHG emissions that these studies assign to cattle systems. This approach does not address how much of this land use change would have occurred in absence of the cattle production. Our approach sidesteps this attribution problem by simulating the marginal emissions effect of policies. We do not make claims about the emissions associated with particular areas of cattle production that we simulate.Taxes increase the cost of production of pasture System 1. This leads to higher beef and milk prices in Brazil . While the internal demand is only marginally affected , higher prices decrease the competitiveness of Brazilian beef on international markets and exports are reduced by 10 percent with a tax of 10 USD per ha . However beef prices do not vary much between a 20 USD tax and a 50 USD tax because the higher tax leads to a higher adoption rate of management System 2 and thus boosts output. The share of the pasture area under System 2 increases from 6 percent with a 20 USD tax to 16 percent with 30 USD tax and to 42 percent with a 50 USD tax. The area of pasture decreases by less than 3 percent for a tax level higher than 20 USD. This means that in these cases the higher output of cattle products under System 2 partially offsets the decrease in grassland area. Thus,plastic potting pots a higher tax has little effect on beef production. This remains at 12.2 million tons per year for any tax level higher than 20 USD per ha. The tax does, however, affect the distribution of the cattle production across Brazil.
Cattle production increases in the South and Southeast regions at the expense of the North, North East and Center West regions due to higher adoption rates of the System 2. Adoption of System 2 in the North requires a rate of greater than 30USD per ha per year and in the Center West for a tax level higher than 40 USD/ha per year. In the case of the North, low land prices are to blame for the limiting adoption. In the case of the Center West the problem is more the limited increase in output from boosted production.The imposition of taxes increases slightly the share of cattle systems reliant on crops for supplemental feed. Hog production also rises. Thus the increases in cultivated area under the tax go primarily to increased soybean and corn production for domestic animal feed. However, the area of these crops increases modestly—just 1 percent to 10 percent depending on the tax level. These increases are small relative to the area of pasture reduction under the taxes. Less than 1 percent of pasture reduced becomes cropland. The remaining 90 percent of avoided pasture expansion mean reduced conversion of Amazon forest and cerrado savannah. The area is quite substantial—between 8 million and 33 million hectares of avoided land use conversion results from the tax policies. Of these reductions, the vast bulk is a reduction in the conversion of forested lands. The tax scenarios reduce the GHG emissions from deforestation in Brazil by 30 percent -66 percent. Substantially smaller declines in GHG emissions are associated with the combined declines of 5-10 percent in methane emissions from enteric fermentation and Nitrous Oxide emissions from cattle manure.
These decreases stem both from a decline in animals numbers and due to switching cattle systems with shorter animal lifespans and thus better ratios of meat to enteric fermentation and nitrous oxide. In sum, compared to the baseline, the total GHG emissions from land use change, crops and livestock sectors are reduced by 30 – 70 percent depending on the tax scenario. Since Brazil is the 2nd largest beef exporter in the world, the reduction in Brazilian beef production by the tax scenarios spills over abroad. 80 percent of the drop in Brazilian beef production under the tax scenarios comes from reductions in beef exports. The remaining 20 percent is explained by reduced consumption in Brazil. Of decline in exports, half comes from reduced beef consumption under higher beef prices and half results in increased production in other exporting and importing nations. The production increases especially in South East Asia and in the other Latin American countries . As a result, GHG emissions from land use change increase between 1.6 and 3.6 percent abroad and GHG emissions from livestock production increase between 0.3 and 0.4 percent abroad. However, the GHG emissions savings in Brazil more than offset the GHG emissions increase in the rest of the world so that the global GHG emissions from land use and agriculture are reduced between 2 and 7 percent with the implementation of the intensification tax scenarios.Subsidies reduce the cost of production in System 2, the semi-intensive alternative cattle system. Just 2 percent of total pasture area sees adoption with a 20 USD/year subsidy. This reaches 17 percent of the total pasture area with a 60 USD/year subsidy and increases to 85 percent of the total area with a 100 USD/year subsidy. In 20 and 40 USD subsidy scenarios, pasture area declines, but cattle production remains similar to the no policy baseline. At the 60 USD subsidy level, beef price declines substantially . At 60 USD, beef production also increases by 6 percent .With a subsidy level of 100 USD/ha/yr, export increase 30 percent . As in the tax scenarios, the transition to more intensive pasture management is heavily concentrated in the South and the South East regions under smaller subsidy levels.
However, we observe that the transition occurs in a much higher share of the pasture in the North, North East and Center West regions in the high subsidy scenarios than in the high taxes scenarios . The total pasture area decreases with the introduction of the subsidies but it decreases less than in the tax scenarios . The reduction in pasture expansion is 7 million and 10 million ha lower than the tax scenarios of equivalent production cost gap reduction. The explanation is that cheaper beef leads to an increase in beef consumption and a decrease in the poultry meat and pork consumption. The total cropland area increases less than 1 percent across the different subsidy scenarios relative to the baseline simulation. The GHG emissions from deforestation are reduced by 12 percent with a 20 USD subsidy per ha and by 60 percent with a 100 USD subsidy in 2030. These correspond to a decline in land use change of 2 million hectares to 25 million hectares respectively. Of this change, the vast bulk is avoided deforestation in the Brazilian Amazon Biome. However,raspberry container growing direct emissions from the ranching sector remain constant for subsidies below 60 USD/ha/yr and increase up to 16 percent. GHG savings in Brazil are between 2 and 3 times lower than the ones that are achieved with production cost gap equivalent tax policies. The adjustments in domestic demand explain between 28-44 percent of the Brazilian domestic beef production increase to 2030. Beef demand abroad increases and Brazilian beef not only grows to satisfy the new demand, but it also displace other beef on the world market due to competitive prices. Production losses are scattered across Australia, Europe, Sub-Saharan Africa and South East Asia. GHG emissions from conversion of natural land decrease between 0.3 percent and 4.2 percent and GHG emissions from livestock production decrease between 0.1 and 0.4 percent in these nations where cattle production declines. Under the subsidy scenarios, GHG emissions are reduced both in Brazil and in the Rest of the World. Compared to other food products, demand for beef is relatively price elastic—when beef prices fall, the consumption of beef increases as consumers buy more beef instead of other protein sources. On average, a shift away from any other food product to beef would lead to increased global land in crops and pasture because land requirements to produce beef are much higher than those for any other food product. However, because our subsidies explicitly target land efficient beef, the boosted land requirements associated with the shift from non-beef to beef is swamped by avoided deforestation associated with the replacement of land inefficient beef with land efficient beef.For the lower range of emissions savings levels65, the subsidies have lower social welfare costs than the taxes. An objective of 300 MtCO2e savings per year could be reached by a subsidy level of 100USD or a 50USD tax over the period 2010-2020.
If the objective of the policy is to reach the highest CO2e savings, high subsidy levels seems the best strategy in the short run but they could become quite expensive in the long run without leading to additional CO2 savings. Between the period 2010-2020 and the period 2020-2030, we observe a shift of the marginalabatement curve to the right. This means that a certain level of CO2 emissions savings could be reached with a lower tax or a lower subsidy level. This suggests that the optimal policy should evolve over time. Taxes or subsidies should be high in the early portion of the modeled period, but they should progressively decrease and disappear. If a high subsidy persists, it could lead to a rebound effect by providing an incentive to increase pasture expansion. The GHG mitigation potential we simulate is similar in magnitude to mitigation found in previous land sparing studies, but under the tax scenarios it differs in mechanism and under the subsidy scenarios it differs in both geography and mechanism. These discrepancies are due primarily to our use of market-mediated mechanisms for land use change including international leakage. Our tax scenarios find international leakage largely concordant with previous studies. We find mitigation from unilateral taxation, but we also find that this effect is dampened by leakage associated with a concomitant rise in production activities offshore . Here an accounting of the GHG effects focused exclusively within Brazil’s borders would overestimate mitigation. Nevertheless, the policy would also deliver global GHG mitigation. International leakage would be less than domestic mitigation. In this way, our tax scenarios tell a familiar story of the type sparked by research into the “common but differentiated responsibilities” approach of the Kyoto Protocol . Unilateral climate policies may create competitive disadvantage in countries and dampening mitigation effects of these unilateral activities due to international leakage. The subsidy scenarios, meanwhile, deliver a sort of reverse leakage. By finding climate benefits where previous research has primarily found climate costs, our subsidy scenarios cover seldom theoretically traversed terrain and have potentially mixed prospects for political feasibility. The subsidies deliver larger GHG reductions than their tax scenarios counterparts. They induce reverse leakage where subsidized Brazilian low-carbon cattle products are replacing higher carbon cattle products that would have been produced offshore. The potential for industrial subsidies to reduce GHGs is a potentially politically alluring alternative to the idea that GHG mitigation would inevitably be costly to firms and governments. Perhaps, these results could be viewed as promising for the potential of the Green Climate Fund and similar initiatives to deliver mitigation through industrial subsidy. However, because these subsidies we model intentionally induce boosted agricultural output, they unambiguously classify as the sort of agricultural subsidies least likely to be allowed in an Agreement on Agriculture in the World Trade Organization. Such subsidies could also spark compensatory or retaliatory measures. Such measures could attenuate GHG gains somewhat given that these gains are in part a function of the retiring of GHG intensive production systems in the rest of the world. Despite the recent emergence in the United Nations Framework Convention on Climate Change of hortatory language for nations to address international drivers of deforestation , international leakage still lacks firm accounting or governance mechanisms. Such mechanisms would need to monitor trade flows to which the climate effects of the policy would be sensitive. Exports of subsidized Brazilian cattle products would only deliver climate benefits where they displace higher carbon cattle products. However, it is possible that such exports could replace lower carbon cattle products and cause emissions increases. Finally, the closest analogues—bio-fuels policies that penalize international land use change—remain methodologically unsettled, politically controversial, and are facing legal challenges in some instances .