Policy challenges for livestock emissions abatement: lessons from New Zealand

Under the current framework embodied in the Kyoto Protocol and envisaged for future multilateral agreements, Annex I parties are obliged to limit their economy-wide GHG emissions and accept responsibility for exceeding their targets through various flexible mechanisms. The predominant sources of agricultural GHGs, which represent about 8% of total Annex I emissions, are methane and nitrous oxide from livestock. Efforts to reduce livestock emissions have so far been limited due to disagreements over the abatement potential, technical feasibility, and cost-effectiveness of the policy instruments available, including market-based measures. Two key challenges facing the application of market-based measures to livestock emissions are evaluated: first, to design a policy framework that appropriately aligns the measurement of emissions, the abatement options, and the incentives facing livestock producers; second, to address the risk of leakage and economic regrets that arise from unilateral domestic policy action. Particular attention is given to the policy developments in New Zealand and the lessons learnt from its experience. The challenges of applying market-based measures to livestock emissions are surmountable, but require innovative policy responses.