Policy options for GHG mitigation under autarky: a conceptual and empirical analysis for Norway

Agriculture makes a significant contribution to Norway’s emissions of greenhouse gases (GHG). Although agriculture accounts for only 0.3 per cent of GDP, it accounts for roughly 8 per cent of total GHG emissions. Norwegian agriculture is dominated by livestock production; ruminants (cattle and sheep) are particularly important. There are opportunities for GHG mitigation under existing technology through changes in agricultural practices. We derive an abatement cost curve for Norway in terms of the change in economic welfare. We require Norway to be self-sufficient in agricultural products; i.e. that domestic production of calories shall be kept at the current level. We use a detailed economic model to assess the impact and welfare implication of a reduction in GHG emissions. We find that a large part of the abatement cost curve is negative due to distortions created by domestic support policies. The practical consequence is that emissions reduction requires that production of grain-based products be increased at the expense of ruminant-based products.