Page 75 - FAO-IPCC Expert meeting on climate change

Appendix 01: Speakers’ summary notes
53
resulting in higher emissions from deforestation and forest degradation. In the tropics, 83% of new agricultural land is from forest conversion (Gibbs et al., 2010).
Technological change and deforestation – conceptual issues
The economic analysis of the impact of improved technologies and higher yields can proceed in two steps. First, a farm-level analysis of how individual farmers respond and thereby how output supply and input demand will change; and second, the market (general equilibrium) effects of those supply and demand changes, and the resulting land use changes both locally and globally (i.e., outside the region experiencing technological change). Three characteristics are critical for the land expansion outcomes (Angelsen and Kaimowitz, 2001a):
Type of technologies: The labour, capital and other input intensities of the new technologies is critical for the forest outcome. Most farmers are capital and labour constrained, hence if labour- and/or capital-intensive technologies are adopted, they tend to constrain land expansion. Looking beyond the individual farm, the adoption of labour-intensive practices can drive up rural wages, and dampen agricultural profitability and expansion.
Farmers seek to adopt technologies that enlarge their opportunities, and might therefore be reluctant to adopt labour intensive technologies, unless their profitability or other characteristics are much more attractive than current practices. The paradox arises, therefore, that while labour-intensive practices can restrain agricultural land expansion, farmers “will only be willing to adopt such land-saving practices when land has become scarce and most of the forest is gone” (Kaimowitz and Angelsen, 2008, 6). In sum, farmers do have strong incentives to adopt technologies that boost yield and raise profitability, but this could provide incentives to intensify production and expand less, or to expand crop or pasture areas.
Output markets: Yield-increasing technological progress increases food supplies, contributing to keeping food prices low. This might reduce farmers’ income (“treadmill effect”), but benefit (poor) consumers. The magnitude of the price effect depends on two factors (Angelsen, 2007; Hertel, 2012): the demand elasticity in the market, and the market share of the sector experiencing technological progress. The price-dampening effect can be low either because the total market demand is inelastic, or because its market share is low, or both. Demand for food is generally assumed
to be inelastic, i.e., supply change leads to a large price change. Many agricultural products are, however, not food stuff (e.g., cotton and rubber), they are not staple food stuff (e.g., cocoa and coffee), or they are subject to demand from multiple markets, such as for food, livestock feed and biofuels (e.g. maize and soybeans). Further, farmers selling products at large national or global markets are less likely to face downward pressure on prices when they increase their supply. “Innovations in regions commanding a small share of global production, with relatively low yields, high land supply elasticities and low emissions efficiencies are most likely to lead to an increase in global land use change emissions” (Hertel, 2012, 1). He notes that conflicting results of technology impacts on land expansion are mainly due to differences in demand elasticities.
Other market conditions are also relevant, for example, to what extent there is a well-functioning labour market (including migration) to supply more labour for the adoption of labour-intensive technologies, thus avoiding any brakes on expansion due to labour shortages and higher local wages.
Scale and sector of adoption: The output market share is also linked to the scale of adoption. The more widespread the adoption, the larger, cet. par., the supply increase and the price-dampening effect. The scale of adoption - and
of the analysis itself - is therefore critical. Thus “situations that are win-lose at the local level may be win-win at the global level” (Angelsen and Kaimowitz, 2001b, 400). The Green Revolution is a form of technological progress in intensive agriculture, which has saved large amounts of forests. The effect works principally through the output markets by keeping the prices of rice, maize and other food crops lower than they would have been without the Green Revolution. Technological progress in intensive agriculture can therefore be expected to slow down expansion of extensive agriculture (into forests), in part though output market effects. Thus efforts to spare forests, should focus on innovations which are appropriate for established areas and not for frontiers.
Labour market effects also pull in the same direction, as exemplified by intensified lowland rice production pulling labour out of upland rice cultivation in the Philippines (Shively and Pagiola, 2004). There are exceptions to this. In a study from Sulawesi (Indonesia), Ruf (2001) finds that Green Revolution technologies were linked with more forest clearing in the uplands for cocoa planting through two effects: (i) the technologies implied a mechanization of lowland
FAO-IPCC Expert meeting on climate change, land use and food security