A legislator in North America working on an agricultural commission read these three sets of articles recently. He is surprised how much agriculture is sometimes presented as a problem in the climate crisis, sometimes as a solution to this same crisis. The three mechanisms mentioned in the articles above (carbon credit market in agriculture, tax on sensitive production, climate label on retail food products) caught his attention. They all seem interesting but each have limitations and trade-offs. He appeals to your advice and asks you to write economic note on one of these three options. He is interested in the economic arguments of the debate, in particular what economic theory teaches us about the stakes and the potential of such mechanisms. He wants a nuanced and original analysis.

Whatever your choice, the main question to answer is: Is the mechanism presented likely to provide adequate incentives to initiate a change in the behavior of economic agents (producers, consumers, intermediaries, etc.) favorable to the reduction of emissions? greenhouse gases?

Yes or no (even if it means qualifying later), you may not agree with the terms of the question. In addition, you are free to conduct a general analysis (climate change being a global issue), or to focus on a particular production in a particular country, state or province. You can if you want to pay attention to the legal aspects, but your analysis must remain mainly an economic analysis.

In any case, choose an angle of attack, explain your answer and justify using economic theory and concepts (you can support yourself with material that is in the articles, as well as material external to the articles) . Given the still emerging nature of these mechanisms, you can also draw inspiration from theoretical and empirical lessons learned from similar mechanisms in the past.

Path to follow

o Start by identifying the concepts to use

o Think about the incentives of the actors of the sector (but also about the disincentives as well as the possible perverse effects)

Series 1: Farmers struggle to break into the booming carbon credit market | Reuters
Series 2: Climate change: New Zealand's plan to tax cow and sheep burps - BBC News
New Zealand offers taxing cow burps, angering farmers (nypost.com)
Series 3: Opinion: The Case for Putting Climate Labels on Meat - Modern Farmer
You'll see more carbon labels at the grocery store next year. Here's what they mean. (macleans.ca)
More and more products are adding carbon labels. What do they really mean? (chatelaine.com)

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The economic note will focus on the carbon credit market in agriculture as a mechanism to reduce emissions of greenhouse gases Carbon credits are a fo... View the full answer