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Dutch agriculture generally stands firm in greening scenarios, but livestock numbers will decrease

Exhibition News by Exhibition News
December 16, 2021
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Dutch agriculture generally stands firm in greening scenarios, but livestock numbers will decrease
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These are among the conclusions of an exploratory study by Wageningen University & Research into ‘The future of agriculture and horticulture in the Netherlands in the European and global context’.

The study was commissioned by the Ministry of Agriculture, Nature and Food Quality. It examines various long-term scenarios (up to 2050) for the development of the Dutch agri-food sector and considers strategies for the Ministry to influence these scenarios. The scenarios were each elaborated in MAGNET, an economic equilibrium model developed by Wageningen Economic Research that now also integrates several non-economic parameters.

The scenarios

The starting point is a reference scenario that sets out how the sector will develop if the existing policies remain in force. A number of variants are then considered, based on the degree of greening aimed for (implementation of the Paris Agreement/Green Deal) and whether this is an EU or international target. Another variable is the extent to which international trade is further liberalised (or in fact restricted) in conjunction with this greening.

These greening scenarios are based on the premise of monetising greenhouse gas emissions to reduce the pressure on the environment. The transition to a more plant-based diet, the reduction of food waste and increasing the area of land under nature management will also contribute to this greening. Greenhouse gases are monetised by implementing a CO2 equivalent tax that reflects the various costs involved in reducing emissions.

Policy instruments

The main impact of the greening of agricultural policy will be a smaller livestock sector. The arable and horticultural sectors will remain roughly stable or grow slightly (depending on the scenario). The food processing industry will show relative growth and even flourish in some of the scenarios. If the greening policies are only implemented at the EU level, then compensatory trade tariffs can limit the negative impact of CO2-eq taxes on the agri-food sector. A timely commitment to sustainability could provide a competitive advantage in the long run by avoiding higher costs in the future, for example because external impacts become subject to higher carbon taxes or other environmental measures.

None of the scenarios results in a significant impact on food self-sufficiency in the Netherlands and the EU. The scenarios reveal the potential for some kind of trade-off between the degree of global greening, market liberalisation, and the impact on the Dutch agricultural sector.

Europe greens alone and protects its own markets

In general, if the EU makes the green transition unilaterally (i.e. the rest of the world does not) and protects the European market, this will result in the smallest reduction in emissions, but it is the most viable scenario for Dutch agriculture. The Gross Domestic Product (GDP) will also be least affected by this scenario.

Whole world greens and markets are open

The scenario in which the whole world makes the green transition and the borders are opened leads to the highest reduction in emissions. However, this scenario sees the greatest decline in agricultural production, agriculture-related income and the added value of the Dutch agricultural sector. A striking finding of the study is that Dutch GDP will actually increase in this scenario because efficiency improvements (mainly driven by free trade and a reduction of food losses) will outweigh the negative influence of environmental measures such as carbon taxes.

Global greening necessary

Global greening is ultimately necessary if we are to achieve the global climate targets, because a scenario with only unilateral greening within the EU will have a very limited effect on emissions. The Netherlands is therefore advised to leave its borders open to take advantage of the expected positive effect on GDP. However, this scenario is less favourable for the Dutch agri-food sector.

/Public Release. This material from the originating organization/author(s) may be of a point-in-time nature, edited for clarity, style and length. The views and opinions expressed are those of the author(s).View in full here.



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