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Which metrics to measure greenness of value chains

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Presentation on theme: "Which metrics to measure greenness of value chains"— Presentation transcript:

1 Which metrics to measure greenness of value chains
By Louis Bockel Economics of Sustainable Agriculture Team ESA Division CTA Conference: Making the Connection Addis Ababa, 6-9 November 2012

2 Green indicators and sustainability
Multi-criteria appraisal Carbon as an aggregated indicator? Green labelling and carbon footprint to compare value chains Tools for appraising green-growth scenarios of value chains (VCA Tool, EX-ACT Tool) Practical examples: rice, banana

3 1. Green indicators and sustainability
Definitions of „green‟ can be based on ex ante arguments (e.g. any activity in sustainable energy, energy efficiency or water management), or based on specific indicators. There are qualitative and quantitative definitions, trying to measure different grades of „greenness‟. The latter requires some sort of indicator or measure of greenness (e.g. greenhouse gas emissions, energy efficiency, recycling and waste management, more points in a scoring system, etc.). Environmental impacts of agricultural production, processing and trade are commonly characterized through the core dimensions of biological diversity, climate change and energy use, soil, toxicity of inputs, and water. Environmental impacts of agricultural production, processing and trade are commonly characterized through the core dimensions of biological diversity, climate change and energy use, soil, toxicity of inputs, and water

4 At which level do we work to get measurable indicators?
Natural capital • Biodiversity and habitat in landscape • Quality of water through watershed • No damage from toxics • Low carbon footprint from economic activities • High organic matter content in soil Farm-level indicators • # ha under active conservation management (natural habitat) • # ha arable land under sustainable practices • # m3 of water not affected • # kg of N not wasted • # kg of chemicals not used • GHG emission trend • Percentage of organic matter in the soil Landscape-level indicators • High conservation value areas in the landscape • Levels of flow in rivers Reduced deforestation and land erosion (% of area)

5 2. Multicriteria appraisal : spider graph of green value chain indicators
Example based on consumption per bushel of maize (25.4 kg) Source: Hamilton, Operationalizing Sustainability in Value Chains, 2010

6 3. Carbon as an aggregated indicator?:

7 4. Green labelling and carbon footprint to compare value chains
Definition: CFP of a product = quantity of GHG, expressed in CO2-eq, emitted across the supply chain for a single unit of that product mainly in developed countries either the initiative of a company alone (retailer, industry) or launched by governments with the voluntary collaboration of the private sector (credibility) no harmonized methodology for CFP accounting. The multiplication of methodologies difficult to compare the footprint of a same category of products across countries

8 Advantages of calculating and labelling the carbon footprint
3 main advantages

9 Achieving reduction targets of GHG emissions
Implementation of a more effective GHG reduction strategy Where are the largest emissions sources? Meeting national and international legislation on GHG emissions by involving the food industry CFP accounting often linked with mandatory or voluntary reduction of emissions (UK, Thailand, Korea) Identify the largest emission sources + focus on those step UK : need to decrease the emissins every 2 years or don’t get the label again Thailand, korea: in paralel to CFP label, there is a carbon reduction label that certifies that the good satisfies the minimum reduction target presented by the government

10 Achieving reduction targets of GHG emissions
Greater emissions reduction by encouraging changes in consumers’ behaviour CFP labelling helps consumer to choose more environmentally friendly products; choice orientation The label sometimes advises consumers on how to reduce their impact (use phase) Tesco, casino : compare the CFP of the product against other product of the same category (scale) Sweden , germany (stop climate change) : label only the best producst (or the ones that are C neutral) so orientates consumer choice Tesco: better to boil or microwave the potatoes rather than baking them.

11 Carbon footprint as a support to management and decision making in value chains
Better management practices in general Cost savings and performance Strengthen relationships with suppliers Better management practices in general Make enhanced, more informed decisions about how to run their own operations Risks management (FLO-CERT) Cost savings and performance Identify efficiencies that enhance energy and/or waste reductions across the supply chain (Walkers) Strengthen relationships with suppliers Willingness to cooperate, responding to supplier feedback and creating coordinated solutions to reduce carbon emissions (PepsiCo, Walkers) Companies select only the more environmentally efficient suppliers (Wal-Mart) Walkers : buy potatoes to supplier based on weight Supplier increase water content (humidified warehouse) to sell their potatoes more expensive (weight more)  consume NRJ But walkers then need to dry them before the process  consum energy By varying the pricing structure according to water content both the potato producers and Walkers could save energy and costs On a standard bag of Walkers Crisps the saving is equal to 6g of CO2. These carbon emission reductions enable Walkers to save an estimated £400,000. Pepsico : 30% emissin of tropicana pure premium orange juice come from fertilizers test with their florida farmers a new type of fertilizer that emit less (but don’t know if it is durng the fabrication process or emissisn form the soil) Walmart : supplier corecard : question on sustainbility management of the supplier, to select the best one

12 Market and trade advantages
Enhanced brand image and reputation “greener” their image and products ensure a certain credibility to their environmental declarations Product differentiation and access to niche segments EU and UK survey Enhanced brand image and reputation “greener” their image and products  increase customer loyalty, attract new customers, convey stability in the business ensure a certain credibility to their environmental declarations by engaging themselves in the wake of the government carbon labelling scheme Products’ differentiation and access to niched segments EU survey: 72% of EU citizens thought that a label indicating a product’s carbon footprint should be mandatory in the future Survey in UK BUT only 15% of the British consumers asked are ready to pay more for a product with a lower CFP

13 One tool, several potentials
5. FAO tools for appraising value chain green growth scenarios EX-Ante Carbon-balance Tool (EX-ACT) EX-ACT main objective… Estimating the possible mitigation benefits of an investment project/ programme One tool, several potentials Putting forward externalities Anticipating GHG and carbon impacts of agriculture and forestry activities in a development context Strengthening value chains Helping to get additional funding Helping policy decision-making EX-ACT in few words… Set of linked Microsoft Excel sheets (19) Based on land use and management practices Using IPCC default values (Tier 1) and/or ad hoc coefficients (Tier2) Comparing a situation without project and a situation with project Upgradable over time Possible up-scaling (watershed, national, regional levels)

14 EX-Ante Carbon-balance Tool
(EX-ACT) Main data required to run the tool… Different land uses and land use changes Basic agricultural practices (residue burning, kind of improvements…) Areas in ha Amount of inputs (fertilizers, fuel, electricity...) Activities accounted within EX-ACT… Deforestation Forest degradation Afforestation/Reforestation Land use change Annual crops Perennial/tree crops Irrigated rice Use of organic soils Grasslands Livestock Inputs Other investments

15 The FAO Value Chain Analysis VCA Tool
The FAO VCA-Tool is a software explicitly designed to carry out economic analyses of value chains Structure the accounting framework of a value chain Organize data concerning different activities and agents Compute the inflows and outflows and performance indicators for each activity and agent Compute performance indicators for the whole chain Compute reference prices Compute competitiveness and protection indicator

16 Business as usual scenario
6. EXAMPLE OF RICE VALUE CHAIN IN MADAGASCAR Rice production in Madagascar Carbon footprint 4.8 kg of CO2eq per kg of paddy 7.2 kg of CO2eq per kg of rice Current annual emissions: Million tons of CO2eq Methane production of aquatic rice (67%) Deforestation effect (29%) Persistence of hilly S&B rice (tavy) Carbon balance Towards an upgrading scenario for Business as usual scenario Upgrading scenario -Contuniously flooded rice management -Laissez aller policy letting S&B increase by 3.1%/year Switch of 300,000 ha to intermittent flooding and non-flooded preseason - improved organic amendment - Stop any increase of S&B rice - Net increase of fertilizers used The upgraded scenario will allow to fix 5.6 million tons of CO2eq/year between => 45% due to ↘CH4 (from continuously to intermittedntflooding) => 54% linked with reduction of deforestation due to tavy

Table 16. Emissions related to the different production phases of bananas. Phase Kg CO2e/ton of bananas % Farm % Packing % Transport from packing facility to terminal % Terminal and port operations % Overseas transport % Ripening % Transport from ripening facility to retail % Extra due to exclusions % Total , % A single banana grown in Costa Rica and sold in a German supermarket has a carbon footprint of 135 g CO2e Source: Soil and More, Comprehensive Carbon Footprint Assessment , Dole Bananas, 2010

18 BANANA carbon footprint appraisal in ex-act


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