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Winter
2017
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“We’re concerned about the way the federal government
has chosen to mandate a deadline and institute a tax. There’s
still a lot of grey area in terms of how it will all come together,”
he said. “Really, what we’re looking for in our business is some
assurance that we are going to have a predictable regulatory
environment.”
The Wheat Growers, along with many provincial ministers
of environment, were surprised by the federal announcement.
The association would have liked to see more consultation
with agriculture groups, and is hopeful that there will be
more communication going forward. Wood said that it was
evident that understanding the impacts to agriculture was not
a priority when a proposal to study the effects of a carbon tax
on agriculture was voted down by the House of Commons
Standing Committee on Agriculture and Agri-Food this past
October.
Among the many considerations, Wood wonders where
grain growers will find the new efficiencies required to meet
emission reduction goals. “A lot of these changes make
good management sense on our farm, and we have already
implemented them—things like reduced tillage, investing
in more efficient machinery and developing best practices
for fertilizer use,” he said. “In Western Canada, farms are
getting as efficient as they can be. We are way out ahead of
the curve.”
Carbon policy for a second-best world
Peter Phillips is a political economist and Distinguished
Professor at the University of Saskatchewan’s Johnson
Shoyama Graduate School of Public Policy. His work focuses
on technology change in agriculture, and the increasing
overlap between new technology and reducing the impacts
of climate change.
“Canadian producers have one of the lightest footprints per
unit of output of the many jurisdictions producing food for the
export market,” he said. “Agriculture is really a science-based
industry. They are heavily engaged in technological change
and adapting new science to existing and new problems.”
He said a good carbon strategy consists of three
mechanisms: pricing, cap-and-trade, and public investment in
research and innovation.
“Carbon pricing can lead to distortions in the way we
allocate our resources. Cap-and-trade is a little bit better, but
we know that the market is underfunded. So we still need
the third sector, an investment strategy model,” said Phillips.
“This is just one more rationale for governments and industry
to spend more on agricultural research. The returns on
investment are high, the economy and society benefit, but the
benefits diffuse too quickly for private investors to put up all
the capital.”
Ultimately, Phillips said governments are faced with the
challenge of designing carbon policy for a second-best world.
“In a first-best world, you figure out what the best
mechanism is and you say we’re going with that, but that
assumes everything is in equilibrium and we’re not. We’re in
a second-best world, where everything is out of equilibrium,
and at that point there’s a burden of proof in public policy that
one should spend time and energy validating that the measure
you are going to propose actually achieves the goal you are
seeking. So far, the debate hasn’t got there.”