Which metrics to measure greenness of value chains

By Louis BockelEconomics of Sustainable Agriculture Team

ESA Division

CTA Conference: Making the ConnectionAddis Ababa, 6-9 November 2012

1. Green indicators and sustainability2. Multi-criteria appraisal3. Carbon as an aggregated indicator?4. Green labelling and carbon footprint to

compare value chains5. Tools for appraising green-growth scenarios

of value chains (VCA Tool, EX-ACT Tool)6. Practical examples: rice, banana

1. Green indicators and sustainability

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

At which level do we work to get measurable indicators?

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

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

Landscape-level indicators• High conservation value areas in the landscape• Levels of flow in rivers• Reduced deforestation and land erosion (% of area)

Landscape-level indicators• High conservation value areas in the landscape• Levels of flow in rivers• Reduced deforestation and land erosion (% of area)

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

3. Carbon as an aggregated indicator?:

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

Advantages of calculating and labelling the carbon footprint

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)

• 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)

Achieving reduction targets of GHG emissions

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

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

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)

EX-Ante Carbon-balance Tool (EX-ACT)

EX-ACT main objective…Estimating the possible mitigation benefits of an investment project/ programme

5. FAO tools for appraising value chain green growth scenarios

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

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...)

EX-Ante Carbon-balance Tool (EX-ACT)

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

6. EXAMPLE OF RICE VALUE CHAIN IN MADAGASCAR

Current annual emissions: 12.9 Million tons of CO2eq

4.8 kg of CO2eq per kg of paddy7.2 kg of CO2eq per kg of rice

Methane production of aquatic rice (67%)Deforestation effect (29%)Persistence of hilly S&B rice (tavy)

Rice production in Madagascar

Towards an upgrading scenario for 2003-2020

The upgraded scenario will allow to fix 5.6

million tons of CO2eq/year between

2003-2020

-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

=> 45% due to ↘CH4 (from continuously to intermittedntflooding)

=> 54% linked with reduction of

deforestation due to tavy

Carbon footprint

Carbon balance

6. EXAMPLE OF BANANA VALUE CHAIN IN COSTA RICA

Table 16. Emissions related to the different production phases of bananas. Phase Kg CO2e/ton of bananas %

Farm 137.83 12% Packing 89.60 8% Transport from packing facility to terminal 14.11 1% Terminal and port operations 25.75 2% Overseas transport 691.74 62% Ripening 84.46 8% Transport from ripening facility to retail 26.62 2% Extra due to exclusions 53.51 5% Total 1,123.62 100%

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

BANANA carbon footprint appraisal in ex-act