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• CAP subsidy regime is keeping peatland in production, causing high GHG emissions. • Emission abatement payments would lead to reduction in GHG emissions in agriculture. • The largest reduction in GHG emissions is by reducing peatland use and diet change. • Diet change with decrease in animal production would lead to a drop in farm income. • Just transition for farmers in livestock dominated regions is a policy challenge. This study, based on agricultural sector modelling, shows how changes in food consumption and land use measures can reduce GHG emissions from Finnish agriculture, and what are the impacts on regional levels of agricultural production, land use, GHG emissions, and farm income. The results demonstrate that it is difficult to achieve a large reduction in GHG emissions from agriculture by just changing diet alone. There is a big disparity in the distribution of farm income among the main regions in Finland due to a radical decrease in the consumption of livestock products. However, land use measures alone do not create the disparity in farm income among the different regions. Combining changes in diet and land use is the most effective in mitigating GHG emissions from agriculture, but the relatively disadvantaged regions with high shares of livestock production and peatlands may experience major restructuring in agriculture and land use. [ABSTRACT FROM AUTHOR]

Drained agricultural peatlands emit significantly higher amounts of greenhouse gas (GHG) emissions per hectare than mineral soils. GHG abatement costs for representative cereals (CF) and dairy (DF) farms in southwestern Finland were estimated by integrating an emission-based tax together with an option to invest in a subsidized adjustable drainage system on peat soils in a farm-level dynamic optimization model. With an average 10% share of peat soils from overall farm area, emissions tax rates over 15 (CF) and 19 (DF) €/tCO2e triggered adjustable drainage investments with a significant reduction in GHG emissions per ha, when assuming no crop-yield effect from the adjustable drainage. Abatement costs for emissions tax rates €12–50/tCO2e/ha were €16–44/tCO2e (CF) and €26–51/tCO2e (DF) for whole farm-soil emissions, depending on the share of peatlands on the farm, on the yield effects of adjustable drainage, and on crop prices. High emissions tax rates imply higher abatement costs since farms have a limited capability to adjust their production and land use. Thus, emissions reductions from peatlands can be achieved at reasonable costs when investing in adjustable drainage on peatlands. The income losses due to emissions tax, however, are high, but they can be compensated for farmers by lumpsum payments independent of their production decisions. Since existing agricultural policies such as the EU CAP system may have limited effectiveness on GHG emissions, the emissions tax and adjustable drainage on peatlands could promote GHG abatement significantly on farms and areas with abundant peatlands. [ABSTRACT FROM AUTHOR]

We evaluate the overall economic effects of decoupled agricultural payments in Finland. The EU Common Agricultural Policy reform implemented in 2006 means shifting farm subsidies from production output and capital to farmland. Since decoupling seems to be a prominent trend in agricultural policy, we also simulate a case in which some national subsidies are decoupled from production as well. The decoupled support is tied equally to the hectares of arable land owned by farmers, other entrepreneurs, white and blue collar workers, pensioners and other households. This study takes the ownership structure of farmland between these household groups explicitly into account. We evaluate the overall impact of these changes on agricultural production, income and the welfare of various households. The computable general equilibrium GemRur simulation model of Finland is our working tool. We find that decoupling farm payments from production, especially if extended to national subsidies, will increase agricultural and food prices and decrease agricultural and food production. The decoupling has the greatest impact on the income and welfare of farmers. The impacts on other households and sectors are clearly smaller but not negligible. [ABSTRACT FROM AUTHOR]