Climate Solutions in Agriculture and Forestry: What the Evidence Says Works Best

The OECD report “Mitigating Climate Change in the Agriculture, Forestry and Other Land Use (AFOLU) Sectors: A Literature Review on Policy Effectiveness”, authored by Lauren Lee and Ada Ignaciuk, provides a sweeping analysis of policy measures aimed at tackling greenhouse gas (GHG) emissions in land-based sectors. Backed by contributions from the OECD’s Trade and Agriculture Directorate (TAD), Environment Directorate (ENV), and Economics Department (ECO), the study draws from approximately 190 papers assessing the effectiveness of direct and indirect mitigation policies in OECD and G20 countries. Organized using the OECD’s Inclusive Forum on Climate Mitigation Approaches (IFCMA) typology, the report classifies policies into economic, regulatory, and other categories, offering rich insights into their strengths, limitations, and potential to reduce emissions per unit of land.

Forest Protection Leads the Way in Climate Impact

Among all policy tools examined, those that prevent the destruction or degradation of natural carbon sinks, particularly zoning policies like protected areas, stood out as the most impactful. These policies, classified under framework regulations, were found to mitigate as much as 86 tonnes of CO₂-equivalent per hectare per year, mainly by halting deforestation and conserving ecosystems such as tropical forests, peatlands, and mangroves. Their success lies in shielding carbon-rich landscapes from conversion to agricultural land. Yet, their effectiveness varies by location, governance quality, and enforcement capacity. Studies from Brazil, Indonesia, and Mexico confirmed strong results in emission reduction and cost-efficiency, particularly when targeted to areas of high deforestation risk and high carbon stock.

Technology and Innovation Offer High, Yet Unrealized, Potential

Another set of high-performing policies identified were technology standards, particularly those supporting advanced biofuels combined with carbon capture and storage. These policies promise up to 30 tonnes CO₂-equivalent per hectare in reductions, but most of these results stem from ex ante modeling, with limited real-world uptake due to high upfront costs and technical complexity. Similarly, government investment in research and development (R&D) was shown to reduce emissions by 28 tonnes CO₂-equivalent per hectare, largely by improving total factor productivity and advancing innovations in crop genetics, livestock breeding, and soil management. However, such policies often lack direct emissions data, making it harder to quantify benefits on a comparable scale. Nonetheless, the report underscores their critical role in the long-term transformation of agricultural systems and emissions trajectories.

Subsidies: Popular but Modest in Performance

Subsidies dominate the AFOLU policy landscape, both in frequency and political appeal, but their climate effectiveness is more modest, averaging just 5.3 tonnes CO₂-equivalent per hectare. While subsidies aimed at afforestation, conservation tillage, and methane reduction in livestock can deliver positive outcomes, others, especially those tied to production incentives or land-use change, had mixed or uncertain effects. The risk of “subsidy lock-in,” where outdated programs persist due to political inertia, was flagged as a major issue. Participation rates also matter: studies showed that higher payments can improve farmer uptake, but effectiveness declines if subsidies are not aligned with local ecological conditions. Furthermore, context-specific outcomes mean that what works in one country or landscape may underperform elsewhere. Policymakers are encouraged to stack or combine subsidies for multiple environmental benefits and use sunset clauses to limit long-term dependency.

Carbon Pricing: Theoretical Efficiency vs. Political Reality

Carbon taxes emerged in the review as theoretically powerful tools for emission reduction but remain rare in practice due to political resistance and measurement challenges in agriculture. The studies, largely ex ante simulations, suggested modest average reductions, around 6 tonnes CO₂-equivalent per hectare, and highlighted carbon pricing’s ability to incentivize more efficient input use and discourage high-emission production. However, concerns over carbon leakage, where production shifts to jurisdictions with weaker policies, temper the benefits. When not applied uniformly across sectors and countries, such leakage can offset much of the emissions gains. Still, carbon taxes were found to be more cost-effective than equivalent subsidies, especially when revenues are recycled into support for affected farmers or innovation funds.

Mixed Returns from Trading Schemes and Voluntary Agreements

The report offers a cautiously critical view of carbon trading systems and voluntary offset markets in the AFOLU sectors. While programs in California and Australia have issued millions of tonnes in credits, questions remain around the additionality, permanence, and verification of claimed reductions. Nearly 40% of trading system assessments returned mixed or inconclusive results. Voluntary agreements, including private carbon markets and covenants between governments and producers, were found to have limited mitigation impact unless tied to strict monitoring and enforcement. Still, they may play a supporting role by increasing political acceptability or engaging stakeholders otherwise left out of regulatory approaches.

The OECD emphasizes that no single policy is a silver bullet. Effective mitigation requires a well-balanced mix of targeted interventions, grounded in local realities and supported by data. Importantly, the report calls for more ex post evaluations, especially of indirect mitigation policies like fertiliser regulations or input-use limits, which may deliver unaccounted climate benefits. Policymakers are urged to widen the lens to consider food systems in their entirety, from production and land use to consumption and waste, if net-zero goals are to be met.