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International Monetary Fund. Asia and Pacific Dept

would reinforce mitigation incentives. 3. Pricing could be based on proxy estimates of emissions but a compensation scheme for the farm sector may be needed to enhance acceptability and limit emissions leakage. Direct monitoring of farm level emissions is not currently practical, but emissions can be estimated indirectly using farm-level data (on livestock herds, feed, crop production, fertilizer use, and acreage) and default emissions factors. 1 Emissions taxes may face strong political opposition and could cause significant emissions leakage as the tax burden

Ian W.H. Parry and Mr. James Roaf

the farm sector may be needed to enhance acceptability and limit emissions leakage . Direct monitoring of farm level emissions is not currently practical, but emissions can be estimated indirectly using farm-level data (on livestock herds, feed, crop production, fertilizer use, and acreage) and default emissions factors. 48 Emissions taxes would likely face strong political opposition and could cause significant emissions leakage as the tax burden reduced the international competitiveness of US farmers. A feebate approach is worth studying, perhaps based on GHG

International Monetary Fund. Western Hemisphere Dept.

returned in proportion to the value of output to improve acceptability. Emissions can be estimated based on farm-level inputs and default emissions factors. A shift from beef and dairy to crop-based production could be reinforced by fiscal incentives at the consumer level. Fugitive Tax methane emissions from extractives based on a default leakage rate with rebates for firms validating their emission rates are lower than the default. Trade Following future EU experience, consider a BCA and full carbon pricng for EITE industries to substitute for OBPSs