Peatland Restoration in Germany : A Dynamic General Equilibrium Analysis

While drained peatland currently represents only 7.7 percent of Germany’s total utilized agricultural area, it contributes more than 40 percent of total national greenhouse gas emissions from agriculture and agricultural land use. The National Peatland Projection Strategy adopted by the German government recognizes that these emissions need to be reduced significantly. This study employs a global dynamic computable general equilibrium model to assess the economic and greenhouse gas emission impacts of alternative peatland restoration scenarios for Germany up to 2030. In contrast to partial-analytic approaches, the global general equilibrium approach allows to take consistent account of economic ripple-on effects and carbon leakage effects triggered by peatland restoration. The results suggest that in the medium term towards 2030 a reduction in annual emissions from agricultural peatland use by up to 45 percent are attainable at marginal private abatement costs between 27 and 61 Euro/tCO2e. Carbon leakage effects due to induced indirect land use change reduce the global net emission reduction impact by 0.7 to 1.0 percent of the direct emission reduction. Effects on food prices are small. In conclusion, a sizable reduction of Germany’s land-use-related emissions is achievable at a low macroeconomic cost