Farm-level greenhouse gas mitigation: Understanding the effect of interactions and heterogeneity

• Reduction of crude protein in animal diets is the most cost-effective measure for all farm systems. • Some mitigation measures between cost-positive and cost-negative depending on the farm system. • No two farm-level MACC curves for are the same. • Policy design should be targeted towards clusters of farms with high abatement potential. Mitigation of climate change remains a central focus of the European Union (EU). Under its 2030 Climate Target Plan, the European Commission proposes to raise the EU's ambition in this area, targeting a reduction in greenhouse gas emissions (GHG) of at least 55 % below 1990 levels by 2030. In Ireland, the proportion of GHG emissions from the agricultural sector is high compared to other developed countries, contributing 38.1 % of total economy-wide GHG emissions. The extent to which mitigation measures reduce GHG emissions at the farm level has received limited attention, especially the implications of farm-level heterogeneity on the optimal policy design for emission reduction. Using EU Farm Accountancy Data Network data for the Republic of Ireland in 2020, this study uses Marginal Abatement Cost Curve (MACC) analysis to assess a suite of GHG mitigation measures and accounts for interaction and heterogeneous effects across five different farm system types. The result of the study shows that reducing crude protein in animal diets is the most cost-effective measure for all farm systems. Liming and substitution to protected urea fertilisers are also cost-effective measures for all farm systems. However, some measures fluctuate between cost-intensive and cost-saving depending on the farm system type. The findings show that no two farm-level MACC curves are the same, thus farm heterogeneity needs to be accounted for efficient policy design.