Scottish Economy

Climate Change and Farming

The 2021 United Nations (UN) 26th Climate Change Conference (COP26) is scheduled to take place in Glasgow between 31 October – 12 November 2021.

The Fraser of Allander Institute will be discussing key economic issues surrounding climate change and climate change policies. We will also be highlighting a range of research related to COP26, from academic papers to pieces of commissioned research. To find out more, click here.

This article, taken from our latest Fraser of Allander Economic Commentary, highlights the key role of the farming sector and the challenges it faces in Scotland’s journey to net-zero.

Farming may be a relatively small part of Scotland’s economy when measured by GDP, but it is a relatively big player in terms of greenhouse gas emissions as both an emitter and a sequester.

Whilst not a large part of the economy itself, farming underpins Scotland’s food and drink sector, as well as being a crucial employer in rural areas.

Due to natural processes, there will always be emissions associated with farming both from livestock and management of soil. The challenge is to minimise these emissions as much as possible and maximise sequestration opportunities. This is against the backdrop of a challenging and uncertain financial outlook for farming.


What is traditionally thought of as farming actually straddles two sectors in terms of emissions reporting: “agriculture” and “land use, land use change & forestry (LULUCF)”.

Chart 1: Emissions from Agriculture and LULUCF in context (2019)

Source: Scottish Government

Methane and nitrous oxide are the main greenhouse gases emitted under “agriculture”, from livestock and crop management (e.g. fertiliser use) respectively. In addition, carbon emissions from fuel use on farms make up a small portion.

Agriculture has seen a 1.1 MtCO2e (12.7 per cent) fall in net emissions between 1990 and 2019. Between 2018 and 2019 there was essentially no change in net emissions of overall greenhouse gases from this sector.

LULUCF had previously been understood as a carbon sink (mainly due to the forestry component), but recent revisions have included the effect of historical draining and rewetting of peatlands, resulting in a large upward revision to estimates of carbon emissions.

Farming is obviously a key player in terms of forestry and land use, including farming on peatlands. Ensuring good management of peatlands is being increasingly understood as a critical part of sustainable land management. However, even non-peat soils can release carbon from processes such as ploughing.


There is an acceptance that due to the natural processes involved, there will always be emissions from the sector and hence focus is on efficiency to reduce emissions per output, and to increase sequestration activities.

Livestock farming will have to continue to play a key role in farming if the sector is to continue to produce similar levels of food in the future as the vast majority of land in Scotland is only able to support livestock farming due to geology and terrain.

Many mitigation measures promoted by the Scottish Government are linked to called “good practice”, for example limiting soil erosion by utilising cover crops of fixing nitrogen in the soil using clover to reduce fertiliser use. In some cases, these will deliver net financial benefits to the farmer.

Other measures, such as updating manure stores, installing anaerobic digestion or limiting farming activity on certain soils, will mean upfront costs or potential income foregone.

Translating theory into practice, in relatively small businesses that already deal with massive risks on a yearly basis, is a challenge not to be underestimated. The time required to learn and understand measures and how they work is also a ‘cost’ to farmers.

The Scottish Government’s flagship policy is “Farming for a Better Climate” which provides expert advice through a range of sources that the industry trusts. One aspect is volunteer focus farmers to showcase measures.

The ambitions for the sector are significant.

“By 2032, the agriculture sector in Scotland will have adopted and be competently using all available low emission technologies throughout the whole sector, such as maximising efficiencies, minimising inputs and maximising outputs, precision farming, optimal slurry and manure usage and storage. There will also be increased innovation in areas such as feedstuffs and use of fertilisers, making a significant contribution to meeting our climate change targets as well as wider environmental and biodiversity impacts for the whole of Scotland.” – Scottish Government 20201.

Of course, farming could also be a key beneficiary of efforts to halt climate change. Unpredictable weather and greater intensity of extreme conditions, be it rain, sun or snow, heightens the risks already inherent in farming.

The next few years already hold plenty of other challenges for farmers to face, including the move away from EU to domestic subsidies to support the sector. Whilst this will create opportunities for support to be delivered to meet national goals in terms of greenhouse gas emissions, the uncertainty and upheaval it creates may be difficult for farmers to contend with given often precarious financial situations: the average farm business made a loss of £17,100 without support on average in the years 2016–202.

The prizes in terms of turning farming into a low emissions sector are significant, and necessary, to meet Scotland’s climate change targets. The challenge is to ensure food production can operate at a sufficient scale and quality to make the sector financially, as well as environmentally, sustainable.


1 See Scottish Government (2020)

2 See Farm Business Income Survey, Scottish Government (2021)



Emma Congreve is a Senior Knowledge Exchange Fellow and Deputy Director at the Fraser of Allander Institute. Emma's work at the Institute is focussed on policy analysis, covering a wide range of areas of social and economic policy.  Emma is an experienced economist and has previously held roles as a senior economist at the Joseph Rowntree Foundation and as an economic adviser within the Scottish Government.