Assessing the Environmental, Economic and Social Impacts of a Greenhouse Gas Emission Tax in Swiss Agriculture

Abstract

Agriculture accounts for about one fifth of global greenhouse gas (GHG) emissions, making mitigation a key policy priority. Although policymakers are increasingly considering market‐based approaches such as taxes, their broader impacts remain insufficiently assessed. This study examines the environmental, economic and social impacts of a GHG tax on Swiss agriculture. Using the agent‐based sector model SWISSland, representing 3077 farms and capturing heterogeneous responses to taxation and structural change, we simulate tax levels of 100, 200 and 300 CHF/tCO 2 eq for 2024–2030. We consider three mitigation pathways: technical measures, structural changes in land use and livestock numbers, and farm exits. We assess their impacts on GHG emissions, nitrogen surpluses, biodiversity, farm income, food production and food security. A GHG tax activates abatement mechanisms and induces dairy herd reductions, grassland extensification, shifts towards crop production for direct human consumption, and livestock farm exits. At 100 and 200 CHF/tCO 2 eq, emission reductions are mainly driven by technical measures, whereas at 300 CHF/tCO 2 eq they increasingly result from structural adjustment, including livestock farm exits and land reallocation to less emissions‐intensive production. A tax of 100 CHF/tCO 2 eq reduces emissions by 5%, while higher tax rates achieve greater reductions but increase sectoral income losses from 13% to 25%. Food self‐sufficiency and calorie production remain stable. The model also shows environmental co‐benefits, including lower nitrogen surpluses and increased biodiversity areas. These findings highlight synergies and trade‐offs across sustainability dimensions and suggest that redistributing tax revenues could mitigate adverse effects and improve policy outcomes, while enhancing the policy's social acceptability.