Beyond determinism: Accounting for weather variability in the carbon pricing debate for EU agriculture

Abstract

Agriculture accounts for 11 per cent of EU greenhouse gas emissions, yet sectoral emissions have stagnated over the past two decades. This paper evaluates carbon pricing in EU agriculture by integrating stochastic yield variability into the CAPRI model. We assess how different carbon price levels affect emissions and outcome uncertainty. Results show that carbon pricing reduces emissions, and higher price levels are associated with lower uncertainty in policy outcomes. While expected results remain similar to deterministic simulations, stochastic modeling reveals greater regional and sectoral heterogeneity. These findings highlight the importance of accounting for production risk when designing agricultural climate policies. © The Author(s) 2026.