State support payments will be required to compensate farmers for income losses associated with reducing their carbon emissions, according to a new report.

The Irish Fiscal Advisory Council (IFAC) states that “direct Government transfers” to farmers will be needed where a significant reduction in livestock numbers is required to meet carbon emissions reductions. “We assume in our ‘high cost’ scenario that any loss in farm income from a reduction in livestock numbers will be compensated by a direct Government transfer,” it said.

“While these direct transfers will have to continue for several years, as farmers eventually retire, the costs of these schemes should ultimately fall,” the IFAC report adds.

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The study, What Climate Change Means for Ireland’s Public Finances, does not outline the exact level of payments that will be required to compensate farmers, but it estimates that the cost of supports across the economy will range from €1.6bn to €3bn from 2026 to 2030.

Crucially, the report argues that the reduction in stock numbers should reduce costs on low-income drystock farms and open opportunities for other land-use enterprises.

“It should be noted that beef and lamb farms operate at a net loss on average. Maintaining CAP payments, while reducing livestock numbers, could therefore lead to higher net farm incomes,” it contends.