Is agricultural trade liberalisation bad for the climate?

By Andy Reisinger 14/10/2009 3

A Dutch research team has analysed the effect of agricultural trade liberalisation on global greenhouse gas emissions. Their study finds that a full liberalisation of agricultural trade (ie, removal of all trade barriers, quota and subsidies globally) would result in a 6% increase in global greenhouse gas emissions in 2015.

Most of this emissions increase would come from land-clearing in developing countries to create new land for agricultural production, and increased numbers of cattle in extensive farming regions that produce meat less efficiently than in high-intensity production countries. By 2030 and beyond, the global increase in emissions would level off again as increased emissions from countries benefiting from trade liberalisation would be balanced by reduced emissions in countries negatively affected by liberalisation.

This study raises some interesting problems for New Zealand and in particular Tim Groser, who is Minister in charge of both trade and international climate change negotiations. New Zealand is a strong advocate for trade liberalisation, but what if free trade increases the risks of damaging climate change?

The recent study provides some interesting regional details: for example, under a scenario where only trade barriers are removed but existing milk quota are retained, dairy production in Australia and New Zealand increases more than under a full trade liberalisation scenario, as well as leading to a much smaller increase in global greenhouse gas emissions. This shows that specific details about trade liberalisation could matter for both New Zealand’s economy and the global environmental impact of trade agreements.

Perhaps the biggest problem for New Zealand is that at present, we have a very limited capacity in this country to engage in such modelling and to test the various assumptions and conclusions coming out of overseas studies. Work by Caroline Saunders at Lincoln university is probably the most advanced in this regard, but their most recent study on the same subject did not simulate the global changes in greenhouse gas emissions associated with land-use changes, let alone the interaction between agriculture and deforestation under alternative trade agreements.

This lack of domestic capacity to fully understand the interactions between agricultural and trade policies with climate change presents a major challenge for New Zealand, particularly if the government wants to make a science-based case in international fora such as the Doha trade talks on how to combine liberalising agricultural trade policies with the urgent need to limit the growth in global greenhouse gas emissions. Having to rely on research carried out in countries that act as competitors in a global market may not be the most robust strategy.

Incidentally, Caroline Saunders from Lincoln university will give a talk on carbon footprints, life-cycle analysis and foodmiles as part of a seminar series organised by the New Zealand Climate Change Research Institute on 15 October 2009 in Wellington. (Disclosure of conflict of interest: I work for the New Zealand Climate Change Research Institute)

3 Responses to “Is agricultural trade liberalisation bad for the climate?”

  • This is an interesting perspective. Does the study take into consideration the effect of agricultural liberalisation on the potential for climate change adaptation?

    The increased ability of developing countries to export agricultural goods might increase the capacity of developing countries to adapt to climate change, and alleviate poverty, since most developing countries are mainly dependent on agriculture (particularly sub-Saharan Africa).

    The link to the Dutch research did not work so I could not access it – can you post it again so I can check this?

    • Sorry – I updated the link, it should work now. No, the study didn’t look at the implications for adaptation. Generally, integrated assessment models don’t do a good job on simulating adaptation yet, they tend to take either an extreme view of ‘no adaptation’ or ‘perfect adaptation’. The problem is also that if developing countries switch to monocultures in response to market demand in developed countries, but these monocultures rely heavily on particular climatic conditions or irrigation, then this could result in significant maladaptation and vulnerability to future climate change (and current climate variability) as well as environmental and social trade-offs; an example of this is the sugarcane industry in Fiji. If you are interested, a recent paper on this issue discusses limitations of adaptation in integrated assessment models: Patt A, van Vuuren D, Berkhout F et al (2010) Adaptation in integrated assessment modeling: where do we stand? Climatic Change 99(3): 383-402.

  • Apologies, I wrote something cogent and lost the post.

    I think I have some problems with the result of the paper, albeit it does tell a plausible story. It appears a lot rides on three factors. First, the demand response in developed (non-subsidised) countries to the shift in global & domestic prices. Second, the different degrees of agricultural intensification in both developed countries (excluding NZ/Aus) and development. If the demand response is not as high and the reallocation of production not as acute, then a different result could easily emerge.

    The third is treating the current global forestry trade as a baseline- where in fact countries provide a depressing number of subsidies for deforestation & trade barriers to more efficient growers are palpable. A simultaneous liberalisation of both global agriculture and global forestry would be of more interest. If developing countries were also *not* subsidising deforestation & including non-timber values in their production plans, that would seem to blunt one of the drivers identified in the above paper.

    The other problem is we appear to be overlooking the size and scale of these subsidies. These are in the order of tens-of-billions of dollars a year. Annually, more is spent propping up French farmers or Japanese rice growers than fixing many other problems. The Gordon Brown ‘fund’ for developing countries proposed ahead of Copenhagen was almost an order of magnitude less than this.

    That leaves open the whole policy question of whether this level of spending is a particularly efficient (or even fair) way to achieve GHG emission reductions. If you were going to spend $US20bn on something to reduce GHG emissions, wouldn’t you be thinking of targeting say energy, transport or forestry policies ahead of paying French framers to produce more butter?