GTAP Resources: Resource Display
| GTAP Resource #1489 |
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"Policy reform in agriculture and the environment: Linkages in the crops sector " by Tsigas, Marinos Abstract In many OECD countries, a wide range of economic policies affects crop sectors. Thus, multilateral trade liberalization and reduction in support in food and agriculture may have significant impacts on crop production. Policy reform impacts may include changes in natural and environmental resources through changes in the location and scale of crop production as well as in the composition of inputs. This work analyses environmental impacts of multilateral food and agriculture policy reform on crops using various environmental and economic indicators. Utpal Vasavada and Wesley Nimon reviewed the empirical literature regarding environmental impacts of trade liberalization in agriculture and they found that the overall impact may depend on several and offsetting effects and that coordination of trade and environmental policies may promote a more sustainable pattern of natural resource use. Marinos Tsigas, Denise Gray and Thomas Hertel (2002) extended the GTAP framework to model linkages between trade and environment. The authors found that freer trade in the Americas may lead to changes in production patterns and to more pollution in some regions. The authors also found that if environmental resources are priced correctly and environmental regulations are enforced, freer trade will lead to less pollution. This paper focuses on the environmental impacts of multilateral policy reform in food and agriculture. The GTAP framework is used to quantify impacts on trade, production and input use for crop sectors and their environmental implications. Information from environmental databases supplements the GTAP analysis to assess impacts on pesticide use, nitrogen uptake and off load, and greenhouse gas emissions. This analysis does not consider the alleviating influence of existing environmental policies and regulations. We assess the environmental impacts of two hypothetical multilateral food and agriculture policy reform scenarios. First, we simulate an extension of the Uruguay Round Agreement on Agriculture. Second, we simulate the elimination of all food and agriculture policy measures. In each scenario, liberalization is limited to food and agriculture. GTAP assumptions regarding agricultural production are relaxed and the production functions are specified as two-level constant-elasticity-of- substitution functions (Kazuo Sato, 1967). It is assumed that in one subprocess, capital (or machinery) is a factor to substitute for labor; in the other subprocess, agri-chemicals (i.e., fertilizer and pesticides) is a factor to substitute for land (Yujiro Hayami and Vernon Ruttan, 1970; Yoav Kislev and Willis Peterson, 1982). The trade implications of multilateral policy liberalization in food and agriculture are sensitive to the trade elasticities assumed. To examine the robustness of the environmental implications, simulations are performed with two alternative sets of trade elasticities: the standard GTAP elasticities and more recent trade elasticities from the work of David Hummels (1999). References Hayami, Y. and V.W. Ruttan (1970), “Factor Prices and Technical Change in Agricultural Development: The United States and Japan, 1880-1960,” The Journal of Political Economy, 78(5):1115-1141, Sept.-Oct. Hummels, D., (1999), Towards a Geography of Trade Costs, GTAP Working Paper No. 17, Center for Global Trade Analysis, Purdue University, West Lafayette, Indiana. Kislev, Y. and W. Peterson (1982), “Prices, Technology, and Farm Size,”The Journal of Political Economy, 90(3):578-595, June. K., Sato (1967), “A Two-Level Constant-Elasticity-of-Substitution Production Function,” The Review of Economic Studies, 34(2):201-218, April. Tsigas, M., D. Gray, and T. W. Hertel (2002), “How to Assess the Environmental Impacts of Trade Liberalization,” selected paper, Fifth Annual Conference on Global Economic Analysis, National Tsing Hua University, Taipei, 5-7 June. Vasavada, U. and W. Nimon, “Environmental Effects of Further Trade Liberalization in Agriculture,” Economic Research Service, U.S. Department of Agriculture, found at http://www.ers.usda.gov/briefing/wto/PDF/environmentandtradeliberalization .pdf, retrieved 30 June, 2003. |
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Public Access  GTAP Resource 1489 (250.8 KB) Replicated: 0 time(s) Presentation (45.2 KB) Replicated: 0 time(s)Restricted Access No documents have been attached. Special Instructions No instructions have been specified. |
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Last Modified: 9/15/2023 1:05:45 PM
