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GTAP Resource #398

"Trade Liberalization as a Vehicle for Adapting to Global Warming"
by Hertel, Thomas and Timothy Randhir

Earlier versions of this paper were presented at the International Agricultural Trade Research Consortium Meetings San Diego, CA, December 14-16, 1997 and at the First Annual Conference in Global Economic Analysis, Purdue University, June 1998

This study assesses the interaction between climate change and agricultural trade policies.
We distinguish between two dimensions of agricultural trade policy: market insulation and
subsidy levels. Building on the previous work of Tsigas, Frisvold and Kuhn (1997) we find that,
in the presence of current levels of agricultural subsidies, increased price transmission --as called for under the Uruguay Round Agreement on Agriculture-- reduces global welfare in the wake of climate change. This is due to the positive correlation between productivity changes and current levels of agricultural support. Increases in subsidized output under climate change tend to
exacerbate inefficiencies in the global agricultural economy in the absence of market insulation.
However, once agricultural subsidies have also been eliminated, price transmission via the global
trading system contributes positively to economic adaptation under climate change.

Resource Details (Export Citation) GTAP Keywords
Category: Working Paper
Status: Not published
By/In: GTAP Working Paper No. 09
Date: 1999
Created: Bacou, M. (10/20/2000)
Updated: Batta, G. (11/13/2006)
Visits: 32,384
No keywords have been specified.

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