INTERNATIONAL TECHNICAL CONFERENCE ON CLIMATE CHANGE, AGRICULTURAL TRADE AND FOOD SECURITY

Transcription

1 INTERNATIONAL TECHNICAL CONFERENCE ON CLIMATE CHANGE, AGRICULTURAL TRADE AND FOOD SECURITY November 2017 FAO Headquarters, Rome Italy

2 Trade, food security and climate change: Recent literature and policy implications Andrea Zimmermann, Julian Benda Trade and Markets Divison, FAO 16 November 2017

3 Outline 1. Climate change and food security 2. Trade effects on climate change 3. Climate change effects on agricultural trade 4. Climate and trade policy

4 Climate change and food security INTERNATIONAL TECHNICAL CONFERENCE ON Dimension of food security Climate change effects on food security Time horizon Availability - Global mean crop yields of rice, maize and wheat projected to decrease 3-10% per degree of warming - Impacts on livestock mediated through reduced feed quantity/quality, pest and disease prevalence, physical stress; meat, egg and milk yield and quality decrease % decrease in potential fish catch in tropical marine ecosystems Access - Increasing food prices; relocation of production with impacts on prices, trade flows and food access Slow onset, long-term Slow onset, long-term Utilization - Reduced food safety due to higher rates of microbial growth at increased temperatures - Reduced quality due to decreases in leaf and grain N, protein and macro- and micronutrient concentrations associated with increased CO 2 concentrations and more variable and warmer climate Stability - Damage to crops from extreme events (heat waves, droughts, floods, storms, etc.) - Short-term disruptions of trade routes Slow onset, long-term Extreme events, shortterm Source: Based on Campbell et al. (2016) and Schmidhuber and Tubiello (2007)

5 Trade effects on climate change (CC) Trade can affect Greenhouse gas (GHG) emissions Accelerating effect on economic growth and the production of traded goods mixed effects (scale, composition, technique effects) Transportation between trading partners negative effects on CC Empirical evidence Mixed effect of GDP on GHG emissions depending on level of GDP (Jafari et al. 2017); Industrialization increases GHG emissions, services and agriculture value added reduce emissions (Rafiq et al. 2016) No significant effect of trade and foreign direct investments on GHG emissions (Jafari et al. 2017); Linear model: no significant effect of trade openness on GHG emissions, nonlinear model: trade openness contributes to emission reductions (Rafiq et al. 2016) Overall, impact of trade on emissions depends on the relative magnitude of the emissions induced by transportation and the net effects of production related aspects of trade Rather than restricting trade-induced growth, traderelated environmental issues should be addressed by targeted environmental measures accompanying liberalisation processes Agricultural trade for CC mitigation Agricultural trade can help shift food production to environments with low carbon intensities Dedicated (most suitable) regions could be used for the production of (new) energy crops Mentioned in literature, but not much research

6 Climate change effects on agricultural trade INTERNATIONAL TECHNICAL CONFERENCE ON CC may lead to significant trade disruptions in the short term through extreme events Long-term changes in trade patterns by altering the competitive advantages of countries Trade liberalisation as adaptation measure Quantative model-based simulations Climate model Crop model Source: IPCC AR5 Synthesis Report Economic (agricultural sector) model

7 Authors Year Main objective Economic model type Scenarios Nelson et al. 2014a/b Economic impacts of CC Multi-model (5-6 CGE, 4 PE) SSP2 (+ RCP8.5, no CO2) Von Lampe et al Economic impacts of CC, model comparison Multi-model (6 CGE, 4 PE) Ahammad et al Role of international trade under CC Multi-model (6 CGE, 4 PE) SSP2 (+ RCP8.5, no CO2) SSP3 Bioenergy SSP2 (+ RCP8.5, no CO2) SSP3 Bioenergy OECD 2015 Economic impacts of CC CGE SSP2 (+ RCP8.5, no CO2) Havlík et al CC impacts and mitigation in the developing world Van Meijl et al Impacts of CC Multi-model (1 IAM, 1 CGE, 3 PE) PE SSP4 (+ RCP2.6 w/o mit.) (+ RCP8.5 w/o CO2) SSP5 ( + RCP2.6 w/o mit.) (+ RCP8.5 w/o CO2) SSP1 (+ RCP6.0) (+ mit.) (+ RCP2.6, mit.) SSP2 (+ RCP6.0) (+ mit.) (+ RCP2.6, mit.) SSP3 (+ RCP6.0) (+ mit.) (+ RCP2.6, mit.) No CO2 Blanco et al CC impacts on agriculture PE SSP2 (+ RCP8.5 w/o CO2) Wiebe et al CC impacts on agriculture Multi-model (3 CGE, 2 PE) SSP1 (+ RCP4.5 w/o trade liberalised) SSP2 (+ RCP6.0) SSP3 (+RCP8.5 w/o trade restricted) No CO2 Baldos and Hertel 2015 Role of international trade in CC Simple PE model SSP2 (+RCP8.5 w/o CO2 w/o markets integrated) Costinot 2016 CC impacts on comparative advantages Simple CGE SRES A1FI + free allocation of production + free trade SRES A1FI + free trade SRES A1FI + free allocation of production

8 Results Climate change effects on trade Focus usually on yield, production and price responses All studies find an increasing role of trade under CC (often not quantified) World regions with more favourable growing conditions under CC export more, adversely affected regions use imports to buffer production losses Adversely affected (more net imports/less net exports) India (1/5) Sub-Sahara Africa (3/5) South Asia (2/5) Eastern Asia and Pacific (1/5) USA (1/5) European Union (1/5) Australia and New Zealand (1/5) Positively affected (more net exports/less net imports) Canada (2/5) Brazil (1/5) China (1/5) Eastern Europe and Central Asia (2/5) USA (1/5) Liberalisation effects Fully integrated world markets net global effect of CC critical for long-run food security Trade barriers regional impacts of CC relatively more important Liberalisation scenarios All tariffs and export subsidies on agri-food trade removed / trade more restricted (Wiebe et al. 2015) Markets segmented/integrated (Baldos and Hertel 2015) Trade more restricted as part of SSP assumptions (Havlík et al. 2015) Full trade liberalisation (Costinot et al. 2016) All studies confirm the important role of trade in adapting to CC Price increases lower Malnutrition outcomes smaller

9 Paris Agreement 2015 INTERNATIONAL TECHNICAL CONFERENCE ON First global accord to combat CC and adapt to its effects Reduce overall GHG emissions so that the increase in the global mean temperature remains below 2 C relative to pre-industrial levels, ideally below 1.5 C Nationally Determined Contributions (NDCs): Domestic mitigation and adaptation plans 164 parties submitted their NDCs (of 170 ratified) First official stocktaking planned for 2018 Patterns of NDCs Generally, developed economies NDCs are very broad in their commitment, while developing economies NDCs are much more elaborate and detailed Mentioning of adaptation measures almost only in developing countries NDCs Often developing countries commitments split into targets unconditional and conditional on foreign support (financing, technology transfers, etc.) NDCs often very vague, but strong interlinkages with international trade policy (TradeLab 2017, Brandi 2017)

10 Policy category Potential climate policy Related WTO positions and disciplines Taxes and emission trading schemes Aim: Internalize environmental costs of GHG emissions Examples: Carbon taxes, emission trading schemes Disparities in domestic levels of carbon pricing and risk of carbon leakage Border measures to counterbalance these disparities may be implemented (e.g. carbon tariffs) Legality of carbon tariffs has not been tested in a WTO dispute settlement GATT, Article XX; Agreement on Agriculture (AoA) - Market access Subsidies Aim: Promote the development and use of climate-friendly goods and technologies Examples: Support for biomass production as a measure to mitigate climate change Agreement on Subsidies and Countervailing Measures (SCM); AoA - Domestic support Regulations and standards Aims: Promote the use of climate-friendly goods and technologies, promote food safety Examples: Carbon labelling initiatives, regulations concerning food safety Problem if these discriminate against imports WTO encourages the use of international standards to reduce the likelihood of dispute settlements Technical Barriers to Trade agreement (TBT); Sanitary and Phytosanitary measures (SPS) agreement Support to developing countries Assistance for climate change mitigation/adaptation to developing countries is explicitly provided for in the Paris Agreement Examples: Support for development of drought resistant crops, more efficient irrigation systems Special and Differential Treatment (SDT) for developing countries; SDT in the AoA provides for special treatment of domestic support (as part of development programmes) for investment subsidies and agricultural input subsidies Source: Based on Blandford (2013) and WTO-UNEP (2009)

11 Conclusions Climate change and trade CC affects food security Trade can affect GHG emissions, but also serve as means for mitigating climate change (further research needed) CC affects agricultural trade Trade disruptions through extreme events Long-term changes in trade patterns by altering competitive advantages Trade important for CC adaptation How well markets can adapt to CC determined by the extent of trade openness Systematic comparison difficult, most studies focus on different model outcomes Only few traded commodities and major importers/exporters considered Relative magnitude of trade responses varies depending on model specification Climate and trade policy Paris Agreement Nationally Determined Contributions (NDCs) very vague Interlinkages between climate and international trade policy Commitments under the Paris Agreement may not always be compatible with those taken under WTO rules Further research on the interlinkages and potential conflicts between climate and agricultural trade policies needed

12 References Ahammad, H. et al., The role of international trade under a changing climate: Insights from global economic modelling, in: Elbehri, A. (Ed.), Climate Change and Food Systems: Global Assessments and Implications for Food Security and Trade. Food and Agriculture Organization of the United Nations, Rome. Baldos, U.L.C., Hertel, T.W., The role of international trade in managing food security risks from climate change. Food Secur. 7, Blanco, M. et al., Climate change impacts on EU agriculture: A regionalized perspective taking into account market-driven adjustments. Agric. Syst. 156, Blandford, D., International Trade Disciplines and Policy Measures to Address Climate Change Mitigation and Adaptation in Agriculture. E15Initiative. Geneva: International Centre for Trade and Sustainable Development (ICTSD) and World Economic Forum. Brandi, C., Trade Elements in Countries Climate Contributions under the Paris Agreement. Geneva: International Centre for Trade and Sustainable Development (ICTSD). Campbell, B.M. et al., Reducing risks to food security from climate change. Glob. Food Secur., 2nd International Global Food Security Conference 11, Costinot, A., Donaldson, D., Smith, C., Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World. J. Polit. Econ. 124, Havlík, P. et al., Climate Change Impacts and Mitigation in the Developing World (Policy Research Working Paper No. 7477). World Bank Group. Jafari, Y. et al., Economic liberalization and the environmental Kuznets curve: some empirical evidence. J. Econ. Dev. 42. Nelson, G.C. et al., 2014a. Climate change effects on agriculture: Economic responses to biophysical shocks. Proc. Natl. Acad. Sci. 111, Nelson, G.C. et al., 2014b. Agriculture and climate change in global scenarios: why don t the models agree. Agric. Econ. 45, OECD, The economic consequences of climate change. OECD publishing, Paris. Rafiq, S., Salim, R., Apergis, N., Agriculture, trade openness and emissions: an empirical analysis and policy options. Aust. J. Agric. Resour. Econ. 60, Schmidhuber, J., Tubiello, F.N., Global food security under climate change. Proc. Natl. Acad. Sci. 104, TradeLab, UNFCCC Nationally Determined Contributions: Climate Change and Trade. CTEI , CTEI Working Papers. Van Meijl, H. et al., Challenges of global agriculture in a climate change context by 2050 (AgCLIM50). von Lampe, M. et al., Why do global long-term scenarios for agriculture differ? An overview of the AgMIP Global Economic Model Intercomparison. Agric. Econ. 45, Wiebe, K. et al., Climate change impacts on agriculture in 2050 under a range of plausible socioeconomic and emissions scenarios. Environ. Res. Lett. 10, WTO-UNEP, Trade and Climate Change. WTO-UNEP Report.

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14 Trade, food security and climate change: Recent literature and policy implications Andrea Zimmermann, Julian Benda Trade and Markets Division, FAO 16 November 2017