Trade Liberalization and Climate Change: A Computable General Equilibrium Analysis of the Impacts on Global Agriculture

Abstract

Based on predicted changes in the magnitude and distribution of global precipitation, temperature and river flow under the A1B and A2 scenarios of the Intergovernmental Panel on Climate Change Special Report on Emissions Scenarios (IPCC SRES), this study assesses the potential impacts of climate change and CO 2 fertilization on global agriculture, and its interactions with trade liberalization, as proposed for the Doha Development Round. The analysis uses the new version of the GTAP-W model, which distinguishes between rainfed and irrigated agriculture and implements water as an explicit factor of production for irrigated agriculture. Significant reductions in agricultural tariffs lead to modest changes in regional water use. Patterns are non-linear. On the regional level, water use may go up for partial liberalization, and down for more complete liberalization. This is because different crops respond differently to tariff reductions, and because trade OPEN ACCESSWater 2011, 3 527 and competition matter too. Moreover, trade liberalization tends to reduce water use in water scarce regions, and increase water use in water abundant regions, even though water markets do not exist in most countries. Considering impacts of climate change, the results show that global food production, welfare and GDP fall over time while food prices increase. Larger changes are observed under the SRES A2 scenario for the medium term (2020) and under the SRES A1B scenario for the long term (2050). Combining scenarios of future climate change with trade liberalization, countries are affected differently. However, the overall effect on welfare does not change much.

European Water Footprint Scenarios for 2050

“…Under the drastic-biofuel-expansion scenario, rapid growth of biofuel demand is foreseen. Notes: * The scenario codes refer to the scenarios as used by the IPCC [13]; ** The scenario codes refer to the scenarios as used by Calzadilla et al [14].…”

“…Production and trade patterns are taken based on Calzadilla et al [14], who estimated agricultural production changes in world regions by taking climate change and trade liberalization into account. We use two different trade futures as described in their study.…”

An Extended Input Output Table Compiled for Analyzing Water Demand and Consumption at County Level in China

“…It is therefore necessary to build resource extended input-output tables for small-scale research in order to reveal economic impacts on utilization of natural resources, such as water and land. Though there have been a number of respectable research and international negotiations on natural resource utilization for supporting economic development demand at the national level [10], there are still few studies at the regional level. For example, Zhang (2011) did quantitative research on water usage in Beijing, and Titze (2011) did qualitative research on the industrial cluster in Germany through inter-regional and intra-regional analysis among basic prefectures [11,12].…”

Simulated water productivity in Gansu Province, China

“…The CGE model is widely used to analyze the socioeconomic policy and assess the efficiency of water allocation among different sectors (Chen et al, 2005;Baker, 2011;Wittwer, 2012). Most researches with the CGE model focused on the water rights exchanges (Seung et al, 1997;Gómez et al, 2004;Diao et al, 2005) and integrated management of surface water and ground water (Diao et al, 2008;Calzadilla et al, 2011a (Berrittella et al, 2007). Alvaro et al have carried out a series of studies on the agricultural production with the GTAP-W model (Calzadilla et al, 2010(Calzadilla et al, , 2011a(Calzadilla et al, ,b,c, 2014.…”