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Leakage and Comparative Advantage Implications of Agricultural Participation in Greenhouse Gas Emission Mitigation

Author

Listed:
  • Heng-Chi Lee

    (University of Western Ontario)

  • Bruce A. McCarl

    (Texas A&M University)

  • Uwe A. Schneider

    (Hamburg University)

  • Chi-Chung Chen

    (National Chung Hsing University)

Abstract
The world is moving toward efforts to reduce greenhouse gas emissions. Net emission reduction efforts may involve the agricultural sector through options such as planting of trees, crop and livestock management changes, and production of biofuels. However, such options can be competitive with domestic food production. In a free trade arena, reduced domestic food production could stimulate increased production and exports in other countries, which are not pursuing similar mitigative courses of action. As a consequence, net emission reductions in implementing countries may be offset by activities stimulated in other countries. In addition producers in countries where agriculture may be influenced through higher fuel or other emission related prices and opportunities have expressed concern relative to their competitive position vis a vis countries which are not trying to reduce net emissions. We examine the competitive effects of differential mitigation efforts on agricultural food production and on international trade. In doing this we employ the assumption that the average U.S. compliance caused cost increase would also occur in other complying countries. We consider implementation: 1) unilaterally by the U.S., 2) by all Kyoto Protocol Annex I countries and 3) globally. The results, which are only suggestive of the types of effects that would be observed due to the simplifying cost assumptions, indicate compliance causes supply cutbacks in regulated countries and increases in non-regulated countries. In addition, the study results show that U.S. agricultural producers are more likely to benefit from a Kyoto Protocol like environment but that consumers are likely to be hurt in terms of their agricultural welfare.

Suggested Citation

  • Heng-Chi Lee & Bruce A. McCarl & Uwe A. Schneider & Chi-Chung Chen, 2004. "Leakage and Comparative Advantage Implications of Agricultural Participation in Greenhouse Gas Emission Mitigation," University of Western Ontario, Departmental Research Report Series 20041, University of Western Ontario, Department of Economics.
    • Handle: RePEc:uwo:uwowop:20041
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    2. Britz, Wolfgang & van Ittersum, Martin K. & Oude Lansink, Alfons G.J.M. & Heckelei, Thomas, 2012. "Tools for Integrated Assessment in Agriculture. State of the Art and Challenges," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 1(2), pages 1-26, August.
    3. Himics, Mihaly & Fellmann, Thomas & Barreiro-Hurlé, Jesús & Witzke, Heinz-Peter & Pérez Domínguez, Ignacio & Jansson, Torbjörn & Weiss, Franz, 2018. "Does the current trade liberalization agenda contribute to greenhouse gas emission mitigation in agriculture?," Food Policy, Elsevier, vol. 76(C), pages 120-129.
    4. Zhou Yuan & Richard S.J. Tol, 2004. "Evaluating the costs of desalination and water transport," Working Papers FNU-41, Research unit Sustainability and Global Change, Hamburg University, revised Dec 2004.
    5. B. Jong & E. Bazán & S. Montalvo, 2007. "Application of the “Climafor” baseline to determine leakage: the case of Scolel Té," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(6), pages 1153-1168, July.
    6. Claudia Dias & Ricardo Gouveia Rodrigues & João J. Ferreira, 2021. "Small agricultural businesses' performance—What is the role of dynamic capabilities, entrepreneurial orientation, and environmental sustainability commitment?," Business Strategy and the Environment, Wiley Blackwell, vol. 30(4), pages 1898-1912, May.
    7. I. Hakan Yetkiner, 2003. "Is There An Indispensable Role For Government During Recovery From An Earthquake? A Theoretical Elaboration," Working Papers FNU-25, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
    8. Roberto Roson & Richard s.J. Tol, 2003. "An Integrated Assessment Model Of Economy-Energy-Climate – The Model Wiagem: A Comment," Working Papers FNU-26, Research unit Sustainability and Global Change, Hamburg University, revised May 2003.
    9. Haim, David & White, Eric M. & Alig, Ralph J., 2014. "Permanence of agricultural afforestation for carbon sequestration under stylized carbon markets in the U.S," Forest Policy and Economics, Elsevier, vol. 41(C), pages 12-21.
    10. Wan-Yu Liu & Qunwei Wang, 2016. "Optimal pricing of the Taiwan carbon trading market based on a demand–supply model," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 84(1), pages 209-242, November.
    11. ince, meltem, 2011. "Financial liberalization, financial development and economic growth: An empirical analysis for Turkey," MPRA Paper 31978, University Library of Munich, Germany, revised 05 May 2011.
    12. Torbjörn Jansson & Ida Nordin & Fredrik Wilhelmsson & Peter Witzke & Gordana Manevska‐Tasevska & Franz Weiss & Alexander Gocht, 2021. "Coupled Agricultural Subsidies in the EU Undermine Climate Efforts," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(4), pages 1503-1519, December.
    13. P. Michael Link, 2003. "Auswirkungen populationsdynamischer Veränderungen in Fischbeständen auf die Fischereiwirtschaft in der Barentssee," Working Papers FNU-29, Research unit Sustainability and Global Change, Hamburg University, revised May 2003.
    14. McCarl, Bruce A., 2008. "The Lifecycle Carbon Footprint, Bioenergy and Leakage: Empirical Investigations," Lifecycle Carbon Footprint of Biofuels Workshop, January 29, 2008, Miami Beach, Florida 49100, Farm Foundation.
    15. Bruce A McCarl & Thomas W Hertel, 2018. "Climate Change as an Agricultural Economics Research Topic," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 40(1), pages 60-78.
    16. Sam Van Hoof, 2023. "Climate Change Mitigation in Agriculture: Barriers to the Adoption of Carbon Farming Policies in the EU," Sustainability, MDPI, vol. 15(13), pages 1-17, July.
    17. Uwe A. Schneider & Bruce A. McCarl, 2006. "Appraising agricultural greenhouse gas mitigation potentials: effects of alternative assumptions," Agricultural Economics, International Association of Agricultural Economists, vol. 35(3), pages 277-287, November.
    18. Mosnier, A. & Havlík, P. & Valin, H. & Baker, J. & Murray, B. & Feng, S. & Obersteiner, M. & McCarl, B.A. & Rose, S.K. & Schneider, U.A., 2013. "Alternative U.S. biofuel mandates and global GHG emissions: The role of land use change, crop management and yield growth," Energy Policy, Elsevier, vol. 57(C), pages 602-614.

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    More about this item

    Keywords

    leakage; international trade; agricultural and forest sector; greenhouse gas; mitigation implementation;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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