international technical conference on climate …

INTERNATIONAL TECHNICAL CONFERENCE ON

CLIMATE CHANGE, AGRICULTURAL TRADE AND FOOD SECURITY

INTERNATIONAL

TECHNICAL CONFERENCE

ON CLIMATE CHANGE,

AGRICULTURAL TRADE

AND FOOD SECURITY

15 -17 November 2017

FAO Headquarters, Rome Italy



Trade, food security and climate change:

Recent literature and policy implications

Andrea Zimmermann, Julian Benda

Trade and Markets Divison, FAO

16 November 2017



1. Climate change and food security

2. Trade effects on climate change

3. Climate change effects on agricultural trade

4. Climate and trade policy

Outline



Climate change and food security

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

- 5-10% decrease in potential fish catch in tropical marine ecosystems

Slow onset,

long-term

Access - Increasing food prices; relocation of production with impacts on prices, trade flows and

food access

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 CO2 concentrations and more

variable and warmer climate

Slow onset,

long-term

Stability - Damage to crops from extreme events (heat waves, droughts, floods, storms, etc.)

- Short-term disruptions of trade routes

Extreme

events, short-

term

Source: Based on Campbell et al. (2016) and Schmidhuber and Tubiello (2007)



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, non-

linear 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, trade-

related 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



• 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 change effects on agricultural trade

Source: IPCC AR5 Synthesis Report

Climate model

Crop model

Economic (agricultural sector) model



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. 2014Economic impacts of CC, model

comparisonMulti-model (6 CGE, 4 PE)

SSP2 (+ RCP8.5, no CO2)

SSP3

Bioenergy

Ahammad et al. 2015 Role of international trade under CC Multi-model (6 CGE, 4 PE)

SSP2 (+ RCP8.5, no CO2)

SSP3

Bioenergy

OECD 2015 Economic impacts of CC CGE SSP2 (+ RCP8.5, no CO2)

Havlík et al. 2015CC impacts and mitigation in the

developing worldPE

SSP4 (+ RCP2.6 w/o mit.) (+ RCP8.5 w/o CO2)

SSP5 ( + RCP2.6 w/o mit.) (+ RCP8.5 w/o CO2)

Van Meijl et al. 2017 Impacts of CC Multi-model (1 IAM, 1 CGE, 3 PE)

SSP1 (+ RCP6.0) (+ mit.) (+ RCP2.6, mit.)



No CO2

Blanco et al. 2017 CC impacts on agriculture PE SSP2 (+ RCP8.5 w/o CO2)

Wiebe et al. 2015 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



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

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

Results

Adversely affected (more net

imports/less net exports)

Positively affected (more net

exports/less net imports)

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)

Canada (2/5)

Brazil (1/5)

China (1/5)

Eastern Europe and Central Asia

(2/5)

USA (1/5)



• 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)

Paris Agreement 2015



Policy

categoryPotential 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)



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

Conclusions



• Ahammad, H. et al., 2015. 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., 2015. The role of international trade in managing food security risks from climate change. Food Secur. 7, 275–290.

• Blanco, M. et al., 2017. Climate change impacts on EU agriculture: A regionalized perspective taking into account market-driven adjustments. Agric. Syst. 156, 52–66.

• Blandford, D., 2013. 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., 2017. Trade Elements in Countries’ Climate Contributions under the Paris Agreement. Geneva: International Centre for Trade and Sustainable Development (ICTSD).

• Campbell, B.M. et al., 2016. Reducing risks to food security from climate change. Glob. Food Secur., 2nd International Global Food Security Conference 11, 34–43.

• Costinot, A., Donaldson, D., Smith, C., 2016. 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, 205–248.

• Havlík, P. et al., 2015. Climate Change Impacts and Mitigation in the Developing World (Policy Research Working Paper No. 7477). World Bank Group.

• Jafari, Y. et al., 2017. 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, 3274–3279.

• Nelson, G.C. et al., 2014b. Agriculture and climate change in global scenarios: why don’t the models agree. Agric. Econ. 45, 85–101.

• OECD, 2015. The economic consequences of climate change. OECD publishing, Paris.

• Rafiq, S., Salim, R., Apergis, N., 2016. Agriculture, trade openness and emissions: an empirical analysis and policy options. Aust. J. Agric. Resour. Econ. 60, 348–365.

• Schmidhuber, J., Tubiello, F.N., 2007. Global food security under climate change. Proc. Natl. Acad. Sci. 104, 19703–19708.

• TradeLab, 2017. UNFCCC Nationally Determined Contributions: Climate Change and Trade. CTEI-2017-02, CTEI Working Papers.

• Van Meijl, H. et al., 2017. Challenges of global agriculture in a climate change context by 2050 (AgCLIM50).

• von Lampe, M. et al., 2014. Why do global long-term scenarios for agriculture differ? An overview of the AgMIP Global Economic Model Intercomparison. Agric. Econ. 45, 3–20.

• Wiebe, K. et al., 2015. Climate change impacts on agriculture in 2050 under a range of plausible socioeconomic and emissions scenarios. Environ. Res. Lett. 10, 085010.

• WTO-UNEP, 2009. Trade and Climate Change. WTO-UNEP Report.

References



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Trade, food security and climate change:

Recent literature and policy implications

Andrea Zimmermann, Julian Benda

Trade and Markets Division, FAO

16 November 2017

international technical conference on climate …

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