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Agricultural trade liberalization, price changes, and environmental effects


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  • Ernst Lutz
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    Many analyses of agricultural trade liberalization have been undertaken but few have considered the effects on the environment. For the developed countries, reducing the degree of protection would result in less intensive production; therefore, environmental stress would be reduced. A reduction of trade barriers in industrial countries would result in higher world prices and in a somewhat lower world price variability. Assuming initially no policy changes for developing countries, the question is how the liberalization would affect the environment. Higher Prices in developing countries increase the level of production by intensifying production, particularly in the commercial sector, and by an area expansion. Both result in negative environmental effects. These could be partly offset by an increase in hired labor in the commercial sector, which might reduce pressure at the frontier and on marginal lands, as well as by the income effect. These off-setting effects may be small; however, the direction of the overall environmental effects cannot be determined unambiguously without empirical examination. At the global level, the beneficial economic effects of agricultural trade liberalization probably outweigh the expected negative environmental effects in developing countries, but this cannot be unambiguously established without valuation. Copyright Kluwer Academic Publishers 1992

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    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 2 (1992)
    Issue (Month): 1 (January)
    Pages: 79-89

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    Handle: RePEc:kap:enreec:v:2:y:1992:i:1:p:79-89

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    Keywords: Environmental effects; agricultural trade liberalization; agricultural price changes;


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    1. Lutz, Ernst & Saadat, Yasmin, 1988. "Issues relating to Agricultural Pricing Policies and their Analysis in Developing Countries," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 2(1), June.
    2. Heimlich, Ralph E., 1989. "Productivity of Highly Erodible Cropland," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, United States Department of Agriculture, Economic Research Service, issue 3.
    3. Lutz, Ernst & Saadat, Yasmin, 1988. "Issues relating to agricultural pricing policies and their analysis in developing countries," Agricultural Economics, Blackwell, Blackwell, vol. 2(1), pages 19-37, June.
    4. Valdes, Alberto, 1987. "Agriculture in the Uruguay Round: Interests of Developing Countries," World Bank Economic Review, World Bank Group, World Bank Group, vol. 1(4), pages 571-93, September.
    5. Ernst Lutz, 1991. "Incentives, regulations, and sustainable land use in Costa Rica," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 1(2), pages 179-194, June.
    6. Lutz, Ernst & Young, Michael, 1992. "Integration of environmental concerns into agricultural policies of industrial and developing countries," World Development, Elsevier, vol. 20(2), pages 241-253, February.
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    Cited by:
    1. Krissoff, Barry & Ballenger, Nicole & Dunmore, John C. & Gray, Denice, 1996. "Exploring Linkages Among Agriculture, Trade, and the Environment: Issues for the Next Century," Agricultural Economics Reports 33961, United States Department of Agriculture, Economic Research Service.
    2. Maya, Peter H. & Bonilla, Olman Segura, 1997. "The environmental effects of agricultural trade liberalization in Latin America: an interpretation," Ecological Economics, Elsevier, vol. 22(1), pages 5-18, July.
    3. Thilo W. Glebe, 2003. "Assessing the agricultural trade and environment interaction: Taking stock and looking ahead," Discussion Papers, Technische Universität München, Environmental Economics and Agricultural Policy Group 022003, Technische Universität München, Environmental Economics and Agricultural Policy Group.
    4. Johnstone, Nick, 1995. "Trade liberalization, economic specialization and the environment," Ecological Economics, Elsevier, vol. 14(3), pages 165-173, September.
    5. Kishor, Nalin M., 1992. "Pesticide externalities, comparative advantage, and commodity trade : cotton in Andhra Pradesh, India," Policy Research Working Paper Series 928, The World Bank.
    6. Kuyvenhoven, Arie, 2004. "Creating an enabling environment: policy conditions for less-favored areas," Food Policy, Elsevier, Elsevier, vol. 29(4), pages 407-429, August.
    7. Peter Walkenhorst, 2004. "Domestic And International Environmental Impacts Of Agricultural Trade Liberalisation," International Trade, EconWPA 0401010, EconWPA.
    8. Jussi LANKOSKI, 1997. "Environmental Effects Of Agricultural Trade Liberalization And Domestic Agricultural Policy Reforms," UNCTAD Discussion Papers 126, United Nations Conference on Trade and Development.
    9. Djanibekov, Nodir & Sommer, Rolf & Djanibekov, Utkur, 2013. "Evaluation of effects of cotton policy changes on land and water use in Uzbekistan: Application of a bio-economic farm model at the level of a water users association," Agricultural Systems, Elsevier, Elsevier, vol. 118(C), pages 1-13.
    10. Runge, C. Ford, 1992. "Environmental Effects Of Trade In The Agricultural Sector: A Case Study," Working Papers 14449, University of Minnesota, Center for International Food and Agricultural Policy.


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