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Agricultural multifunctionality and trade liberalisation

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  • Thilo Glebe

    ()
    (Technische Universität München, Lehrstuhl für VWL-Umweltökonomie und Agrarpolitik, Alte Akademie 14, 85350 Freising-Weihenstephan,Germany)

  • Uwe Latacz-Lohmann

    (Department of Agricultural Economics, Christian-Albrechts University, Olshausenstr. 40, 24118 Kiel, Germany)

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    Abstract

    This paper employs a partial equilibrium trade model to analyse the interaction of trade and environmental policy in the context of agriculture’s multifunctionality. We formally demonstrate that free trade is suboptimal if no efficient environmental policy addressing the provision of multifunctional benefits is in place. However, tariff reductions in a large net-importing country reinforce the incentive for that country to introduce environmental policy, though this policy will be strategically distorted to partly substitute for the tariff. Despite its strategic character, this environmental policy programme will unambiguously enhance global welfare if it is introduced in conjunction with tariff reductions. We conclude that, although the multifunctionality argument may lend some support to the criticism of trade liberalisation, the argument is not solid when trade liberalisation induces the introduction of environmental policy.

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    Bibliographic Info

    Article provided by INRA Department of Economics in its journal Cahiers d'Economie et Sociologie Rurales.

    Volume (Year): 82-83 (2007)
    Issue (Month): ()
    Pages: 57-73

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    Handle: RePEc:rae:jouces:v:82-83:y:2007:i::p:57-73

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    Keywords: agricultural trade; agricultural multifunctionality; strategic environmental policy; welfare economics;

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    1. Kyle Bagwell & Robert W. Staiger, 2001. "The WTO as a Mechanism for Securing Market Access Property Rights: Implications for Global Labor and Environmental Issues," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 69-88, Summer.
    2. Anderson, Kym, 2000. "Agriculture's 'multifunctionality' and the WTO," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(3), September.
    3. Gohin, Alexandre & Moschini, GianCarlo, 2006. "Evaluating the Market and Welfare Impacts of Agricultural Policies in Developed Countries: Comparison of Partial and General Equilibrium Measures," Staff General Research Papers 12727, Iowa State University, Department of Economics.
    4. Krutilla, Kerry, 1991. "Environmental regulation in an open economy," Journal of Environmental Economics and Management, Elsevier, vol. 20(2), pages 127-142, March.
    5. Ian Hodge, 2000. "Agri-environmental Pelationships and the Choice of Policy Mechanism," The World Economy, Wiley Blackwell, vol. 23(2), pages 257-273, 02.
    6. Tim Josling, 2003. "Key Issues in the World Trade Organization Negotiations on Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 663-667.
    7. Jeffrey M. Peterson & Richard N. Boisvert & Harry de Gorter, 2002. "Environmental policies for a multifunctional agricultural sector in open economies," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(4), pages 423-443, December.
    8. Bautista, Romeo M. & Robinson, Sherman & Tarp, Finn & Wobst, Peter, 1998. "Policy bias and agriculture: partial and general equilibrium measures," TMD discussion papers 25, International Food Policy Research Institute (IFPRI).
    9. Latacz-Lohmann, Uwe & Hodge, Ian D., 2003. "European agri-environmental policy for the 21st century," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), March.
    10. Josling, Tim & Tangermann, Stefan, 1999. "Implementation of the WTO Agreement on Agriculture and Developments for the Next Round of Negotiations," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 371-88, August.
    11. Alan Swinbank, 1999. "EU Agricultural, Agenda 2000 and the WTO Commitments," The World Economy, Wiley Blackwell, vol. 22(1), pages 41-54, 01.
    12. P. Lynn Kennedy & Won W. Koo & Mary A. Marchant, 1999. "Key Issues and Challenges for the 1999 World Trade Organization Agriculture Round," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(5), pages 1134-1141.
    13. David Blandford & Richard N. Boisvert & Linda Fulponi, 2003. "Nontrade Concerns: Reconciling Domestic Policy Objectives with Freer Trade in Agricultural Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 668-673.
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    Cited by:
    1. Elsholz, Rudiger & Harsche, Johannes, 2011. "Price Changes, Policy Impacts and Instability in Farmers’ Revenues," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114342, European Association of Agricultural Economists.

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