IDEAS home Printed from https://ideas.repec.org/a/wly/apecpp/v44y2022i4p1614-1636.html
   My bibliography  Save this article

Sustainable agricultural production, income, and eco‐labeling: What can be learned from a modern Ricardian approach?

Author

Listed:
  • Kari E. R. Heerman
  • Ian M. Sheldon

Abstract

In this article, trade‐in sustainably produced agricultural products with eco‐labeling are modeled using a modern Ricardian framework. Based on this approach, expressions are derived for the share of products importers purchase from specific exporters for low‐cost unsustainable and high‐cost sustainable production technologies, assuming consumers have non‐homothetic preferences. The consumer and sustainability gains from eco‐labeling are also analyzed, along with a discussion and comparison of the effects of mutual recognition versus harmonization of countries' eco‐labeling regimes.

Suggested Citation

  • Kari E. R. Heerman & Ian M. Sheldon, 2022. "Sustainable agricultural production, income, and eco‐labeling: What can be learned from a modern Ricardian approach?," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(4), pages 1614-1636, December.
    • Handle: RePEc:wly:apecpp:v:44:y:2022:i:4:p:1614-1636
    DOI: 10.1002/aepp.13279
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/aepp.13279
    Download Restriction: no
    File URL: https://libkey.io/10.1002/aepp.13279?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Levchenko, Andrei A. & Zhang, Jing, 2014. "Ricardian productivity differences and the gains from trade," European Economic Review, Elsevier, vol. 65(C), pages 45-65.
    2. John C. Beghin & Miet Maertens & Johan Swinnen, 2017. "Nontariff Measures and Standards in Trade and Global Value Chains," World Scientific Book Chapters, in: John Christopher Beghin (ed.), Nontariff Measures and International Trade, chapter 2, pages 13-38, World Scientific Publishing Co. Pte. Ltd..
    3. Ana Cecília Fieler, 2011. "Nonhomotheticity and Bilateral Trade: Evidence and a Quantitative Explanation," Econometrica, Econometric Society, vol. 79(4), pages 1069-1101, July.
    4. Jeffrey J. Reimer & Man Li, 2010. "Trade Costs and the Gains from Trade in Crop Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(4), pages 1024-1039.
    5. C. J. Vörösmarty & P. B. McIntyre & M. O. Gessner & D. Dudgeon & A. Prusevich & P. Green & S. Glidden & S. E. Bunn & C. A. Sullivan & C. Reidy Liermann & P. M. Davies, 2010. "Erratum: Global threats to human water security and river biodiversity," Nature, Nature, vol. 468(7321), pages 334-334, November.
    6. Villas-Boas, Sofia B & Taylor, Rebecca & Krovetz, Hannah, 2016. "Willingness to Pay for Low Water Footprint Food Choices During Drought," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt9vh3x180, Department of Agricultural & Resource Economics, UC Berkeley.
    7. Levchenko, Andrei A. & Zhang, Jing, 2016. "The evolution of comparative advantage: Measurement and welfare implications," Journal of Monetary Economics, Elsevier, vol. 78(C), pages 96-111.
    8. Ian M. Sheldon, 2017. "Certification Mechanisms for Credence Attributes of Foods: Does It Matter Who Provides Diagnosis?," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 33-51, October.
    9. Sebastian Sotelo, 2020. "Domestic Trade Frictions and Agriculture," Journal of Political Economy, University of Chicago Press, vol. 128(7), pages 2690-2738.
    10. Kari E. R. Heerman & Shawn Arita & Munisamy Gopinath, 2015. "Asia-Pacific Integration with China versus the United States: Examining Trade Patterns under Heterogeneous Agricultural Sectors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1324-1344.
    11. Daniele Curzi & Valentina Raimondi & Alessandro Olper, 2015. "Editor's choice Quality upgrading, competition and trade policy: evidence from the agri-food sector," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(2), pages 239-267.
    12. Kiminori Matsuyama, 2000. "A Ricardian Model with a Continuum of Goods under Nonhomothetic Preferences: Demand Complementarities, Income Distribution, and North-South Trade," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1093-1120, December.
    13. Carl Gaigné & Bruno Larue, 2016. "Quality Standards, Industry Structure, and Welfare in a Global Economy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 98(5), pages 1432-1449.
    14. Chor, Davin, 2010. "Unpacking sources of comparative advantage: A quantitative approach," Journal of International Economics, Elsevier, vol. 82(2), pages 152-167, November.
    15. Fischer, Ronald & Serra, Pablo, 2000. "Standards and protection," Journal of International Economics, Elsevier, vol. 52(2), pages 377-400, December.
    16. Molden, David, 2007. "Water for food, water for life: a comprehensive assessment of water management in agriculture," IWMI Books, Reports H040193, International Water Management Institute.
    17. James R. Markusen, 2021. "Explaining the Volume of Trade: An Eclectic Approach," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 9, pages 177-186, World Scientific Publishing Co. Pte. Ltd..
    18. Sheldon, Ian, 2012. "North–South trade and standards: what can general equilibrium analysis tell us?," World Trade Review, Cambridge University Press, vol. 11(3), pages 376-389, July.
    19. Arnaud Costinot & Dave Donaldson, 2012. "Ricardo's Theory of Comparative Advantage: Old Idea, New Evidence," American Economic Review, American Economic Association, vol. 102(3), pages 453-458, May.
    20. Dornbusch, Rudiger & Fischer, Stanley & Samuelson, Paul A, 1977. "Comparative Advantage, Trade, and Payments in a Ricardian Model with a Continuum of Goods," American Economic Review, American Economic Association, vol. 67(5), pages 823-839, December.
    21. Gouel, Christophe & Laborde, David, 2021. "The crucial role of domestic and international market-mediated adaptation to climate change," Journal of Environmental Economics and Management, Elsevier, vol. 106(C).
    22. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    23. Ian M. Sheldon, 2017. "Certification Mechanisms for Credence Attributes of Foods: Does It Matter Who Provides Diagnosis?," Annual Review of Resource Economics, Annual Reviews, vol. 9(1), pages 33-51, October.
    24. Balasubramanya, Soumya & Stifel, David, 2020. "Viewpoint: Water, agriculture & poverty in an era of climate change: Why do we know so little?," Food Policy, Elsevier, vol. 93(C).
    25. Molden, David, 2007. "Water for food, water for life: a comprehensive assessment of water management in agriculture: summary. In Russian," IWMI Books, Reports H041260, International Water Management Institute.
    26. C. J. Vörösmarty & P. B. McIntyre & M. O. Gessner & D. Dudgeon & A. Prusevich & P. Green & S. Glidden & S. E. Bunn & C. A. Sullivan & C. Reidy Liermann & P. M. Davies, 2010. "Global threats to human water security and river biodiversity," Nature, Nature, vol. 467(7315), pages 555-561, September.
    27. Arnaud Costinot & Dave Donaldson & Cory Smith, 2016. "Evolving Comparative Advantage and the Impact of Climate Change in Agricultural Markets: Evidence from 1.7 Million Fields around the World," Journal of Political Economy, University of Chicago Press, vol. 124(1), pages 205-248.
    28. Raymond Vernon, 1966. "International Investment and International Trade in the Product Cycle," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(2), pages 190-207.
    29. Molden, David, 2007. "Water for food, water for life: a comprehensive assessment of water management in agriculture: summary. In Arabic," IWMI Books, Reports H041261, International Water Management Institute.
    30. Sheldon Ian M & Roe Brian E, 2009. "Public vs. Private Eco-Labeling of Environmental Credence Goods: Maximizing the Gains from International Integration," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 7(2), pages 1-29, December.
    31. Grebitus, Carola & Steiner, Bodo & Veeman, Michele M., 2016. "Paying for sustainability: A cross-cultural analysis of consumers’ valuations of food and non-food products labeled for carbon and water footprints," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 50-58.
    32. Ansink, Erik, 2010. "Refuting two claims about virtual water trade," Ecological Economics, Elsevier, vol. 69(10), pages 2027-2032, August.
    33. Arnaud Costinot & Dave Donaldson & Ivana Komunjer, 2012. "What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 581-608.
    34. Weinzettel, Jan & Pfister, Stephan, 2019. "International trade of global scarce water use in agriculture: Modeling on watershed level with monthly resolution," Ecological Economics, Elsevier, vol. 159(C), pages 301-311.
    35. Johan Swinnen, 2017. "Some Dynamic Aspects of Food Standards," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 321-338.
    36. Soregaroli, Claudio & Ricci, Elena Claire & Stranieri, Stefanella & Nayga, Rodolfo M. & Capri, Ettore & Castellari, Elena, 2021. "Carbon footprint information, prices, and restaurant wine choices by customers: A natural field experiment," Ecological Economics, Elsevier, vol. 186(C).
    37. Heerman, Kari E.R. & Arita, Shawn & Gopinath, Munisamy, 2015. "Asia-Pacific Integration with China vs. the United States: Examining trade patterns under heterogeneous agricultural sectors," 2015 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2015, Boston, Massachusetts 189819, Agricultural and Applied Economics Association.
    38. Eum, Jihyun & Sheldon, Ian & Thompson, Stanley R., 2021. "Product Quality in Food and Agricultural Trade: Firm Heterogeneity and the Impact of Trade Costs," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 46(1), January.
    39. Balasubramanya, Soumya & Stifel, David, "undated". "Viewpoint: water, agriculture and poverty in an era of climate change: why do we know so little?," Papers published in Journals (Open Access) H049664, International Water Management Institute.
    40. Molden, David, 2007. "Water for food, water for life: a comprehensive assessment of water management in agriculture: summary," IWMI Books, Reports H039769, International Water Management Institute.
    41. Brian Roe & Ian Sheldon, 2007. "Credence Good Labeling: The Efficiency and Distributional Implications of Several Policy Approaches," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1020-1033.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andrianarimanana, Mihasina Harinaivo & Yongjian, Pu & Rabezanahary Tanteliniaina, Mirindra Finaritra, 2023. "Assessment of the importance of climate, land, and soil on the global supply for agricultural products and global food security: Evidence from Madagascar," Food Policy, Elsevier, vol. 115(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Heerman, Kari E.R., 2020. "Technology, ecology and agricultural trade," Journal of International Economics, Elsevier, vol. 123(C).
    2. Heerman, Kari E. & Sheldon, Ian M., 2018. "Increased economic integration in the Asia-Pacific Region: What might be the potential impact on agricultural trade?," 2018 Annual Meeting, August 5-7, Washington, D.C. 274279, Agricultural and Applied Economics Association.
    3. Heitor Pellegrina & Sebastian Sotelo, 2019. "Migration, Specialization and Trade: Evidence from the Brazilian March to the West," 2019 Meeting Papers 863, Society for Economic Dynamics.
    4. William R Kerr, 2018. "Heterogeneous Technology Diffusion and Ricardian Trade Patterns," The World Bank Economic Review, World Bank, vol. 32(1), pages 163-182.
    5. Kiminori Matsuyama, 2019. "Engel's Law in the Global Economy: Demand‐Induced Patterns of Structural Change, Innovation, and Trade," Econometrica, Econometric Society, vol. 87(2), pages 497-528, March.
    6. Sebastian Sotelo, 2020. "Domestic Trade Frictions and Agriculture," Journal of Political Economy, University of Chicago Press, vol. 128(7), pages 2690-2738.
    7. Mihasina Harinaivo Andrianarimanana & Pu Yongjian, 2021. "Importance of the Improvement in the Agricultural Technology of Sub-Saharan Africa on Local Economic Development and International Trade," Sustainability, MDPI, vol. 13(5), pages 1-14, February.
    8. Christopher O. AKINBILE & Andrew E. ERAZUA & Toju E. BABALOLA & Fidelis O. AJIBADE, 2016. "Environmental implications of animal wastes pollution on agricultural soil and water quality," Soil and Water Research, Czech Academy of Agricultural Sciences, vol. 11(3), pages 172-180.
    9. Cunha, Henrique & Loureiro, Dália & Sousa, Gonçalo & Covas, Dídia & Alegre, Helena, 2019. "A comprehensive water balance methodology for collective irrigation systems," Agricultural Water Management, Elsevier, vol. 223(C), pages 1-1.
    10. Justin Caron & Thibault Fally & James Markusen, 2021. "Per capita income and the demand for skills," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 12, pages 251-268, World Scientific Publishing Co. Pte. Ltd..
    11. Jaimovich, Esteban & Merella, Vincenzo, 2015. "Love for quality, comparative advantage, and trade," Journal of International Economics, Elsevier, vol. 97(2), pages 376-391.
    12. Batidzirai, B. & Smeets, E.M.W. & Faaij, A.P.C., 2012. "Harmonising bioenergy resource potentials—Methodological lessons from review of state of the art bioenergy potential assessments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6598-6630.
    13. Tiziano Gomiero, 2016. "Soil Degradation, Land Scarcity and Food Security: Reviewing a Complex Challenge," Sustainability, MDPI, vol. 8(3), pages 1-41, March.
    14. Logan T Lewis & Ryan Monarch & Michael Sposi & Jing Zhang, 2022. "Structural Change and Global Trade," Journal of the European Economic Association, European Economic Association, vol. 20(1), pages 476-512.
    15. Feng Huang & Baoguo Li, 2020. "What is the Redline Water Withdrawal for Crop Production in China?—Projection to 2030 Derived from the Past Twenty-Year Trajectory," Sustainability, MDPI, vol. 12(10), pages 1-14, May.
    16. Gong, Daozhi & Mei, Xurong & Hao, Weiping & Wang, Hanbo & Caylor, Kelly K., 2017. "Comparison of ET partitioning and crop coefficients between partial plastic mulched and non-mulched maize fields," Agricultural Water Management, Elsevier, vol. 181(C), pages 23-34.
    17. Costinot, Arnaud & Rodríguez-Clare, Andrés, 2014. "Trade Theory with Numbers: Quantifying the Consequences of Globalization," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 197-261, Elsevier.
    18. Pablo D. Fajgelbaum & Amit K. Khandelwal, 2016. "Measuring the Unequal Gains from Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1113-1180.
    19. Holland, Jonathan E. & Luck, Gary W. & Max Finlayson, C., 2015. "Threats to food production and water quality in the Murray–Darling Basin of Australia," Ecosystem Services, Elsevier, vol. 12(C), pages 55-70.
    20. Xiukang Wang, 2022. "Managing Land Carrying Capacity: Key to Achieving Sustainable Production Systems for Food Security," Land, MDPI, vol. 11(4), pages 1-21, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:apecpp:v:44:y:2022:i:4:p:1614-1636. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2040-5804 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.