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Modelling agri-environmental policy in the context of international trade

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  • Thilo W. Glebe

    ()
    (Environmental Economics and Agricultural Policy Group, Technical University of Munich)

  • Uwe Latacz-Lohmann

    ()
    (Department of Agricultural Economics, Christian-Albrechts University, Kiel)

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    Abstract

    The paper develops a conceptual framework for the welfare analysis of agri-environmental policy within an international trade context. Based on a two-factor production model, we analyse the marginal social costs of agricultural production before and after the introduction of an efficient agri-environmental policy. The paper shows that an assessment of social external costs, which is predicated on the factor intensity prior to the implementation of an agri-environmental policy, underestimates the potential welfare improvements that can be achieved by introducing an efficient environmental policy. We further demonstrate that, even if the marginal environmental effect of farming is negative prior to introducing agri-environmental policy, the co-existence of positive and negative externalities might cause the production level to increase as a result of an optimal environmental policy.

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    Bibliographic Info

    Paper provided by Technische Universität München, Environmental Economics and Agricultural Policy Group in its series Discussion Papers with number 012006.

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    Length: 15 pages
    Date of creation: Jan 2006
    Date of revision: 2008
    Publication status: Published in Yearbook of Socioeconomics in Agriculture (in work; title: Assessing the production and welfare effects of agri-environmental policy: a conceptual analysis.)
    Handle: RePEc:tuu:papers:012006

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    1. Edwards, Geoff & Fraser, Iain, 2001. "Reconsidering agri-environmental policy permitted by the Uruguay round agreement," Ecological Economics, Elsevier, vol. 37(2), pages 313-326, May.
    2. 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.
    3. Steininger, Karl, 1994. "Reconciling trade and environment: towards a comparative advantage for long-term policy goals," Ecological Economics, Elsevier, vol. 9(1), pages 23-42, January.
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