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Climate Change, Agriculture And Trade Liberalization: A Dynamic Cge Analysis For Turkey

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  • Hasan, Dudu
  • Erol, Cakmak

Abstract

This paper analyses the effects of climate change and trade liberalization on Turkish Economy between 2008 and 2099 by using a recursive dynamic CGE model. Results of a crop-irrigation requirement model are used to generate climate change shocks. The results suggest that the effects of climate change will be effective especially after 2030s with acceleration after 2060s. GDP loss gets as high as 3.5 percent. Main drivers of the loss in GDP are the significant decline in private consumption and up to two percent increase in imports. A trade liberalization scenario where tariffs on imports from EU are eliminated unilaterally by Turkey is also simulated to investigate the interaction between climate change and trade liberalization. Trade policy alleviates the negative effects of climate change only marginally for Turkey, as suggested by the literature for many other regions in the world. Trade liberalization with EU causes a trade diversion effect and decreases imports from other trading regions. The main adjustment mechanism of the economy under trade liberalization works through the substitution of factors for intermediate goods, imported consumption goods and intermediate inputs for domestic goods. Maize, oilseeds, fruits and processed food benefit from trade liberalization while production of other crops generally decline.

Suggested Citation

  • Hasan, Dudu & Erol, Cakmak, 2014. "Climate Change, Agriculture And Trade Liberalization: A Dynamic Cge Analysis For Turkey," 2014 Third Congress, June 25-27, 2014, Alghero, Italy 172964, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aiea14:172964
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    File URL: http://purl.umn.edu/172964
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    References listed on IDEAS

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    1. Alvaro Calzadilla & Katrin Rehdanz & Richard Betts & Pete Falloon & Andy Wiltshire & Richard Tol, 2013. "Climate change impacts on global agriculture," Climatic Change, Springer, vol. 120(1), pages 357-374, September.
    2. Randhir, Timothy O. & Hertel, Thomas W., 2000. "Trade Liberalization As A Vehicle For Adapting To Global Warming," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(2), October.
    3. Laborde, David, 2011. "Climate Change and Agriculture In South Asia: Looking for An Optimal Trade Policy," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 104526, Agricultural and Applied Economics Association.
    4. Reilly, John & Hohmann, Neil, 1993. "Climate Change and Agriculture: The Role of International Trade," American Economic Review, American Economic Association, vol. 83(2), pages 306-312, May.
    5. Selahattin Bekmez, 2002. "Sectoral Impacts of Turkish Accession to the European Union: A General Equilibrium Analysis," Eastern European Economics, Taylor & Francis Journals, vol. 40(2), pages 57-84, March.
    6. Pekka Sulamaa & Mika Widgrén, "undated". "Turkish EU Membership: a Simulation Study on Economic Effects," EcoMod2006 272100090, EcoMod.
    7. Arjan Lejour & Ruud de Mooij & Clem Capel, 2004. "Assessing the economic implications of Turkish accession to the EU," CPB Document 56, CPB Netherlands Bureau for Economic Policy Analysis.
    8. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters,in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
    9. Fellmann, Thomas & van Leeuwen, Myrna & Salamon, Petra, 2011. "Eu Enlargement To Turkey: Potential Impacts On Agricultural Markets And How They Are Shaped By Changes In Macroeconomic Conditions," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114507, German Association of Agricultural Economists (GEWISOLA).
    10. Francois, Joseph F. & McQueen, Matthew & Wignaraja, Ganeshan, 2005. "European Union-developing country FTAs: overview and analysis," World Development, Elsevier, vol. 33(10), pages 1545-1565, October.
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    More about this item

    Keywords

    Climate Change; Trade Liberalization; Agriculture; Computable General Equilibrium; Turkey; Environmental Economics and Policy; Land Economics/Use; Research Methods/ Statistical Methods; C68; Q54; Q17;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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