Agricultural Trade Reform and Environmental Pollution from Livestock in OECD Countries

Global trade barriers are particularly severe in the case of products derived from livestock, and especially for dairy products and beef. The Doha Development Agenda negotiations have the potential to lower agricultural protection and improve livestock production incentives for many farmers worldwide. While such liberalisation is a source of economic benefits, it may also impose environmental costs such as through water and atmospheric pollution from livestock wastes. Agricultural trade liberalisation is a particularly contentious negotiating issue, and potential obstacles to reform include concern that it will lead to adverse environmental outcomes, and that national environmental policy interventions may not be compatible with WTO trade rules. In this paper we aim to contribute to an improved understanding of some environmental impacts of agricultural reform that may be agreed in the current WTO Round. We model the anticipated changes in livestock and crop production and compute the impacts on regional nitrogen balances, using the OECD Nitrogen Balance Database. We estimate the changes in inputs and outputs of nitrogen to determine the impact on the nitrogen balance for each region. Our findings suggest that for most OECD countries, WTO trade reform is likely to lead to improved nitrogen balances and lower nitrogen pollution. The more ambitious the trade reform, the better the environmental outcomes appear to be.