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Carbon Taxes, Agricultural Competitiveness and Trade

Author

Listed:
  • Nicholas Rivers

    () (Graduate School for Public and International Affairs, University of Ottawa, Ottawa, ON)

  • Brandon Schaufele

    () (Department of Economics and Institute of the Environment, University of Ottawa, Ottawa ON)

Abstract

This study evaluates the implications of an actual carbon tax on the international competitiveness of the agricultural sector. Applying uniformly to all fossil fuels combusted within its borders, the province of British Columbia unilaterally introduced a carbon tax on July 1, 2008. Using commodity-specific trade flows and exploiting cross-provincial and inter-temporal variation, we find little evidence that the implementation of the carbon tax is associated with any meaningful effects on agricultural exports despite the sector being singled out as “at risk” by the provincial government. Allowing for heterogeneous responses by commodity, some statistically insignificant negative effects are shown for specific exports. Discussion of potential policy remedies to address the potential impacts of the tax on firm profitability and international competitiveness is also included.

Suggested Citation

  • Nicholas Rivers & Brandon Schaufele, 2013. "Carbon Taxes, Agricultural Competitiveness and Trade," Working Papers 1302E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:1302e
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    Keywords

    Agricultural trade; British Columbia; carbon tax; competitiveness; unilateral climate policy.;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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