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Leakage and Comparative Advantage Implications of Agricultural Participation in Greenhouse Gas Emission Mitigation

  • Heng-Chi Lee

    (University of Western Ontario)

  • Bruce A. McCarl

    (Texas A&M University)

  • Uwe A. Schneider

    (Hamburg University)

  • Chi-Chung Chen

    (National Chung Hsing University)

The world is moving toward efforts to reduce greenhouse gas emissions. Net emission reduction efforts may involve the agricultural sector through options such as planting of trees, crop and livestock management changes, and production of biofuels. However, such options can be competitive with domestic food production. In a free trade arena, reduced domestic food production could stimulate increased production and exports in other countries, which are not pursuing similar mitigative courses of action. As a consequence, net emission reductions in implementing countries may be offset by activities stimulated in other countries. In addition producers in countries where agriculture may be influenced through higher fuel or other emission related prices and opportunities have expressed concern relative to their competitive position vis a vis countries which are not trying to reduce net emissions. We examine the competitive effects of differential mitigation efforts on agricultural food production and on international trade. In doing this we employ the assumption that the average U.S. compliance caused cost increase would also occur in other complying countries. We consider implementation: 1) unilaterally by the U.S., 2) by all Kyoto Protocol Annex I countries and 3) globally. The results, which are only suggestive of the types of effects that would be observed due to the simplifying cost assumptions, indicate compliance causes supply cutbacks in regulated countries and increases in non-regulated countries. In addition, the study results show that U.S. agricultural producers are more likely to benefit from a Kyoto Protocol like environment but that consumers are likely to be hurt in terms of their agricultural welfare.

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Paper provided by University of Western Ontario, Department of Economics in its series UWO Department of Economics Working Papers with number 20041.

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Date of creation: 2004
Date of revision:
Handle: RePEc:uwo:uwowop:20041
Contact details of provider: Postal: Department of Economics, Reference Centre, Social Science Centre, University of Western Ontario, London, Ontario, Canada N6A 5C2
Phone: 519-661-2111 Ext.85244
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  1. Hoag, Dana L. & Babcock, Bruce A. & Foster, William E., 1993. "Field-Level Measurements of Land Productivity and Program Slippage," Staff General Research Papers 10586, Iowa State University, Department of Economics.
  2. Pethig, Rudiger, 1976. "Pollution, welfare, and environmental policy in the theory of Comparative Advantage," Journal of Environmental Economics and Management, Elsevier, vol. 2(3), pages 160-169, February.
  3. Uwe A. Schneider & Bruce A. McCarl, 2001. "Economic Potential of Biomass-Based Fuels for Greenhouse Gas Emission Mitigation," Center for Agricultural and Rural Development (CARD) Publications 01-wp280, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  4. JunJie Wu & David Zilberman & Bruce A. Babcock, 1999. "Environmental and Distributional Impacts of Conservation Targeting Strategies," Center for Agricultural and Rural Development (CARD) Publications 99-wp230, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  5. Schneider, Uwe A. & Kumar, Pushpam, 2008. "Greenhouse Gas Mitigation through Agriculture," Choices, Agricultural and Applied Economics Association, vol. 23(1).
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  7. Brian C. Murray & Bruce A. McCarl & Heng-Chi Lee, 2004. "Estimating Leakage from Forest Carbon Sequestration Programs," UWO Department of Economics Working Papers 20043, University of Western Ontario, Department of Economics, revised Mar 2003.
  8. Bernstein, Paul M. & Montgomery, W. David & Rutherford, Thomas F., 1999. "Global impacts of the Kyoto agreement: results from the MS-MRT model," Resource and Energy Economics, Elsevier, vol. 21(3-4), pages 375-413, August.
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  16. Kenneth M. Chomitz, 2002. "Baseline, leakage and measurement issues: how do forestry and energy projects compare?," Climate Policy, Taylor & Francis Journals, vol. 2(1), pages 35-49, March.
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