Domestic And International Environmental Impacts Of Agricultural Trade Liberalisation

A reduction of trade barriers will influence the overall scale of agricultural activities, the structure of agricultural production in different countries, the mix of inputs and outputs, the production technology, and the regulatory framework. These adjustments, in turn, will impact on the international and domestic environment by increasing or reducing environmental harm and creating or destroying environmental amenities. International environmental effects include transboundary spill-overs, such as greenhouse gas emissions, changes in international transport flows, and the potential introduction of non-native species, pests and diseases alongside agricultural products. Domestic environmental effects include ground- and surfacewater pollution from fertiliser and pesticide run-offs, and changes in land-use that affect landscape appearance, flood protection, soil quality, and biodiversity. This study illustrates the direction and magnitude of some of the environmental impacts by combining preliminary results on the commodity market impacts of agricultural trade liberalisation with agri- environmental indicators. The international environmental impacts indicate that projected medium-term increases in ruminant livestock numbers could lead to substantial increases in methane emissions in some OECD countries, which could warrant the attention of policy makers in the context of existing Kyoto Protocol commitments on greenhouse gas emissions. With respect to domestic environmental impacts, the quantitative analysis suggests that agricultural prices and production intensity would decrease in countries that have had historically high levels of fertiliser and pesticide application, so that environmental stress in these countries would be relieved. Countries where increases in production intensity occur might be able to accommodate increased application rates of agro-chemicals relatively easily, as their historical levels of fertiliser and pesticide use tend to be low. Projections on the effects of further agricultural trade liberalisation on land use do not suggest substantial changes in agricultural land. Yet, the analysis does not allow to derive firm conclusions on prospective changes in landscape appearance, soil and flood protection, and biodiversity, since the projections did not explicitly consider some environmentally sensitive areas, such as pastures and marginal agricultural land.