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Growing world trade makes food production cheaper – at the expense of the environment

Further opening of the markets for agricultural products leads to lower production costs for food. This will happen at the expense of the environment though, if for example forests are turned into cropland.

The conflict of interests between food production and climate protection is now shown by scientists from the Potsdam Institute for Climate Impact Research (PIK) in calculations for the years 2005 to 2045. For the first time, the effects of an advancing liberalization of agricultural trade were comprehensively analyzed through computer simulations, focusing both on the economic impacts and on those on land use and nature. This is one of the issues for the UN summit in Durban next week.

“Trade with grains and sugar, with soy and meat has multiplied more than tenfold since 1950,” says Christoph Schmitz, lead author of the study that has recently been published in the scientific journal Global Environmental Change. His team has analysed three different scenarios of future world trade for different regions of the earth, using a coupled economic and biophysical model tool.

“The effects of an expansion of global agricultural trade for the world´s climate could be drastic – at least if no additional new rules are introduced,” says Schmitz. The main reason for this: with more liberalised world trade, production areas move towards tropical regions, which leads to an expansion of agricultural land at the expense of nature there.

Cropland instead of rainforest in the Amazon region: cheap production, expensive emissions

If world trade was freed from all trade barriers by 2045, global agricultural production could become 11 trillion US dollars cheaper altogether than with barriers in a time span of four decades – a cost reduction of roughly a tenth. At the same time, emissions of agricultural greenhouse gases would increase by around 15 percent by 2045 as compared to a scenario without an expansion of trade. A moderate scenario of opening markets still amounts to 6.5 trillion US dollars in cost reductions and almost ten percent more emissions harmful to the climate. Environmental costs are therefore substantial.

As a result of the calculations, Latin America would gain in exports of grains and oilseeds in the case of liberalization – but more than elsewhere by cutting down rainforests and a corresponding extension of cultivated areas, for example in the Amazon region. North America and Europe would export less. China could lead exports of meat. Regarding animal husbandry, calculations show a relatively strong absolute increase of greenhouse gas emissions in comparison to today, but only little alteration between the different trade scenarios.

Forest protection is one of the major topics in Durban – it could be linked to trade issues

“According to our analysis, the reduction of trade barriers cannot simply be condemned,” explains Hermann Lotze-Campen with regard to the current fierce public debate on world trade and short-term fluctuations of agricultural prices. He heads the research project on this matter. “Liberalization can be of sustainable advantage to global food supplies, if rules to contain agricultural impacts on the environment are created on an international level.”

The scientists conclude from their study that rules for world trade and climate protection cannot be treated separately in international negotiations any longer. “This is one thing to be discussed in Durban”, Lotze-Campen says. “Forest protection is decisive to reach ambitious emission targets and is high on the agenda there.” According to the study, several things could be considered. In the future, agreements on trade liberalization could be accompanied by measures to protect forests. Secondly, the cost reduction through cheaper food production would be sufficient to pay for measures of climate protection like reforestation or mitigation of greenhouse gas emissions from agriculture. On the other hand, compensation payments for comprehensive forest protection would be fundable from saved costs for additional emission certificates.

Investing in agricultural innovation

Thirdly, a sustainable increase of agricultural production can only be feasible if considerably more money were to be invested in the development of better cultivation methods soon, the scientists say. “Investments in yield increase have stagnated in the last decades,” emphasizes Lotze-Campen. Especially in developing countries a lot can still be accomplished. “If more can be produced on the same piece of land, this helps both ends: global food security as well as climate protection.”

Article: Schmitz, C., Biewald, A., Lotze-Campen, H., Popp, A., Dietrich, J.P., Bodirsky, B., Krause, M., Weindl, I. (2011): Trading more Food - Implications for Land Use, Greenhouse Gas Emissions, and the Food System. Global Environmental Change, [doi:10.1016/j.gloenvcha.2011.09.013] (in press)

For further information, please contact:

Potsdam-Institut für Klimafolgenforschung, Pressestelle
Telefon: +49 (0)331 288 2507

Jonas Viering | PIK Potsdam
Further information:

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