Could free trade alleviate effects of climate change? A worldwide analysis with emphasis on Morocco and Turkey.

Author:Ouraich, Ismail
Position:P. 31-57
 
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5 Conclusions

Globally, the main conclusions of the analysis suggest that:

* Trade liberalization in most cases offsets only partially the negative impact associated with climate change on agriculture;

* Total offset of negative welfare impacts associated with climate change occurs only under special scenario cases, which are from an implementation perspective highly improbable to materialize.

* At the regional level, and depending on the scope of the trade liberalization, we notice that, regions benefitting from positive climate-induced productivity shocks on agriculture benefit the most under trade liberalization;

* Regions experiencing negative climate shocks to agricultural yields benefit only marginally from trade liberalization, and under specific tariff elimination scenarios, the net impact is negative.

For Morocco, the analysis suggests that:

* Tariff elimination under all scenarios on average induces additional welfare loss compared with the climate change only scenario;

* Trade liberalization induces net gains in allocative efficiency, but the latter are generally offset by the substantial negative contribution of the TOT and investment savings effects;

* Exports tend to increase substantially, but in a context of significantly decreasing prices; whereas imports show significant increases in a contest of increasing prices, especially for crop and food commodities.

In Turkey, we notice that:

* Trade liberalization induces net welfare gains under all scenarios;

* The magnitude of the gains are not large enough to offset the totality of the initial loss under climate change;

* The combined effect of positive net allocative efficiency and TOT effects drive most of the results;.

* Exporting sectors in Turkey seem to benefit substantially from free trade given increasing export prices and quantities, and especially for crop and food commodities (e.g. oilseeds and other crops);

* Imports increase substantially, driven primarily by intermediate demand and low import prices;

* For the rest of the sectors, the trend in traded volumes is generally increasing for both exports and imports, due to increasing export prices and declining import prices.

Appendix, remaining tables and figures

Table 1: Definition of simulation scenarios Scenario Description CConly Climate change only CCMULTI CConly + Global tariff elimination on all commodities CCAGMULTI CConly + Global tariff elimination on all agricultural commodities CCTRLIBEU CConly + Tariff elimination on all commodities between OECD Europe + Eastern Europe and Morocco, and OECD Europe + Eastern Europe and Turkey CCAGLIBEU CConly + Tariff elimination on all agricultural commodities between OECD Europe + Eastern Europe and Morocco, and OECD Europe + Eastern Europe and Turkey CCMENA CConly + Tariff elimination on all commodities among all MENA regions CCAGMENA CConly + Tariff elimination on all agricultural commodities among all MENA regions Source: Authors' definition. Table 4: Description of the GTAP regional aggregation adopted in the analysis Region code Description GTAP countries/regions Oceania Oceania Australia, New Zealand, Rest of Oceania EAsia East Asia China, Hong Kong, Japan, Korea, Taiwan, Rest of East Asia Cambodia, Indonesia, Lao People's Democratic Republic, Myanmar, SEAsia Southeast Asia Malaysia, Philippines, Singapore, Thailand, Viet Nam, Rest of Southeast Asia SAsia South Asia Bangladesh, India, Pakistan, Sri Lanka, Rest of South Asia CAN Canada Canada USA United States United States of America Rest of Latin Mexico, Rest of North America, America Argentina, Bolivia, Chile, Colombia, XLatAmer Ecuador, Paraguay, Peru, Uruguay, Venezuela, Rest of South America, Costa Rica, Guatemala, Nicaragua, Panama, Rest of Central America BRA Brazil Brazil Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, OecdEU OECD Europe Italy, Luxembourg, Malta, Netherlands, Portugal, Spain, Sweden, United Kingdom, Switzerland, Norway, Rest of EFTA XMidEast Rest of Middle Cyprus, Iran Islamic Republic of, East Rest of Western Asia EastEU Eastern Europe Czech Republic, Hungary, Poland, Slovakia, Slovenia, Albania, Bulgaria, Croatia, Romania, Rest of Eastern Europe, Rest of Europe Estonia, Latvia, Lithuania, Belarus, Russian Federation, Ukraine, FrmUSSR Former USSR Kazakhstan, Kyrgyztan, Rest of Former Soviet Union, Armenia, Azerbaijan, Georgia TUR Turkey Turkey XNAfrica Rest of North Egypt, Tunisia, Rest of Africa North Africa MAR Morocco Morocco Nigeria, Senegal, Rest of Western Africa, Central Africa, South Central SSA SSA Africa, Ethiopia, Madagascar, Malawi, Mauritius, Mozambique, Tanzania, Uganda, Zambia, Zimbabwe, Rest of Eastern Africa, Botswana, South Africa, Rest of South African Customs Source: Authors' adaptation (Data: GTAP database version [7.0.sup.9]) Table 5: Regional matching between the GTAP and IFPRI regions GTAP region IFPRI region Code Description Code Description EastEU Eastern Europe ADR Adriatic OecdEU OECD Europe AEU Alpine Europe SAsia South Asia AFG Afghanistan XNAfrica Rest of North Africa ALG Algeria SSA SSA ANG Angola XLatAmer Rest of Latin America ARG Argentina Oceania Oceania AUS Australia OecdEU OECD Europe BAL Baltic SAsia South Asia BAN Bangladesh OecdEU OECD Europe BEL Belgium SSA SSA BEN Benin SAsia South Asia BHU Bhutan SSA SSA BOT Botswana BRA Brazil BRA Brazil OecdEU OECD Europe BRI Britain British Isles SSA SSA BUF Burkina Faso SSA SSA BUR Burundi SSA SSA CAM Cameroon CAN Canada CAN Canada SSA SSA CAR Central African Republic FrmUSSR Former USSR CAU Caucus XLatAmer Rest of Latin America CCA Caribbean EastEU Eastern Europe CEU Central Europe SSA SSA CHA Chad XLatAmer Rest of Latin America CHL Chile EAsia East Asia CHN China XLatAmer Rest of Latin America COL Colombia SSA SSA CON Congo XLatAmer Rest of Latin America CSA Central South America XMidEast Rest of Middle East CYP Cyprus SSA SSA DJI Djibouti SSA SSA DRC Democratic Republic of Congo XLatAmer Rest of Latin America ECU Ecuador XNAfrica Rest of North Africa EGY Egypt SSA SSA EQG Equatorial Guinea SSA SSA ERI Eritrea SSA SSA ETH Ethiopia OecdEU OECD Europe FRA France SSA SSA GAB Gabon SSA SSA GAM Gambia OecdEU OECD Europe GER Germany SSA SSA GHA Ghana SSA SSA GUB Guinea Bissau SSA SSA GUI Guinea XMidEast Rest of Middle East GUL Gulf States OecdEU OECD Europe IBE Iberia SAsia South Asia IND India SEAsia Southeast Asia INO Indonesia XMidEast Rest of Middle East IRN Iran XMidEast Rest of Middle East IRQ Iraq XMidEast Rest of Middle East ISR Israel OecdEU OECD Europe ITA Italy SSA SSA IVC Ivory Coast EAsia East Asia JAP Japan XMidEast Rest of Middle East JOR Jordan FrmUSSR Former USSR KAZ Kazakhstan SSA SSA KEN Kenya FrmUSSR Former USSR KYR Kyrgyzstan XNAfrica Rest of North Africa LBY Libya XMidEast Rest of Middle East LEB Lebanon SSA SSA LES Lesotho SSA SSA LIB Liberia SSA SSA MAD Madagascar SSA SSA MAL Mali SSA SSA MAU Mauritania XLatAmer Rest of Latin America MEX Mexico SSA SSA MLW Malawi SEAsia Southeast Asia MLY Malaysia EAsia East Asia MON Mongolia MOR Morocco MOR Morocco SSA SSA MOZ Mozambique SEAsia Southeast Asia MYN Myanmar SSA SSA NAM Namibia SAsia South Asia NEP Nepal OecdEU OECD Europe NET Netherlands SSA SSA NIA Nigeria SSA SSA NIG Niger EAsia East Asia NOK North Korea XLatAmer Rest of Latin America NSA Northern South America Oceania Oceania NZE New Zealand SAsia South Asia PAK Pakistan XLatAmer Rest of Latin America PER Peru SEAsia Southeast Asia PHI Philippines Oceania Oceania PNG Papua New Guinea EastEU Eastern Europe POL Poland FrmUSSR Former USSR RUS Russia SSA SSA RWA Rwanda SSA SSA SAF South OecdEU OECD Europe SCA Scandinavia SEAsia Southeast Asia SEA SE Asia SSA SSA SEN Senegal SEAsia Southeast Asia SIN Singapore EAsia East Asia SKO South Korea SSA SSA SLE Sierra Leone SSA SSA SOM Somalia SAsia South Asia SRL Sri Lanka SSA SSA SUD Sudan SSA SSA SWA Swaziland XMidEast Rest of Middle East SYR Syria FrmUSSR Former USSR TAJ Tajikistan SSA SSA TAN Tanzania SEAsia Southeast Asia THA Thailand FrmUSSR Former USSR TKM Turkmenistan TKY Turkey TKY Turkey SSA SSA TOG Togo XNAfrica Rest of North Africa TUN Tunisia SSA SSA UGA Uganda FrmUSSR Former USSR UKR Ukraine UNS United States UNS United States XLatAmer Rest of Latin America URU Uruguay FrmUSSR Former USSR UZB Uzbekistan SEAsia Southeast Asia VIE Vietnam SSA SSA ZAM Zambia SSA SSA ZIM Zimbabwe Source: Authors' adaptation (Data: GTAP database version 7 and IFPRI 2010). Table 6: Regional matching between the GTAP and IMAGE regions GTAP region IMAGE region Oceania Oceania East Asia East Asia, Japan Southeast Asia Southeast Asia South Asia South Asia Canada Canada United States of America USA Rest of Latin America Central America, South America Brazil South America OECD Europe OECD Europe Rest of Middle East Middle East Eastern Europe Eastern Europe Former USSR Former USSR Turkey Middle East Rest of North Africa Northern Africa Morocco Northern Africa SSA Eastern Africa, Southern Africa, Western Africa Source: Authors' adaptation (Data: GTAP database version 7 and IMAGE 2.2, 2001). Table 7: GTAP sector aggregation in the model GTAP New sector Code Description pdr Paddy rice wht Wheat gro Cereal grains nec VegtFrut Vegetables, fruit, nuts osd Oil seeds c_b Sugar cane, sugar beet OthCrop Other crops MtLkMlk Meat, livestock, raw milk Extract Forest, fish, minerals VegtOil Vegetable oils and fats XPrFood Other processed food TextApp Textile and apparel Mnfctrs Manufactures UtilCons Utilities and construction Svces Transportation and services GTAP Old sector Code Description pdr Paddy rice wht Wheat gro Cereal grains nec v_f Vegetables, fruit, nuts osd Oil seeds c_b Sugar cane, sugar beet pfb Plant-based fibers ocr Crops nec ctl Cattle, sheep, goats, horses oap Animal products nec rmk Raw milk wol Wool, silk-worm cocoons cmt Meat: cattle, sheep, goats, horse omt Meat products nec frs Forestry fsh Fishing coa Coal oil Oil gas Gas omn Minerals nec vol Vegetable oils and fats mil Dairy products pcr...

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