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1、SERVICESThe Trade and Climate Change NexusThe Urgency and Opportunities for Developing CountriesPaul Brenton and Vicky ChemutaiTHE TRADE AND CLIMATECHANGENEXUSTHE TRADE AND CLIMATE CHANGE NEXUSThe Urgency and Opportunities for Developing CountriesPaul Brenton and Vicky Chemutai 2021 International Ba
2、nk for Reconstruction and Development/The World Bank1818 H Street NW,Washington,DC 20433Telephone:202-473-1000;Internet:www.worldbank.orgSome rights reserved1 2 3 4 24 23 22 21This work is a product of the staff of The World Bank with external contributions.The findings,interpretations,and conclusio
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7、r the following conditions:AttributionPlease cite the work as follows:Brenton,Paul,and Vicky Chemutai.2021.The Trade and Climate Change Nexus:The Urgency and Opportunities for Developing Countries.Washington,DC:World Bank.doi:10.1596/978-1-4648-1770-0.License:Creative Commons Attribution CC BY 3.0 I
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12、Examples of components can include,but are not limited to,tables,figures,or images.All queries on rights and licenses should be addressed to World Bank Publications,The World Bank Group,1818 H Street NW,Washington,DC 20433,USA;e-mail:pubrightsworldbank.org.ISBN(paper):978-1-4648-1770-0ISBN(electroni
13、c):978-1-4648-1773-1DOI:10.1596/978-1-4648-1770-0Cover photos:idreamipursue/iStock.Used with the permission of idreamipursue/iStock.Further permission required for reuse.Cover design:Melina Rose Yingling,World Bank.The Library of Congress Control Number has been requested.vContentsForeword ixAcknowl
14、edgments xiAbout the Authors xiiiExecutive Summary xvAbbreviations xixChapter 1 Introduction 1Notes 5References 5Chapter 2 Low-and Middle-Income Countries,Carbon Emissions,and Trade 7Trade,global value chains,and emissions 7Understanding emissions from the developing world 9Implications for global c
15、limate efforts and the role of trade policy 12Examining agriculture as one of the main trade-related sectors affecting emissions from the developing world 19Conclusions 25Notes 26References 26Chapter 3 Evolving Comparative Advantages and the Impacts of Extreme Weather Events 31The impact of a changi
16、ng climate on comparative advantages 33Extreme weather events and trade 40Disaster response and trade restrictions:Implications from a numerical model 42Conclusions 48Notes 49References 50ContEntSviChapter 4 Adaptation to Climate Change:Trade in Green Goods and Services and Access to Low-Carbon Tech
17、nologies 53The implications for trade of adapting to a changing climate 53Trade in environmental goods 55Conclusions 63Notes 63References 65Chapter 5 Environmental Policies and Trade 67The Carbon Border Adjustment Mechanism and low-income-country trade 67Greening transport:Implications for low-incom
18、e-country exports 82Conclusions 86Notes 86References 89Chapter 6 Issues at the Country Level:A Diagnostic Framework 93Vietnam 93Ethiopia 97Notes 101References 102Appendix A.The 59 Countries with the Fastest-Growing Carbon Dioxide Emissions 105Appendix B.Tariffs on Environmental Goods 109Appendix C.C
19、limate and Trade Policy Diagnostic Framework 113Boxes 2.1 Modeling Postpandemic Impacts under Different Trade Scenarios 16 3.1 Numerical Model to Explore the Economic Impacts of Compound Hazards and Trade Restrictions 43 5.1 CO2 Intensity and Carbon Competitiveness in the Steel Industry 72 5.2 Model
20、ing the Impacts of Nationally Determined Contributions and Carbon Border Adjustments 73 5.3 Implementation Challenges for Business Carbon Management:Walmarts Project Gigaton 80Figures 1.1 Links between Climate Change and Trade 4 2.1 Changes in Annual CO2 Emissions and GDP of the 59 Emerging Emitters
21、,201018 10ContEntSvii 2.2 CO2 Emissions and GDP Growth of 59 Emerging Emitters,China,India,and the United States,201018 11 2.3 Countries with Surging Emissions and Their Drivers,by Region,201018 13 B2.1.1 CO2 Emissions in Selected Countries in the Postpandemic Era under Different Trade Pattern Scena
22、rios,201940 17 B2.1.2 Poverty Rate in Selected Countries in the Postpandemic Era under Different Trade Pattern Scenarios,202450 18 2.4 Categories of Exports from the Poorest Countries to the World(Mirror Data),201219 20 2.5 Cereal Production versus Yield on Harvested Land in Sub-Saharan Africa,19602
23、016 21 3.1 ND-GAIN Index:Vulnerability to Climate Change in Selected Countries,by Income Level,2019 32 3.2 Hunger with and without Climate Change in 2030 and 2050,by Region 37 3.3 Weekly Changes in Regional Gross Value Added Relative to Predisaster Levels,When Multiscale Floods Collide with Pandemic
24、 Control and Export Restrictions 46 3.4 Weekly Changes in Regional GVA,Relative to Predisaster Levels,When Multiscale Floods Collide with Pandemic Control and Production Specialization 47 4.1 Number of Environmental Goods with Tariffs above 5 Percent,2018 58 B5.1.1 CO2 Intensity Values for Steel 72
25、5.1 Change in Real Income and Carbon Prices Associated with Achievement of Nationally Determined Contribution Targets in a Post-COVID Scenario,by Region,2030 74 5.2 Impacts of the European Green Deal and CBAM on GDP per Capita,by EU Trading Region,2030 76 5.3 Impacts of CBAM on Income per Capita and
26、 Carbon Intensity of Exports to the European Union,by EU Trading Region,2030 77 6.1 Evolution of Vietnams Top Five Export Products,200719 95 B.1 Average Most-Favored-Nation Tariffs on Environmental Goods(APEC List),by Economy,2018 110 B.2 Average Most-Favored-Nation Tariffs on Environmentally Prefer
27、able Products,by Economy,2018 111Map 2.1 Rate of Growth of CO2 Emissions,201018,and GDP per Capita 11Tables ES.1 The Trade and Climate Change Myth Buster xvi 3.1 Factors Affected by Climate Change and Impact on Crop Productivity 34 3.2 Impact of Climate Change on Crop Yields,Accounting for CO2 Ferti
28、lization,by Region 35 3.3 Estimated Changes in Aggregate Productivity due to the Impact of Climate Change on Crop Production in Selected Countries,at the 2080 Horizon 36ContEntSviii 3.4 Average Most-Favored-Nation Unweighted Tariffs on Agricultural Products in Selected Countries and Regions,2019 38
29、3.5 Indirect Impacts on Global GDP of a“Perfect Storm”under Different Export Restriction Scenarios 44 3.6 Indirect Impacts on Global GDP of a“Perfect Storm”under Different Production Specialization and Export Restriction Scenarios,Relative to Predisaster Levels 47 4.1 GATS Commitments for Environmen
30、tal Services,by Supply Mode 62 5.1 Changes in Output Following the Implementation of Nationally Determined Contributions,by Sector and Region 75 5.2 Impact of the European Green Deal and CBAM on Selected Sectors of EU Trading Partners 77 5.3 Carbon Footprint of 1 Kilogram of Green Coffee 84 A.1 Emer
31、ging Emitters,by Stage of Economic Development 106ixForewordAll human and economic activities have an impact on the environment.Trade is no different.The production,movement,and consumption of goods and serviceswithin and across bordersis the foundation of modern society.This process brings us the e
32、nergy that powers our homes and gets us to work each day.It delivers the food we need,the appliances we have come to depend on,and the medical supplies that help make us safer.Yet each stage of the process entails a fresh contribution to greenhouse gas emissions:trade undeniably exacerbates climate
33、change.It is equally true that trade is disrupted by climate change.Extreme weather events often devastate transport and logistics infrastructure.These events erode capital stock,debilitate export capac-ity,damage agriculture,and disrupt food securityall with adverse consequences for long-term devel
34、opment outcomes.Trade,in short,is a critical node to mobilize if the world is to achieve green,resilient,and inclusive development in the coming years.As this report demonstrates,it is a central element of the solution to climate changebecause it has the potential to enhance mitiga-tion as well as a
35、daptation efforts.First,trade can help shift production to areas with cleaner production techniques:as the world makes the transition to a low-carbon econ-omy,export comparative advantages will change,compelling countries to adapt and seize new opportunities.Second,trade promotes the spread of criti
36、cal environmental goods and services that can help reduce emissions and improve environmental managementtoday,global trade in environmental goods is estimated at more than US$1 trillion annu-ally and is rising.Third,imports are critical to immediate recovery from a natural disaster,when essential it
37、ems such as food and medicines are in short supply.In a world increas-ingly shaped by climate change,trade will be a crucial mechanism to address food inse-curity,support adaptation,and enable recovery from natural disasters.In the last decade,some developing countries have emerged as fast-growing e
38、mit-ters of greenhouse gases.The poorest countries,however,remain the smallest con-tributors to emissions.Yet they often suffer the most from climate change.Natural disasters disproportionately affect the most vulnerable people and the smallest firms.All developing countries therefore have an import
39、ant stake in adapting to climate changeespecially in agriculture,which is central to food security,employment,and trade and is also the most sensitive to climate change.Tourism,the mainstay of the economy of many small island developing states,is also particularly sensitive to climate change.Diversi
40、fying away from sectors that are the most vulnerable to climate shocks will allow these economies to become more resilient over the long term.ForEwordxThe global community has an important role to play in greening trade.This report identifies several immediate trade policy measures that offer quick
41、wins.Correcting the current bias in many countries tariff schedules toward imports of carbon-intensive“dirty”goods is one of them.Advanced economies can also support green trade liberal-ization of goods and services of high-priority interest to exporters in developing coun-tries.Multilateral negotia
42、tions should focus not only on tariffs on environmental goods but also on nontariff measures and regulations affecting servicesaccess to which is often vital for implementing the new technologies embodied in environmental goods.Enforceable rules should be created to ensure global discipline in the u
43、se of trade mea-sures that impede crisis responsesuch as export restrictions on food or medicine or restrictive intellectual property rights that prevent the diffusion of clean technologies to developing countries.The need for transparency and predictability in policies affecting trade is always pre
44、ssing,but it is particularly urgent during a crisis.The least-developed countries also need to be at the multilateral negotiating table for matters involving trade and the environment.Policy makers in these countries have not paid much attention to trade policy as a tool for achieving environmental
45、objectives.By contributing to the rules governing environmental trade,they can ensure that their interestsespecially regarding capacity building and data collectionare duly consid-ered.They can help ensure that the standards set reflect the reality of production in these countries.All developing cou
46、ntries have much to gain by improving their policies on trade and the environment.Implementing ambitious nationally determined contributions(NDCs)to achieve climate goals,for example,can help them exploit new trade opportu-nities arising from the implementation of NDCs in other countries.Reaping the
47、 gains from emerging trade opportunities will also require developing countries to address their high costs of trade:doing so can make them both competitive and resilient in the long term.Lowering tariff and nontariff barriers on imports that embody new technologies can drive productivity growth and
48、 adaptation.The global community can help develop-ing countries adopt climate-smart agriculture and build capacity for trade-facilitation reforms.Mutual recognition agreements covering environmental goods and products can go a long way in helping exporters in developing countries meet the regulatory
49、 requirements of developed countries,thereby cutting time and costs.As countries formulate policies for recovery from the COVID-19(coronavirus)pandemic,the World Bank Group is supporting their efforts to embark on a green,resilient,and inclusive development path,setting the foundation for robust and
50、 sus-tainable growth and development in the longer run.The World Bank Group Climate Change Action Plan for 20212025 takes a whole of economy approach,focusing on policies to create the right enabling environment for climate action.Trade is an indispensable requirement for achieving the global develo
51、pment agenda.This report provides a timely review of critical issues involving green trade,laying out the key policy steps that countries can take to ensure that trade plays its full role in supporting the transition to a low-carbon future.Mari PangestuManaging Director of Development Policy and Par
52、tnershipsWorld BankxiAcknowledgmentsThe authors are indebted to many colleagues for their contributions to the substance of this report.These include Dabo Guan(distinguished professor,Tsinghua University,China,and University College London,UK),Michael Friis Jensen(consultant,Trade and Regional Integ
53、ration Unit ETIRI,World Bank),Maryla Maliszewska(senior economist,ETIRI),Maria Filipa Seara E Pereira(consultant,ETIRI),Israel Osorio-Rodarte(economist,ETIRI),Dominique Van Der Mensbrugghe(research professor and director,Global Trade Analysis Project Center at Purdue University),Walter Mandela(consu
54、ltant,ETIRI),Mariam Soumare(consultant,ETIRI),Nyembezi Mvunga(consultant,ETIRI),Anita Nyajur(consultant,ETIRI),and Emilia Malavoloneque(consultant,ETIRI).Many colleagues,inside and outside the World Bank Group,provided useful comments,suggestions,and inputs at various drafting stages:Michael Ferrant
55、ino(lead economist,ETIRI);Robert Mutyaba(climate change specialist,World Bank);Stphane Hallegatte(lead economist,World Bank),and Kayenat Kabir(consultant,World Bank)on behalf of the Climate Change Group;and Emiliano Duch(lead pri-vate sector specialist,World Bank),Miles McKenna(associate economist,I
56、nternational Finance Corporation),and Brian Blankespoor(environmental specialist,World Bank).At the World Trade Organization(WTO),valuable comments were received from Aik Hoe Lim(director,Trade and Environment Division)and Daniel Ramos(legal officer,Trade and Environment Division).The team also deep
57、ly thanks Erik Churchill(Vice President of Public Affairs,United Parcel Service,United States),Mohini Datt(consultant,ETIRI),Pratyush Dubey(consultant,ETIRI),Niels Junker Jacobsen(senior trade specialist,ETIRI),and Karen Souza Muramatsu(consultant,ETIRI)for their valuable recommenda-tions.Administra
58、tive support was also provided by Tanya Cubbins,Victoria L.Fofanah,Aidara Janulaityte,and Flavia Nahmias da Silva Gomes.We are also grateful for the insights and collaboration of several colleagues who have participated in the Trade and Climate Change Webinar Series.These include Richard Damania(chi
59、ef economist,Sustainable Development,World Bank),Vicente Hurtado Roa(head of unit,Directorate-General for Taxation and Customs Union,European Commission),Georg Zachmann(senior fellow,Bruegel),Holger A.Kray(practice manager,Agriculture and Food Security,World Bank),Edwini Kessie(director,Agriculture
60、Division,WTO),Steven Stone(chief,Resources and Markets Branch Economy Division,United Nations Environment Programme),Grzegorz Peszko(lead economist,Environment and Natural Resources,World Bank),Lourdes Sanchez ACknowlEdgmEntSxii(senior policy adviser and lead on Indonesia,International Institute for
61、 Sustainable Development),Shari Friedman(agriculture global head,Climate Strategy and Business Development,International Finance Corporation),Penny Naas(president,International Public Affairs and Sustainability,United Parcel Service,United States),Steve Nicholls(head of environment,National Business
62、 Initiative,South Africa),Urvashi Narain(lead environmental economist for East and Southern Africa Region,World Bank),Ryan Abman(assistant professor of economics,San Diego State University),Clark Lundberg(research agricultural economist,Economic Research Service,US Department of Agriculture),Michele
63、 Ruta(lead economist,ETIRI),Prudence Sebahizi(chief technical adviser on the African Continental Free Trade Area,African Union Commission),Allen Asiimwe(chief technical officer,Trademark East Africa),Olivier Mahul(practice manager,Crisis and Disaster Risk Finance,World Bank),Alexei Kireyev(senior ec
64、onomist,International Monetary Fund),Andrew Burns(lead economist,EMFMD,World Bank),Aik Hoe Lim(director,Trade and Environment Division),Ronald Steenblik(senior fellow,International Institute for Sustainable Development),Mahesh Sugathan(senior policy adviser,Forum on Trade,Environment,and the Sustain
65、able Development Goals;independent consultant),Kimberley Botwright(community lead,Global Trade and Investment,World Economic Forum),Ana Laura Lizano(trade counselor,Permanent Mission of Costa Rica to the World Trade Organization),Martha Martinez Licetti(practice manager,ETIMT,World Bank),Stefan Gssl
66、ing(professor,Department of Service Management and Service Studies,Lund University;School of Business and Economics,Linnaeus University,Kalmar),Kimarli Fernando(chairperson,Sri Lanka Tourism),and Megan Morikawa(global director for sustainability,Iberostar Group).The authors are deeply grateful to An
67、na Brown,Elizabeth Forsyth,and Inge Pakulski,who edited the text.Patricia Katayama and Mark McClure expertly led the publishing process.Yaneisy Martinez coordinated the print and electronic conversion.Melina Rose Yingling created the cover and interior design.Elizabeth Price and Inae Rivers provided
68、 excellent guidance on the communica-tions strategy,and Avik Ray created the video for this report.All information on the trade and climate change work program is posted on the World Bank website at https:/www.worldbank.org/en/topic/trade/brief/trade-and-climate-change.This report is an output of th
69、e Trade and Regional Integration Unit of the World Bank.Funding support was received from the Umbrella Trust Fund for Trade,which is supported by the Foreign,Commonwealth&Development Office(FCDO),the State Secretariat for Economic Affairs of Switzerland(SECO),the Ministry of Foreign Affairs of Norwa
70、y,the Ministry of Foreign Affairs of the Netherlands,and the Swedish International Development Cooperation Agency(Sida).The former global director for Trade,Investment,and Competitiveness,Caroline Freund(now Dean,School of Global Policy and Strategy,University of California at San Diego)and Antonio
71、Nucifora,ETIRI practice manager,provided valuable guid-ance and supervision throughout.xiiiAbout the Authors Paul Brenton is lead economist in the Trade and Regional Integration Unit of the World Bank.He focuses on analytical and operations work on trade and regional inte-gration.He has led the impl
72、ementation of World Bank lending operations such as the Great Lakes Trade Facilitation Project in the Democratic Republic of Congo,Rwanda,and Uganda.He coauthored the joint World BankWorld Trade Organization report The Role of Trade in Ending Poverty,and has managed a range of policy-oriented volume
73、s,including De-Fragmenting Africa:Deepening Regional Trade Integration in Goods and Services;Africa Can Help Feed Africa;and Carbon Footprints and Food Systems:Do Current Accounting Methodologies Disadvantage Developing Countries?He joined the World Bank in 2002;before that,he served as senior resea
74、rch fellow and head of the Trade Policy Unit at the Centre for European Policy Studies in Brussels and lectured in economics at the University of Birmingham(UK).A collection of his work has been published in International Trade,Distribution,and Development:Empirical Studies of Trade Policies(https:/
75、 of his research and policy papers are available at http:/ideas.repec.org/f/pbr273.html.He has a PhD in economics from the University of East Anglia.Vicky Chemutai is a Young Professional with the Trade and Regional Integration Unit of the World Bank.Her interests include analyzing the dynamics of i
76、nternational trade and its interactions with global issuesamong others,climate and gender con-cerns.She has developmental experience spanning the public sector in several Ugandan government agencies(health,social security,and the central bank);the private sector as founder of several small-scale ent
77、repreneurial ventures;and the inter-national development sector,focusing on trade policy formulation and implementa-tion,formerly at the World Trade Organization and currently at the World Bank Group.She has been an adjunct lecturer at the International University in Geneva in the fields of trade an
78、d statistics and has coauthored publications on trade policy and its impacts on countries development.She holds an MSc in international trade policy and trade law from Lund University(Sweden),an advanced postgraduate diploma in international trade policy and trade law from the Trade Policy Training
79、Centre in Africa(Tanzania),and a BSc in quantitative economics from Makerere University(Uganda).xvExecutive SummaryWhile trade contributes to climate change,it is also a central part of the solutionenhancing both mitigation and adaptation.This report explores the ways in which trade and climate chan
80、ge intersect.In the process,it confronts several myths concern-ing trade and climate change(as summarized in table ES.1).Trade exacerbates the emissions that cause global warming and is itself affected by climate change through changing comparative advantages.The report focuses on the impacts of,and
81、 adjust-ments to,climate change in low-and middle-income countries and how both the changing climate and the policy responses to address it will affect future trade opportunities.Low-and middle-income countries are at the heart of the nexus between trade and climate change,facing severe challenges b
82、ut also opportunities in the transition to a low-carbon future.Trade-driven growth will be essential to eliminating extreme pov-erty;however,given existing structures of production,this growth will also drive increasing emissions.Both adaptation and the shift to a lower-carbon growth trajec-tory wil
83、l be key challenges for the most vulnerable countries,which have the least resources and weakest capacity to adjust to a changing climate.An increasing body of analysis shows that low-carbon and climate-resilient growth can provide poverty reduction and human development outcomes superior to the cur
84、rent alternative.In this context,the World Bank Group is supporting countries to embark on a green,resilient,and inclusive development(GRID)path,in which trade must play a key role,especially as a conduit for making new low-carbon technologies available to low-and middle-income countries.Trade is in
85、creasingly being affected by extreme weather-related shocks such as storms,floods,and droughts,but it is often critical to the recovery from such events.Exports and imports are directly affected negatively when trade-related transportation and logistics infrastructure sustains significant damage.Lon
86、ger-term adverse impacts arise from loss of life and injury of employees and damage to buildings,machinery,and so forth.These impacts are compounded when exporter contracts are canceled because companies cannot fulfill orders during the crisis.Food production is hit hard when extreme weather events
87、prevent the planting or harvesting of main crops.Imports are critical to the immediate recovery from a natural disaster.Trade allows imports from unaffected countries to meet the crisis-induced shortage of supply in critical goods and services.Such imports are crucial to avoiding long-term negative
88、development outcomes.For example,imports of food can prevent malnutrition and xviEXECUtIVE SUmmArYstunting of children,which affects their learning and productivity in later life.During reconstruction,imports provide the equipment,materials,and skills needed to rebuild the capital stock and transpor
89、tation infrastructure.Climate change is also affecting traditional comparative advantages,specifically agriculture and tourism,which are of particular importance to many low-and middle-income countriesmore than industrial activities.The vulnerability of agricultural yields to climate threatens not j
90、ust domestic food security but also the economic devel-opment of food-exporting countries and their ability to eliminate poverty.Yet out-comes are not always negative and vary across and within countries.Most studies of climate change and its impacts on agriculture have focused on crop production,bu
91、t the effect of heat on labor productivity will also reduce agricultural output.In the trop-ics,the impacts of heat stress may be greater on humans than on adapted crops.With regard to tourism,climate change is increasingly undermining its role in driving TABLE ES.1 the trade and Climate Change myth
92、 BusterThe mythThe emerging realitytrade is bad for the environment.trade flows contribute to carbon emissions but are also a critical part of the solution to climate change for three major reasons:(1)trade shifts production to areas with cleaner production techniques;(2)trade promotes the spread of
93、 environmental goods and services necessary for transitioning to low-carbon production;and(3)trade delivers critical goods and services that are vital in periods of recovery from extreme weather events.trade is bad for climate change relative to domestically produced goods because of the emissions f
94、rom international transportation.while the international transportation of goods and services is a source of emissions,other sources of carbon competitiveness along the value chain can more than offset its quantity of emissions.For example,fruits and vegetables produced in Africa using sunshine,manu
95、al labor,and natural compost may generate far fewer emissions than production in Europe requiring heated greenhouses,tractors,and manufactured fertilizer.Because they are not large emitters individually,the poorest countries do not need to play a major role in negotiating the rules on trade and envi
96、ronment.Collectively,low-and middle-income countries have been increasingly carbonizing over the last decade in pursuit of their development goals,and they need to be at the forefront of climate change adaptation and mitigation.Climate change will affect the poorest countries most severely,and contr
97、ibuting to the rules governing trade and the environment can help to ensure that their interests are considered properly.If a country gets its climate policy right,then the job is finished.trade and climate change policies intersect.trade reforms in the absence of appropriate climate change policies
98、 can have adverse impacts on emissions.when appropriate climate change policies are implemented,trade reforms ensure that goods and services are produced in the most(carbon)efficient location.there is no need to review tariffs from a climate change perspective.tariff structures are often biased in f
99、avor of dirty goods.Bringing tariffs on dirty goods in line with those on clean goods would make a significant contribution to reducing carbon emissions.the impacts of climate change will not be felt soon,so mitigation policies suffice for now.rising temperatures and changing patterns of precipitati
100、on are already affecting crop yields and traditional comparative advantages.mitigation is necessary,but not sufficient;adaptation will be critical,especially for poor countries.while nontariff barriers increase trade costs,they have little to do with climate change.nontariff barriers are a major con
101、straint on trade in critical environmental goods.they also limit access to key products that will drive adaptation,such as seeds and fertilizers.delays at the border and in ports indirectly exacerbate the huge waste of food products,with the resulting cost of higher emissions for a given level of fo
102、od consumption.Source:World Bank.xviiEXECUTIVE SUMMARYdevelopment and reducing poverty in vulnerable countries,such as small island devel-oping states.Substantial new opportunities are emerging for low-and middle-income coun-tries to diversify exports in a low-carbon global economy.While these count
103、ries face huge challenges in adapting to climate change,they will be able to benefit from natu-ral low-carbon advantages and the application of new,low-carbon technologies to increase their carbon competitiveness as traditional comparative advantages are undermined.In an increasingly climate changea
104、fflicted world,trade will gain importance as a mechanism to address food insecurity,support adaptation,and enable recovery from extreme weather events.A trend toward deglobalization would compromise countries ability to drive down poverty and transition to low-carbon growth.In fact,opportuni-ties ex
105、ist to reduce barriers to support the greening of trade and facilitate countries adjustment to changing comparative advantages.Such measures include the following:Review country tariffs and remove any bias toward dirty sectors Reduce restrictions on access to environmental goods and services and on
106、envi-ronmentally preferable products;accelerate negotiations on these goods and ser-vices at the multilateral level Remove nontariff barriers and implement trade facilitation and logistics reforms to reduce delays at borders and along trade routes,especially to reduce food waste and so contribute to
107、 food security Work collectively to develop standards on the carbon emissions embodied in a product that capture the realities of measurement in low-and middle-income countries;scale up technical assistance and capacity building on carbon measure-ment techniques and traceability Reduce tariffs and n
108、ontariff barriers on agricultural inputs and facilitate access to new technologies for farmers through expedited procedures for releasing seeds and easier movement of agricultural specialists Use the tools available at the World Trade Organization to address the climate change emergency,such as a wa
109、iver for the trade-related aspects of intellectual property rights of green technologies.The use of export restrictions is particularly detrimental in a world marked by recurring climate disasters.Measures that reduce trade flows in countries less affected by a weather-related crisis undermine the e
110、fforts of countries battling an extreme weather event.These negative effects are increased in a world where specialization through trade and concentration of production in a few locations limit the options to substitute suppliers.Global food security is being increasingly compromised by the rising v
111、olatility of food supply at the country level as weather becomes more variable and uncertain.This report offers two main suggestions for addressing these challenges.First,enhance efforts to increase information,transparency,and monitoring on global markets for essential items,including food.Greater
112、transparency and information sharing can help to limit panic-driven policy decisions and lead to more informed and coordinated responses that avoid damaging trade restrictions.Second,deepen cooperation at the regional and multilateral levels on trade issues that are critical for xviiiEXECUtIVE SUmmA
113、rYhealth and food security and provide effective disciplines regarding the use of export-restricting measures.It is critical to ensure that the interests of low-and middle-income countries are reflected in the design of trade measures introduced to reduce a countrys or a companys carbon footprint.Go
114、vernments are planning to introduce taxes at the border to comple-ment domestic carbon taxes and prevent carbon leakage.Companies are also designing and implementing programs to demonstrate that they have reduced emissions along their value chains.There is no easy and commonly accepted way to calcul
115、ate the carbon footprint of a product arriving at the border.Despite the difficulties,this calculation is required to tax the embedded carbon,as is information on carbon taxes(if any)already levied in the country of production.These programs face a range of practical implemen-tation problems beyond
116、measuring carbon content,including sector coverage,scope of carbon measurement,when and which default values are used,and how countries can demonstrate their carbon competitiveness.These measures all determine the impact of the program on the trade of low-and middle-income countries.Measures to redu
117、ce carbon emissions will most heavily affect the countries that export fossil fuels and carbon-intensive products,but new opportunities will also arise in global value chains that are less carbon intensive.Measures to support climate miti-gation objectives,including carbon border adjustment mechanis
118、ms,will increase the importance of export and output diversification in countries reliant on exports of fossil fuels and carbon-intensive manufactures,such as metals and fertilizers.But opportuni-ties will arise for countries that can demonstrate carbon competitiveness in these man-ufacturing sector
119、s.New opportunities will also arise as demand shifts to products that are less carbon intensive,such as electronics and other light manufacturing.But many low-and middle-income countries lack appropriate capacities to identify areas of car-bon competitiveness,and their firms are unable to measure an
120、d verify carbon reduc-tions for a given good or service.As a result,exports from low-and middle-income countries risk being taxed unfairly at the border,and their firms risk being excluded from international value chains.It is essential for low-and middle-income countries to understand the risks and
121、 opportunities for trade and development strategies associated with climate change.This report offers a trade and climate policy diagnostic template that can provide inputs to country climate and development reports and beyond,to facilitate a broad dialogue on(1)strengthening capacities to identify
122、opportunities for carbon mitiga-tion that increase competitiveness,(2)investments in carbon measurement that are necessary to verify carbon competitiveness,and(3)trade policy and trade facilitation reforms that will support adaptation and access to essential technologies and techniques.This template
123、 brings together information on the trade and climate interlinkages at the country level to identify(a)key vulnerabilities in trade to rising temperatures,changing precipitation,and more frequent extreme weather events;(b)areas where trade can support mitigation and adaptation to a changing climate
124、as well as emerging constraints;(c)regulatory gaps in the climate and trade policy environment;and(d)recommendations of climate-relevant trade policy options.xixAbbreviationsACCTS Agreement on Climate Change,Trade,and Sustainability AfCFTA African Continental Free Trade Area AGOA African Growth and
125、Opportunity ActAMIS Agricultural Market Information SystemAPEC Asia-Pacific Economic CooperationARIO adaptive regional input-output CAFTA Central America Free Trade Agreement CBAM Carbon Border Adjustment Mechanism CGE computable general equilibriumCO2 carbon dioxideCORSIA Carbon Offsetting and Redu
126、ction Scheme for International Aviation CPC Central Product ClassificationEBA Everything But ArmsEC European CommissionEEA European Economic Area EGA Environmental Goods AgreementEKC Environmental Kuznets CurveEPP environmentally preferable product ETS Emissions Trading SystemEU European UnionGAINS
127、Greenhouse GasAir Pollution Interactions and Synergies(model)GATS General Agreement on Trade in ServicesGATT General Agreement on Tariffs and TradeGDP gross domestic productGRID green,resilient,and inclusive developmentGSP Generalized System of PreferencesGTAP Global Trade Analysis Project GVA gross
128、 value addedICAO International Civil Aviation Organization IFPRI International Food Policy Research Institute IMO International Maritime Organization IO input-outputIPCC Intergovernmental Panel on Climate ChangeABBrEVIAtIonSxxISO International Organization for Standardization LULUCF land use,land-us
129、e change,and forestry MRIO multiregional input-output NDC nationally determined contributionND-GAIN University of Notre Dame Global Adaptation InitiativeOECD Organisation for Economic Co-operation and DevelopmentPAS Publicly Available Specification PPP purchasing power parityR&D research and develop
130、mentSBTi Science Based Target InitiativeUNCTAD United Nations Conference on Trade and DevelopmentUNEP United Nations Environment ProgrammeW/120 Sectoral Classification ListWTO World Trade OrganizationAll dollar amounts are US dollars unless otherwise indicated.11IntroductionClimate change is increas
131、ingly at the forefront of domestic and international policy priorities,and solutions are urgently needed.Trade plays an important role in the emission of greenhouse gases that exacerbate climate change through its effects on the location and scale of production,consumption decisions,emissions from t
132、he interna-tional transporting of goods and services,and the transfer of technologies that may lead to lower emissions in production.Most recent estimates show that around a quar-ter of all global emissions are linked to international trade flows.While attention is currently focused on reducing emis
133、sions,it is increasingly recognized that the climate is already changing and that solutions to adapt to rising temperatures and more extreme weather events are urgently needed.According to the World Meteorological Organization(WMO),the summer of 2021 has seen intense and unprecedented heat waves,esp
134、ecially in the Northern Hemisphere.1 Additionally,the WMO reports that from 1970 to 2019,weather,climate and water hazards accounted for 50 percent of all disasters,45 percent of all reported deaths and 74 percent of all reported economic losses,with 91 percent of the deaths occurring in developing
135、countries(WMO 2021b).Moreover,several climate economists have made projections and stressed the urgency of acting now,insisting that policy makers act in the coming decades,as these years represent a window of opportunity to develop smart and forward-looking adaptation policies.2 The poorest countri
136、es have not traditionally featured in the top list of carbon dioxide(CO2)emitters,but they will face,or are already facing,the most adverse consequences,and these consequences will impede their growth and develop-ment.China,the European Union,India,Japan,the Russian Federation,and the United States
137、accounted for about 70 percent of global emissions in 2019,but low-and middle-income nations are especially vulnerable and on the receiving end of cli-matic distortions.From cross-country analysis,Dasgupta et al.(2011)find a significant increase in the exposure of these countries to climate-induced
138、changes in sea-level rise and storm surges.Malawi annually lost up to 1.7 percent of its gross domestic product(GDP)between 2005 and 2010 owing to extreme climate events(Pauw,Thurlow,and van Seventer 2010),and up to 12 percent of the population in Lilongwe District could THE TRADE AND CLIMATE CHANGE
139、 NEXUS2be vulnerable to food insecurity by the end of the century(Stevens and Madani 2016).In Pakistan,a 1C increase in temperature is estimated to lead to a substantial reduc-tion in net farm revenue each year(Shakoor et al.2011).The effects of climate change are not always negative,but governments
140、 need to ready themselves for the incoming adjustments and figure out how best to adapt.The main changes in climate will take the form of rising temperatures,changing patterns of precipitation,more frequent river floods,sea-level rise,melting ice caps,and other extreme weather conditionsall having a
141、 direct impact on how and what the world trades:how trade will be affectedthat is,over land,by plane,or by shipand what trade will be affected,particularly in response to changing comparative advantages and patterns of production.The consensus among climate change analysts is that rising temperature
142、s will likely have a positive impact in colder areas,by boosting agricultural productivity,3 but will have a negative impact in hotter areas,especially in the tropics.A few studies have estimated positive changes,particularly in terms of transportation routes and transportation infrastructure(Heinin
143、en,Exner-Pirot,and Plouffe 2015).Arctic sea ice is already melting and opening new shipping routes,allowing ships with light icebreakers to navigate the Arctic Ocean more easily(Shiryaevskaya,Lombrana,and Tanas 2020).Within countries,the impacts of rising temperature and changes in rainfall patterns
144、 may be quite localized.For example,in Tanzania,while agricultural yields may rise in certain districts,they are expected to fall in others.Thus,impacts could differ across households both by region and by income category(Arndt et al.2012).Understanding these changes would enable governments to desi
145、gn appropriate climate change adaptation policies.As the private sector will be at the forefront of adaptation within the policy frame-work to be defined by governments,it needs to be engaged in policy discussions from the outset.Most private sector actors in the poorest countries tend to view clima
146、te change as an“environmental issue”rather than as a business issue with significant implications for them.Consequently,much of the private sector underrates the degree of climate risks(Goldstein et al.2018).Any messaging needs to take this misperception into account,stressing the dire economic cons
147、equences of climate change,particularly for production and supply chains.In this regard,early engagement is critical.Governance mechanisms would be better off taking the form of public-private dia-logues with civil society such that climate change adaptation becomes an integral part of decision-maki
148、ng at all levels of society(Fayolle et al.2019).Therefore,it will be important to assess the degree of climate risks along the production and supply chains of private sector investments that are highly vulnerable to climate change.Country-specific interventions regarding trade liberalization would b
149、e better informed if they were based on an in-depth analysis of the nexus between international trade and climate change.For example,any trade-related interventions targeted at boosting agricultural productivity and consequently increasing farmers incomes would be remiss to ignore the criticality of
150、 drought-resilience strategies(Alfani et al.2019).Additionally,Nhemachena and Hassan(2007),in assessing farmers adaptation strategies for climate change in Southern Africa,find that farmers access to credit and extension services as well as climate change awareness are important determinants of farm
151、-level adaptation.Moreover,Ouraich et al.(2019),in analyzing Morocco and Turkey,conclude that the greater the trade liberalization,the higher the gains in global welfare,although these gains may not be large enough to offset the negative impacts on agricultural productivity globally.Clearly,any miti
152、gation or adaptation strategy needs to take into account country-specific development needs as well as the prevailing INTRODUCTION3institutional and technical capacity to address climate change.But policy makers also need to be aware of how climate change will affect other countries in terms of comp
153、eti-tiveness and comparative advantage.Good governance and appropriately designed policies today will be critical to realizing the benefits of trade while mitigating climate change,especially for low-and middle-income countries tomorrow.Emerson et al.(2011),in examining the nuances between trade and
154、 the environment,find that higher trade flows are correlated posi-tively with good environmental practices and that good,data-driven decision-making will be fundamental to overcoming the existing challenges.The World Banks flagship report on managing the impacts of climate change on poverty suggests
155、 that appropri-ate,climate-informed policies today will determine future impacts on poverty(Hallegatte et al.2016).Governments of low-and middle-income countries often pri-oritize economic growth and poverty reduction.In view of this,when interacting with the Banks client governments,addressing clim
156、ate change should be considered a necessary conduit for catalyzing sustainable trade growth.Trade in low-and middle-income countries will be affected by policy measures and private sector actions that are introduced to mitigate carbon emissions in other countries.Many countries are implementing poli
157、cies to achieve their nationally defined contributions under the Paris Agreement,while being encouraged to set higher goals given the increasing evidence of the extent to which the planet is warming.Many of these policies,such as putting a price on the use of carbon through emissions-trading program
158、s,will affect the structure of demand away from carbon-intensive goods and indirectly affect trade.More direct impacts will come if countries impose border adjustment programs to ensure that imports are taxed equally on their carbon content.Firms,too,are assessing their carbon footprint and seeking
159、ways to reduce the emissions associated with them and to communicate their efforts to the wider society.Firms in low-and middle-income countries that supply inputs to global value chains may find that their buyers are placing more emphasis on the ability to track and reduce carbon emissions from the
160、ir specific activities.Hence,trade is a key element in discussions about climate change,touching on emissions,mitigation,and adaptation.Figure 1.1 presents an overview of the types of trade and environmental or climate policies addressed in this report.It shows the importance of creating policies th
161、at consider both trade and climate change issues.The dialogue underpinning these policies requires a strong analytical base that,while recognizing emissions related to trade and legitimate concerns over carbon leak-age,4 does not resort to populist views that treat trade in generic terms as“simply b
162、ad for climate change.”In particular,these discussions need to recognize the gains from trade,how these gains can improve the ability of countries to invest in mitiga-tion,and the instrumental role of trade in combating and adapting to climate change.While there are notable cases where trade has exa
163、cerbated environmental out-comes in countries with weak governance structures,there are also cases,such as Costa Rica,where trade liberalization has accompanied an improving environment.This report shows that low-and middle-income countries are at the heart of the nexus between trade and climate cha
164、nge.Trade has been a phenomenal driver of pov-erty reduction over the past 30 years,and poverty reduction will remain the dominant development objective for many countries in the coming decades.But the changing climate and the policy responses being adopted to address it mean that current growth pat
165、hs are not sustainable.Opportunities exist to move to a green,resilient,and inclu-sive development path,and trade will play a key role for many countries in this THE TRADE AND CLIMATE CHANGE NEXUS4transition.Indeed,there are good reasons to believe that greening trade will contribute more to better
166、growth,poverty reduction,and human development outcomes than current development trajectories.The report is organized as follows.Chapter 2 explains the rationale for paying attention to the important role of low-and middle-income countries in mitigating and adapting to climate change.It presents new
167、 analyses pointing to the increasing annual growth rate of emissions in the poorest countries and provides solutions that center on trade policy.Noting the importance of agriculture for low-and middle-income coun-tries,this chapter also examines emissions related to land-use change and options for s
168、ustainable agricultural land management through trade policy.Chapter 3 delves into the evolving comparative advantages and discusses the impacts of extreme weather events.It uses a stylized model to illustrate the importance of refraining from the use of trade restrictions during climate disasters t
169、hat are coupled with other global disasters,such as the COVID-19 pandemic.Chapter 4 presents the necessity of adaptation poli-cies and the role of trade policy in facilitating the exchange of green goods and services and in promoting access to low-carbon technologies.It also discusses the implicatio
170、ns of adaptation for trade.Chapter 5 examines the various types of environmental poli-cies(at the government and firm levels)and their intersection with trade,especially regarding their effects on exports from the poorest countries.It also discusses the Rising average temperatures Increasing sea lev
171、els Changes in rainfall patterns Permafrost collapse Increase in extreme weather eventsClimate Change Switch to clean energy,thus efficiencies Emission capture and storage Afforestation Trade Switch to green production andconsumption by liberalizingmeasures to facilitate trade inenvironmental goods
172、andservices Production and consumption Movement of goods,services,people,and capitalMitigationMitigation Environmental border taxadjustments Fossil fuel subsidy reforms Renewable energy trade Technology transferIntersectionof Climate andTrade PolicyAdaptationImpactsImpactsAdaptationTrade Policies Ta
173、riffs and nontariff barriers Services regulatory restrictions Standards and certification Green government procurement Migration New trade routes New types oftrade jobs underharsh climate Direct emissions Deforestation andland-use change:emissions andsinks Land and waterpollution Comparativeadvantag
174、es andproductivity Disruption of valuechains Degrading oftrade-relatedinfrastructure Climate-smartagriculturepractices Change instructure andlocation ofproduction Climate Policies International,regional,andnational climate regulations,for example Emission targets Food waste preventionSource:World Ba
175、nk.FIGURE 1.1 links between Climate Change and tradeINTRODUCTION5necessity of greening transportation,particularly for exports from poor countries,which are mostly agricultural.Finally,chapter 6 highlights some of the issues raised in applying the climate and trade policy diagnostic framework for Et
176、hiopia and Vietnam.This report offers critical insights into the emerging types of climate-related issues and the corresponding trade policy options needed to present solutions.In doing so,it supports the World Bank Climate Action Plan(202125)and regional climate action plans.It is hoped that these
177、findings will contribute to the dialogue between the World Bank and its client countries on trade and climate change issues.Notes1.For more details,see WMO(2021a),which adds that 2020 was one of the three warmest years on record.Further,June 2021 was the fifth-warmest Juneand the warmest for Earths
178、land areassince global record-keeping began in 1880,with temperatures 0.88C(1.58F)above the 20th-century average,according to National Oceanic and Atmospheric Administrations National Centers for Environmental Information.2.For example,see Arndt et al.(2014)for their evaluation of the implications o
179、f climate change for growth and development in Malawi.3.However,the positive impact on agricultural productivity could be offset by excessive rainfall or the emergence of pests.4.Carbon leakage occurs when a mitigation policy in one jurisdiction leads not only to lower emissions in that jurisdiction
180、 but also to higher emissions in other,less climate-friendly juris-dictions,as firms shift their production to areas with less-stringent climate regulations.ReferencesAlfani,Federica,Aslihan Arslan,Nancy McCarthy,Romina Cavatassi,and Nicholas Sitko.2019.“Climate-Change Vulnerability in Rural Zambia:
181、The Impact of an El Nio-Induced Shock on Income and Productivity.”FAO Agricultural Development Economics Working Paper 19-02,Food and Agriculture Organization,Rome.Arndt,Channing,William Farmer,Kenneth Strzepek,and James Thurlow.2012.“Climate Change,Agriculture,and Food Security in Tanzania.”Policy
182、Research Working Paper 6188,World Bank,Washington,DC.Arndt,Channing,Adam Schlosser,Kenneth Strzepek,and James Thurlow.2014.“Climate Change and Economic Growth Prospects for Malawi:An Uncertainty Approach.”Journal of African Economies 23(Suppl.2):ii83ii107.http:/jae.oxfordjournals.org/content/23/supp
183、l_2/ii83.full.Dasgupta,Susmita,Benoit Laplante,Siobhan Murray,and David Wheeler.2011.“Exposure of Developing Countries to Sea-Level Rise and Storm Surges.”Climatic Change 106(4):56779.Emerson,John W.,Daniel C.Hillhouse,Tanja Srebotnjak,and Diana Connett.2011.“Exploring Trade and the Environment:An E
184、mpirical Examination of Trade Openness and National Environmental Performance.”Yale Center for Environmental Law and Policy,Yale University,New Haven,CT.https:/envirocenter.yale.edu/sites/default/files/files/exploring_trade _and_the_environment.pdf.Fayolle,Virginie,Caroline Fouvet,Vidya Soundarajan,
185、Vandana Nath,Sunil Acharya,Naman Gupta,and Luca Petrarulo.2019.“Engaging the Private Sector in Financing Adaptation to Climate Change:Learning from Practice.”Action on Climate Today Learning Paper,Oxford Policy Management,Oxford,February 2019.http:/ TRADE AND CLIMATE CHANGE NEXUS6Goldstein,Allie,Wil
186、l R.Turner,Jillian Gladstone,and David Hole.2018.“The Private Sectors Climate Change Risk and Adaptation Blind Spots.”Nature Climate Change 9(1):1825.Hallegatte,Stphane,Mook Bangalore,Laura Bonzanigo,Marianne Fay,Tamaro Kane,Ulf Narloch,Julie Rozenberg,David Treguer,and Adrien Vogt-Schilb.2016.Shock
187、 Waves:Managing the Impacts of Climate Change on Poverty.Climate Change and Development.Washington,DC:World Bank.Heininen,Lassi,Heather Exner-Pirot,and Jol Plouffe,eds.2015.Redefining Arctic Security:Artic Yearbook 2015.Akureyi:Northern Research Forum.Nhemachena,Charles,and Rashid Hassan.2007.“Micro
188、-Level Analysis of Farmers Adaptation to Climate Change in Southern Africa.”IFPRI Discussion Paper,International Food Policy Research Institute,Washington,DC.Ouraich,Ismail,Hasan Dudu,Wallace E.Tyner,and Erol H.Cakmak.2019.“Agriculture,Trade,and Climate Change Adaptation:A Global CGE Analysis for Mo
189、rocco and Turkey.”Journal of North African Studies 24(6):96191.doi:10.1080/13629387.2018.1463847.Pauw,Karl,James Thurlow,and Dirk van Seventer.2010.“Drought and Floods in Malawi:Assessing the Economy-wide Effects.”IFPRI Discussion Paper 00962,International Food Policy Research Institute,Washington,D
190、C.https:/ _ifpridp009621.pdf.Shakoor,Usman,Abdul Saboor,Ikram Ali,and A.Q.Mohsin.2011.“Impact of Climate Change on Agriculture:Empirical Evidence from the Arid Region.”Pakistan Journal of Agricultural Sciences 48(4):32733.https:/.pk/papers/1966.pdf.Shiryaevskaya,Ana,Laura Millan Lombrana,and Olga Ta
191、nas.2020.“Longest Arctic Shipping Season Tops Off a Year of Climate Disasters.”Bloomberg,December 13.https:/ Kaveh Madani.2016.“Future Climate Impacts on Maize Farming and Food Security in Malawi.”Scientific Reports 6:36241.doi:10.1038/srep36241.WMO(World Meteorological Organization).2021a.“2020 Was
192、 One of Three Warmest Years on Record.”Press release,January 15.https:/public.wmo.int/en/media/press-release/2020-was-one-of-three-warmest-years-record.WMO(World Meteorological Organization).2021b.WMO Atlas of Mortality and Economic Losses from Weather,Climate and Water Extremes(19702019).WMO-No.126
193、7.Geneva:WMO.https:/library.wmo.int/doc_num.php?explnum_id=10769.72Low-and Middle-Income Countries,Carbon Emissions,and TradeTrade,global value chains,and emissionsThe suggestion that increased trade automatically increases greenhouse gas emissions is popular but not squarely true,as increased trade
194、 over time in the right types of goods and services,along with complementary regulations,can benefit the environment.The Environmental Kuznets Curve(EKC)captures this relationship perfectly.More spe-cifically,the EKC hypothesis is often used to explain the phenomenon that environ-mental degradation
195、occurs with increasing economic growth until the country attains middle-income status,after which the environmental impacts start to decline.This relationship often happens through three independent effects on green-house gas emissionsscale,composition,and technique.The World Trade Organization(WTO)
196、defines the“scale”effect as the change in the amount of emis-sions attributed to the increased output or economic activity resulting from freer trade;the“composition”effect refers to the change in the mix of a countrys production,in the wake of trade liberalization,toward those products where it has
197、 a comparative advantage;and the“technique”effect alludes to the changes(mainly improvements)in energy efficiency derived from opening trade,which reduces the amount of green-house gas emissions from the production of goods and services.Notably,environmental economists have debated the validity of t
198、he EKC hypoth-esis,with some doubting the U-curve relationship between economic growth and environmental degradation(Das Neves Almeida et al.2017;zokcu and zdemir 2017).However,other researchers have reinforced this theory(Hanif et al.2019;Ulucak and Bilgili 2018,among others).In fact,in examining t
199、he relationship between economic development and environmental degradation based on the EKC,Maneejuk et al.(2020)find that the EKC hypothesis is valid in 3 out of the 8 international eco-nomic communities covering 44 countries across the worldnamely,the European Union(EU),the G-7,and the Organisatio
200、n for Economic Co-operation and Development(OECD).THE TRADE AND CLIMATE CHANGE NEXUS8Although the growth of trade and integration into global value chains has slowed since the financial crisis of 2008,countries that are deeply plugged into global value chains experience greater economic benefits;glo
201、bal shocks threaten this kind of integration.Over the past two decades,structural changes occurring in the global economy have reshaped global production and international trade,lead-ing to the rise of global value chains.An estimated 70 percent of international trade flows are plugged into global v
202、alue chains today.Trade has grown at a slower rate,and the growth of global value chains has slowed as well,mainly due to increasing nationalistic tendencies,an uptake in digitalization,and country-specific concerns about sustainability(Zhan,Casella,and Bolwijn 2020).Moreover,the past two years have
203、 witnessed unprecedented global shocks from deepening trade tensions related to the COVID-19 pandemic.These shocks have disrupted global value chains and led to calls for the public and private sectors to rethink their policies.The pandemic has revealed the extent to which supply and value chains ca
204、n transmit a crisis across countries.While world trade shows signs of rebounding,recovery is still uncertain and could be disrupted by ongoing pandemic effects,so it is important to make these global value chains sustainable and ensure that growth is resilient to external shocks.In addition,the pand
205、emic has led to a shortage of production factors such as labor and capital,slowing down production in large,coronavirus-affected economies such as China,Europe,and the United States,which are at the center of global manufac-turing and trade networks.The slowdown in these countries production inevita
206、bly leads to significant supply-chain interruptions(Lenzen et al.2020),causing world-wide reductions in production and consumption(Cui et al.2020).In addition,cur-rent trade is likely to fall more steeply in sectors characterized by complex value-chain links,particularly in electronics and automotiv
207、e products and in services trade,which have already suffered a 23 percent decline.Given these trends,the WTO estimates a 5.3 percent decline in the volume of world merchandise trade in 2020,followed by an 8.0 percent rise in 2021(WTO 2021).Clearly,if a health disaster can be transmitted along the ch
208、ains,a climate change crisis could follow the same path.Studies have already shown that emissions embodied in production from one coun-try are often transferred to another.Given the transfer of emissions from low-and middle-income to high-income countries along global value chains,it is important to
209、 understand the country-specific territorial emissions embedded in exports.Globally,according to the latest estimates,carbon dioxide(CO2)emissions associated with the production and distribution of traded goods and services(8 billion tons)constitute a quarter of total global emissions(32 billion ton
210、s)(Banque de France 2020).Additionally,high-income nations collec-tively have higher consumption-based emissions(the United States imports 15 percent of the 8 billion tons for consumption)than territory-based emissions,meaning that they are net importers of emissions and thus benefit from carbon-int
211、ensive production abroad(Arto and Dietzenbacher 2014).These effects are growing over time,and the net transfer of emissions(production minus consumption)via international trade from high-income to low-and middle-income countries increased by a factor of four between 1990 and the 2008 global financia
212、l crisis,exceeding the emissions reductions obtained within the Kyoto Protocol(Peters et al.2011).Policies aimed at reducing CO2 emissions can increase a countrys participation in global value chains,but the environmental effects of trade will depend on low-And mIddlE-InComE CoUntrIES,CArBon EmISSIo
213、nS,And trAdE9complementary policies and regulations.For example,Wu,Guisheng,and Baogui(2020)find that causality between participation in global value chains and CO2 emis-sions has different aspects at the global and regional levels.At the global level,a feed-back causal relationship exists between p
214、articipation in global value chains and CO2 emissions.Environmental policies aimed at reducing CO2 emissions will boost partici-pation in global value chains,while policies such as trade-related industrial innovation policies will cause environmental degradation.The causality from participation in g
215、lobal value chains to CO2 emissions is unidirectional.Participation in global value chains is raising CO2 emissions in the Asia-Pacific region,indicating that global-value-chain policies could lead to environmental damage.However,in Sub-Saharan Africa,environmental policies are encouraging participa
216、tion in global value chains.Therefore,to promote participation in global value chains and reduce emissions,trade policies should consider technological innovation that reduces traditional energy consumption and increases renewable energy consumption.Environmental effects could arise from a combinati
217、on of real income effects that will increase damages,an efficiency effect that will reduce damages,and leakage or externality effects that may increase or decrease damages.Consequently,understanding the emissions structure of low-and middle-income countries and identifying appropriate policies for i
218、ncreasing their participation in global value chains while simultaneously leading to positive envi-ronmental outcomes are critical.Understanding emissions from the developing worldProfile of the emerging emittersLow-and middle-income countries have been carbonizing increasingly in recent years,colle
219、ctively emerging as the worlds third top emitter of emissions,after China and the United States.These increasingly carbonizing countries are called“emerging emit-ters.”Figure 2.1 compares the percentage changes over 201018 in annual CO2 emis-sions and gross domestic product(GDP)among the 59 emerging
220、 emitters;map 2.1 shows their GDP per capita and annual CO2 emissions growth rate.1 The average annual growth rate of emissions of the 59 emerging emitters was 6.2 percent in 201018much higher than the 2.0 percent worldwide average and higher than the 4.6 percent annual growth rate of these same cou
221、ntries GDP,reflecting the rising carbon-ization of their economies.Located in Africa,Asia,and Latin America,individually these countries emitted between 0.7 million and 542.9 million tons of CO2 in 2018(bounded by Eritrea and Indonesia,respectively).However,taken together,the coun-tries emissions gr
222、ew by 40.7 percent in the period under studyfrom 2.7 gigatons to 3.8 gigatons of CO2.Moreover,the 1.1 gigaton increase in emissions accounts for 38.9 percent of the global increase in emissions over the period.Figure 2.2 compares these same figures with those for China,India,and the United States ov
223、er the period 201018.By comparison,the CO2 emissions of China,the United States,and India amounted to 9.6 gigatons,4.9 gigatons,and 2.3 gigatons,respectively,in 2018.The aggregated GDP of emerging emitters in 2018(in 2010 constant US dollars)amounted to US$8.2 trillion,compared to the 2018 GDP for C
224、hina,India,and the United States of US$10.9 trillion,US$2.8 trillion,and US$17.9 trillion,respectively.The annual growth of CO2 emissions of China,India,and the United States was 2.5 percent,4.9 percent,and 1.0 percent,respectively.The annual THE TRADE AND CLIMATE CHANGE NEXUS10GDP growth rates of t
225、he entire world(average),China,India,and the United States were 3.14 percent,7.5 percent,6.7 percent,and 2.3 percent,respectively.Emerging emitters have significantly lower levels of GDP per capita than the world average as well as higher levels of poverty.While they comprise countries in developmen
226、t categories ranging from the lowest-income countries to economies in transition,in most cases,their GDP per capita is substantially lower than the global average(53 countries have GDP per capita below US$11,000 in constant 2010 US dollars).In 2017,698 million people in these countries were living i
227、n absolute pov-ertythat is,earning less than US$1.90 per day in purchasing power parity(PPP)value.This figure represents 9.3 percent of the global population.Among the 59 emerging emitters,emissions grew faster than GDP in 34 countries(58 percent)and twice as fast as GDP in 12 countries(20 percent).
228、In 25 other countries(42 percent),economic growth outstripped emissions growth,corresponding to decreasing carbon intensity.FIGURE 2.1 Changes in Annual CO2 Emissions and GDP of the 59 Emerging Emitters,20101813921GDP per capita(US$,thousands)CO2 emissions in 2018(million tons)606515CO2 emissions in
229、 2018(million tons)1003005001:12:1Carbonizing1:12:105%10%010%20%30%a06%8%10%2%4%02%10%4%6%8%Annual growth rate of GDP(%)bbBotswanaCambodiaEthiopiaLao PDRMozambiqueMyanmarNepalTajikistanZambiaAlgeriaArmeniaAzerbaijanBangladeshCameroonChileCte dIvoireCongo,Dem.Rep.Egypt,Arab Rep.GhanaHaitiIndonesiaKen
230、yaKyrgyz Rep.MaliMongoliaNicaraguaNigerNigeriaOmanPakistanPeruPhilippinesQatarRep.CongoSaudi ArabiaTurkeyTurkmenistanUgandaUnited Arab EmiratesVietnamEritreaAnnual growth of CO2(%)South SudanSource:Cui et al.2020.low-And mIddlE-InComE CoUntrIES,CArBon EmISSIonS,And trAdE11FIGURE 2.2 Co2 Emissions an
231、d gdP growth of 59 Emerging Emitters,China,India,and the United States,201018Source:Cui et al.2020.Note:CO2=carbon dioxide.59 emerging emittersChinaIndiaUnited States01,0002,0003,0004,0005,0006,0007,0008,0009,00010,00020001620172018a.CO2 emissionsCO2 emissions(million tons)GDP(
232、2010 trillion US$)02E+124E+126E+128E+121E+131.2E+131.4E+131.6E+131.8E+00018b.GDPMAP 2.1 rate of growth of Co2 Emissions,201018,and gdP per CapitaSource:World Bank.Note:CO2=carbon dioxide.IBRD 45515|AUGUST 202No data29.6%28.5%10%2.5%0%5%GDP per capita(thous
233、ands of dollars)Annual growth rate of C02emissions,201018THE TRADE AND CLIMATE CHANGE NEXUS12Drivers of recent emission surgesAcross all 59 emerging emitters,higher GDP per capita and population growth have been the most important drivers of emissions growth.Figure 2.3 shows the two main drivers and
234、 two main inhibitors of the rise in emissions between 2010 and 2018 for 20 countries in Africa,Asia,and Latin America.An increase in GDP per capita was the foremost driver of emissions increases in 44 percent of the countries,including Colombia,Ethiopia,and Vietnam.In the next 29 percent of the coun
235、tries,including Lebanon and Uganda,population growth was the most significant driver.Following closely behind these socioeconomic factors were increases in the use of a particular fossil fuel,with increases in the use of either oil or coal as the most influential factors of emissions increases in 14
236、 percent of the 59 emerging emitters,including Guatemala,Haiti,the Kyrgyz Republic,Myanmar,and Sudan.Energy intensity was one of the top two drivers of emissions growth in 12 percent of the countries,including Algeria and the Lao Peoples Democratic Republic.A decline in energy intensity was the most
237、 critical driver of emissions reductions.A rise in the CO2 emissions intensity of energy use contributed to emissions growth the most in 5 percent of the countries,including Botswana,Nepal,and Nicaragua.By comparison,a decline in energy intensity was the most influential driver of emissions reductio
238、n in a third(32 percent)of the countries,including Ethiopia,Mongolia,Uganda,and United Arab Emirates,followed by a fall in the CO2 emissions intensity of energy use in 20 percent of the countries,including Haiti,Peru,and Sudan,a smaller share of industrial value added in 15 percent of the countries,
239、especially in Latin America and in some Asian countries,and a declining share of oil use in 15 percent of the countries,including Botswana and Nepal.Implications for global climate efforts and the role of trade policyEmerging emitters collectively have contributed extremely little to the overall sto
240、ck of CO2 in the atmosphere,but they have come to the forefront of the growth of CO2 emis-sions over the past decade and will likely increasingly do so.These emissions will be influenced by strong and sustained economic growth,which is crucial for poverty reduction,and by population growth.Moreover,
241、heavy consumption of carbon energy will continue to drive significant emissions growth from these countries.The COVID-19 pandemic has pushed more people into poverty,and the current depen-dence on traditional fossil fuels is likely to result in sizable carbon emissions.While COVID-related shutdowns
242、are expected to reduce emissions in the next few years,countries will,regardless of the severity of the lockdowns,quickly return to a trajectory whereby emissions by 2040 will substantially exceed those in published scenarios that limit global warming to 2C.As such,there is urgency to revive growth
243、quickly using tools that facilitate sustainable growth.These countries are confronting the massive challenges of achieving inclusive economic development,contributing to climate change mitigation,and adapting to rising global temperatures,changing precipitation patterns,and more extreme weather even
244、ts.Indeed,these emerging emitters are the most vulnerable and least prepared to adapt to climate change.What is more,climate change will undermine their ability to reduce poverty because it will constrain their productivity growth,especially in low-And mIddlE-InComE CoUntrIES,CArBon EmISSIonS,And tr
245、AdE13FIGURE 2.3 Countries with Surging Emissions and their drivers,by region,201018Source:Cui et al.2020.Note:Emissions are expressed in millions of tons.The waterfalls show the drivers of emissions growth from 2010 to 2018,including factors increasing consumption(population,GDP per capita),factors
246、affecting economic structure(industrial structure,including share of value added of primary,secondary,and tertiary industry and GDP energy intensity),and factors affecting carbon intensity(energy structure,including share of consumption of coal,oil,natural gas,and other fuels and CO2 emission intens
247、ity of energy).The total increment for each country is reflected at the base of the graph,e.g.,Ugandas emissions grew by 55.3 percent,mainly driven by population growth,between 2010 and 2018.CO2=carbon dioxide.20102018Ugandaa.AfricaPerub.Latin America and CaribbeanMongoliac.South and East AsiaLebano
248、nd.West and Central Asia20102018Time lag between 2010 and 2018Percentage Increment of Emission Growth2001820102018EthiopiaColombiaVietnamSaudi Arabia2000102018SudanHaitiMyanmarUnited Arab Emirates2000102018AlgeriaGuatemalaKyrgyzstan20
249、01820102018NicaraguaBotswanaNepalAzerbaijan2001820102018+55.3%+123.2%+25.9%+44.5%+15.5%+20.5%+15.0%+37.3%+62.9%+146.7%+43.5%+78.8%+290.9%+171.4%+38.3%+17.6%+24.5%+122.1%+31.5%34.3%23.8%2.0%21.4%18.0%49.9%19.3%10.7%Industry30.8%PopulationOil shareEnergy intensity10.6%Population26.1%6.9%GDP
250、 per capita8.2%18.4%Population37.8%Population56.0%GDP per capitaEnergy intensity43.9%25.9%GDP per capitaEnergy intensity21.6%PopulationPopulation22.3%PopulationPopulationPopulationCO2 intensityCO2 intensityCO2 intensityCO2 intensityGDP per capitaGDP per capitaGDP per capitaGDP per capitaAgricultureC
251、oal share10.4%GDP per capitaCoal share8.6%Gas share10.5%Gas share 2.7%Gas shareIndustryGDP per capitaGDP per capitaGDP per capitaOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherOtherGas share 2.2%OtherOtherCoal shareOil shareOil shareOil share8.3%13.4%Coal shareCoal s
252、hareServicesOil shareServicesServicesIndustryGDP per capita7.3%IndustryIndustryIndustryIndustry9.9%IndustryIndustry12.8%IndustryEnergy intensityEnergy intensity10.2%Energy intensity11.6%Energy intensityEnergy intensityEnergy intensity24.7%Oil shareEnergy intensityEnergy intensityEnergy intensityCO2
253、intensity20.7%8.2%77.6%53.4%8.4%98.5%10.5%18.2%72.4%37.9%17.9%21.3%24.6%54.8%22.1%28.2%0.8%18.0%6.1%10.6%7.3%9.9%26.0%53.4%14.0%95.1%29.0%23.5%53.3%34.3%15.2%7.5%12.4%87.7%20102018+637.1%Lao PDRGDP per capita22.6%11.2%7.5%14.3%PopulationOil shareEnergyintensity155.0%272.2%55.3%Industry 3.0%GDP per c
254、apitaOil share62.3%138.7%Coal shareGDP percapitaOtherCO2 intensityTHE TRADE AND CLIMATE CHANGE NEXUS14agriculture,and will require scarce resources to be redirected toward adaptation.Costinot,Donaldson,and Smith(2016),for example,compute that the impact of cli-mate change on agricultural productivit
255、y alone will result in a decline in welfare equiv-alent to almost 4 percent of GDP in Uganda and more than 6.5 percent of GDP in Vietnam.This scenario assumes that the patterns of trade and production will adjust to dampen the impact.If adjustment is constrained,losses could amount to more than 7.5
256、percent of GDP in Uganda and more than 11 percent in Vietnam.In order to limit global warming to 2C above preindustrial levels,the world will have to reduce emissions by 25 percent with respect to 2018 levelsan uphill task that requires unprecedented efforts from all countries.For this reason,adapta
257、tion will be critical.The emerging emitters are highly diverse in the absolute level of national CO2 emissions,the relationship between GDP growth and increases in CO2 emissions,the drivers of emissions growth,the response to the COVID pandemic,and the impact of alternative post-COVID pathways.Many
258、of these countries are making commendable strides in enhancing the ambition of their nationally determined contributions under the Paris Agreement.However,in the post-COVID era,the outcomes from different pathways could lead to a difference of more than 1 gigaton in emissions from these countries.As
259、 many of these countries are already feeling the adverse effects of climate change and dealing with changing comparative advantages,adaptation mechanisms need to be at the forefront of the discussions.A global move toward a“low-carbon lifestyle”would entail significant changes in consumption and in
260、how products are made.Low-carbon technologies are crucial to limiting the surge in emissions.The analysis shows that the adoption of low-carbon technologies can considerably influence future reductions in emissionswith early application of carbon capture and storage and renewable energy in the power
261、 sector and with electric vehicles replacing oil-fueled cars,the emerging emitters could reduce emissions by 600 metric tons of CO2 equivalent by 2040.2 However,while the adop-tion of new,low-carbon technologies can help to reduce the emissions of the emerging emitters,new technologies alone will no
262、t enable them to follow a sustainable pathway in line with the international consensus on the limits of global warming.Removing barriers to trade in the products that can support the move to a low-carbon future and facilitating the sharing of knowledge on how to implement the tran-sition can be impo
263、rtant steps to support the efforts of low-and middle-income countries to reduce emissions.The challenge for the global community is to facilitate these economic transformations in ways that support sustained growth and poverty reduction.Doing so requires understanding the climate and development imp
264、acts of the policies(especially trade policies)being put forward as necessary to achieve global warming objectives.These policies include imposing domestic carbon taxes(PMR 2017)and carbon border tax adjustments;3 removing subsidies to fossil fuel produc-tion and consumption;reducing tariffs on trad
265、e in green goods;ensuring consistency between trade taxes on dirty and clean goods;4 and improving access to the technolo-gies,finance,and knowledge necessary to support global adoption of new,low-carbon sources of energy and less energy-intensive production.More generally,simultaneously addressing
266、the challenges of ending extreme pov-erty,achieving inclusive growth throughout the world,and meeting climate goals will require cooperative solutions that consider both the development needs and emission realities of low-and middle-income countries.More specifically,while countries at all income le
267、vels refer to renewable energy,low-and middle-income economies often identify it as a priority.These emerging emitters need support from the global low-And mIddlE-InComE CoUntrIES,CArBon EmISSIonS,And trAdE15community to work toward achieving their commitments,especially in the form of large-scale a
268、nd effective technology transfer,financing,and capacity strengthening.Further analysis can help to identify the coordinated policy measures that will allow countries to achieve their objectives regarding poverty reduction,structural transfor-mation,and adaptation to climate change,while stabilizing
269、their emissions and con-tributing to meeting internationally agreed-on climate targets.Policy makers have paid little attention to trade measures as a tool for environ-mental policy,and this situation needs to change.According to a 2017 study of trade commitments undertaken in response to the Paris
270、Agreement,“The major emitters and net exporters of carbon do not put a strong focus on trade or trade-related mea-sures”(Brandi 2017).However,several trade policies are related to climate,and a few are highlighted in this section,with an emphasis on tariffs,as restructuring tariffs could be the nece
271、ssary first step for most governments in facilitating greener trade.Current tariff structures and nontariff barriers are biased toward dirty industries,thus implicitly subsidizing CO2 emissions.5 Shapiro(2020)finds that in most coun-tries the rates of tariffs and nontariff barriersfor both cooperati
272、ve and noncoopera-tive tariffs and over several yearsare substantially higher on clean than on dirty goods.Tariffs and nontariff barriers differ for clean and dirty industries because indus-tries tend to be well organized,while final consumers generally are not.As a result,countries impose higher ta
273、riffs and nontariff barriers on downstream(clean)goods and lower tariffs and nontariff barriers on upstream(dirty)goods.In fact,firms often lobby for high protection for their own outputs but low protection for their intermedi-ate inputs.This skewed bias,resulting from trade policy,creates an implic
274、it subsidy for CO2 generation.An industrys“dirtiness”in this analysis is defined by the total amount of CO2 emitted to produce a dollar of output.This implicit subsidy totals US$550 billion to US$800 billion per year,significantly higher than the direct global subsidies for fossil fuel consumption,e
275、stimated at about US$530 billion per year.Leveling the playing field by imposing similar tariffs and nontariff barriers on clean and dirty industries would have significant positive effects.Using a general equi-librium model,Shapiro(2020)postulates that if countries impose similar tariffs and nontar
276、iff barriers on clean and dirty industries,global CO2 emissions would fall,while global real income would remain unchanged or increase slightly.Further,and with significant effects,these changes in global CO2 emissions are of comparable scale to the estimated impacts of some of the worlds largest ac
277、tual or proposed climate change policies.Evidence suggests that cutting tariffs in dirty sectors,without appropriate carbon policies,leads to higher emissions and more environmental pollution.If environmen-tal policies do not account for the emissions embodied in imports,global emissions are likely
278、to rise(Kanemoto et al.2014).Islam,Kanemoto,and Managi(2019)find that a reduction in tariff barriers facilitates the relocation of factories to countries with less stringent environmental regulations.The carbon footprint of those emissions from low-and medium-income countries to high-income countrie
279、s has grown rapidly over the past 30 years through international trade.However,almost all countries maintain their tariff barriers,and these tariffs limit the potential to increase CO2 emission trans-fers.The findings reveal that a 1 percent tariff cut by G-20 countries for mining gas,manufactured m
280、achinery,metal,and other mining imports would result in 2,779 tons,1,747 tons,1,453 tons,and,1,018 tons of CO2 emissions,respectively.Additionally,a tariff cut would increase the embodied CO2 emissions significantly for most of the manufacturing and mining sectors.He and Huang(2020)find that reducin
281、g import THE TRADE AND CLIMATE CHANGE NEXUS16tariffs on final goods and intermediate inputs in the Central America Free Trade Agreement(CAFTA)could reduce firms pollution emissions through both the“tech-nique effect”and the“composition effect.”Thus,it is essential to make full use of both technique
282、and composition effects to reduce emissions by reducing import tariffs in CAFTA.Trade agreements have traditionally described environmental regulations,but rarely address restructuring tariffs to promote cleaner goods or removing nontariff barriers to facilitate greener trade.The World Banks Deep Tr
283、ade Agreement data-base 2.0 reveals that of all the trade agreements globally,the EUs trade agreements have attempted to include environmental provisions in the most significant way,cov-ering issues of institutions,cooperation,and welfare and including an enforcement mechanism.However,Shapiro(2020)f
284、inds that these agreements typically describe domestic environmental regulations or monitoring investments,but not patterns of tariffs and nontariff barriers.Many of these investments merely seek to prevent the relocation of dirty industries by barring the use of weak domestic environmental policies
285、 to lure dirty production across borders.Governments need to delineate the types of trade policies that affect the environment so that appropriate amendments can be made.A tariff restructuring biased toward lower duties for high-technology green sec-tors would have significant payoffs for low-and mi
286、ddle-income countries,both in terms of emissions and in terms of poverty rates(box 2.1).Taking the example of Bangladesh,a green-trade scenario could remove 45 metric tons of CO2 equivalent BOX 2.1 modeling Postpandemic Impacts under different trade ScenariosThis study defines three scenarios for tr
287、ade patterns in the postpandemic era,based on the default COVID-19 scenario that the pandemic will last for three years:Deglobalization.Import tariff rates on all commodities(except for agricultural products)between all countries are increased by 30 percent.In this scenario,the competitiveness of do
288、mestic products increases,while the competitiveness of imported products decreases.The supply chain becomes more dependent on domestic products.Free trade.Import tariff rates on all commodities(except for agricultural products)between all countries are set to 0.In this scenario,all countries enjoy f
289、ree trade.Green trade.Import tariff rates on products from carbon-intensive commodities(that is,light and heavy manufacturing,transportation equipment industries)between all countries are increased by 30 percent,and import tariff rates on products from high-tech industries between all countries are
290、set to 0.Impact of trade scenarios on emissionsThe emissions trajectory and changes in energy structure under different trade patterns were estimated using a computable general equilibrium model that assesses carbon dioxide(CO2)emissions under different trade scenarios and energy mix projections fro
291、m the Greenhouse GasAir Pollution Interactions and Synergies(GAINS)model.In selected low-income countries,results show that,although fossil fuels will still constitute the highest share of the 2040 energy mix,promoting greener pathways would significantly offset the rapid increment in emissions,whic
292、h is inevitably brought about by a booming economy.Specifically,a green-trade scenario in renewable energies such as wind and solar would contribute significantly to a countrys emissions removal effort.In all countries,the reduction in emissions is significantly higher in the green-trade scenario th
293、an in the business-as-usual trajectory with no COVID-19.(Box continues next page)Low-and MiddLe-incoMe countries,carbon eMissions,and trade17BOX 2.1 Modeling Postpandemic impacts under different trade scenarios(Continued)Figure B2.1.1 shows the results of five scenarios(with COVID,no COVID,green tra
294、de,free trade,and deglobalization)for the evolution of CO2 emissions.Numbers marked on the left side of each line chart represent the maximum and minimum CO2 emissions of the five scenarios in 2040,respectively.To note,the International Energy Agency excludes biomass from its calculations of CO2 emi
295、ssions.Therefore,biomass energy is included in the description of the current state of national energy structure but is neglected in the simulation of future emission and energy structure scenarios.Impact of trade scenarios on poverty alleviation in low-income countriesLinking a global economic mode
296、l(Global Trade Analysis Project GTAP model)to a micro household survey data set makes it possible to assess the impact of COVID-19 and the potential impact of deglobalization in the postpandemic era on economic growth and achievement of the United Nations Sustainable Development Goal of eradicating
297、extreme poverty.Results show that the capacity to alleviate poverty and ability to adapt to the impact of the COVID-19 crisis varies greatly among regions,especially for low-income countries.South American countries have a low poverty rate and a small population base;as such,the rate of decline in t
298、he poverty rate is relatively small.Specifically,when compared to deglobalization scenarios,free trade also contributes to poverty reduction,especially for people who are struggling under extreme poverty(figure B2.1.2).The panels show the poverty rate at different poverty lines for the five scenario
299、s.Projections are available for 85 countries.FIGURE B2.1.1 co2 emissions in selected countries in the Postpandemic era under different trade Pattern scenarios,201940Sources:AghaKouchak et al.2020;Hu et al.2021.Note:COVID=with COVID-19 scenario;Deglobal=deglobalization scenario;Free trade=free-trade
300、scenario;Green trade=green-trade scenario;SSP2=business-as-usual scenario.COVIDSSP2Green tradeFree tradeDeglobal4805806807808809802002520272029203372039200252027202920337203920025202720292033720392002520272029203
301、372039a.IndonesiaCO2 emissions(million tons)80 130 180 230 280310c.BangladeshCO2 emissions(million tons)230 280 330 380 430 480 530b.VietnamCO2 emissions(million tons)30 35 40 45 50 55 60 65 70 75d.PeruCO2 emissions(million tons)(Box continues next page)THE TRADE AND CLIMATE CHANGE NEXUS18(accumulat
302、ed value)of emissions by 2040,equal to 53 percent of national emissions in 2019.Notably,a free-trade scenario without a positive bias toward greener high-technology goods would increase emissions by 6.86 metric tons of CO2 equivalent.Facilitating trade for these types of products is critical.In addi
303、tion,a deglobalization reaction to the COVID-19 pandemic would exacerbate the already worsening poverty BOX 2.1 modeling Postpandemic Impacts under different trade Scenarios(Continued)Taking Ethiopia as an example,18.3 percent(US$1.90 purchasing power parity PPP per day),37.6 percent(US$1.90$3.20 PP
304、P per day),and 32.6 percent(US$3.20US$5.50 PPP per day)of the total population were living below these poverty lines in 2010.Due to the pandemics impact,the extreme poverty rate in Ethiopia will remain at 18.3 percent in 2021 in a default scenario but will decline to 7.9 percent in 2024.FIGURE B2.1.
305、2 Poverty rate in Selected Countries in the Postpandemic Era under different trade Pattern Scenarios,202450Sources:AghaKouchak et al.2020;Hu et al.2021.Note:COVID=with COVID-19 scenario;Deglobal=deglobalization scenario;Free trade=free-trade scenario;Green trade=green-trade scenario;SSP2=business-as
306、-usual scenario.007080Poverty rate(%)Yearb.Ethiopia02024202620282030203220342036203820402042204420462048205020242026202820302032203420362038204020422044204620482050202420262028203020322034203620382040204220442046204820502024202620282030203220342036203820402042204420462048205007
307、0Poverty rate(%)Yeara.Pakistan0070Poverty rate(%)Yearc.Uganda007080Poverty rate(%)Yeard.Zambia$5.5$3.2$1.9DeglobalCOVIDSSP2Free tradeGreen tradelow-And mIddlE-InComE CoUntrIES,CArBon EmISSIonS,And trAdE19levels,increasing globally to 17 percent(US$1.90US$3.20 PPP per day)by 204
308、0 from only 9.2 percent in 2017.The reduction in poverty is most significant under a free-trade scenariodropping to 2 percent(US$3.20US$5.50 PPP per day)(Hu et al.2021).Examining agriculture as one of the main trade-related sectors affecting emissions from the developing world The export structure o
309、f most low-and middle-income countries is based on agricul-ture,signaling agricultures critical importance for jobs,income,poverty reduction,and government revenue.However,the Intergovernmental Panel on Climate Change(IPCC)estimates that land-use changefor example,conversion of forest into agricul-t
310、ural landadds a net 1.6 0.8 gigaton of carbon per year to the atmosphere,which is similar to a quarter of emissions from fossil fuel combustion and cement production(Watson et al.2000).The expansion of large-scale commercial agriculture is often viewed as the culprit,but the collective emissions fro
311、m subsistence farmers and out-growers6 also contribute significantly.Moreover,while agriculture exacerbates climate change(through deforestation and in other ways),it also suffers from the adverse effects of climate changeamong others,growing water scarcity.This section exam-ines the problem and pro
312、vides suggestions on how trade can help to increase agricul-tural output sustainably while reducing land-use change.Impact of trade on land-use change and emissions,especially in low-income African countriesSince the advent of agriculture,natural forests and habitats have been cleared to engage in c
313、rop and animal production,but these changes in land use are contributing to grow-ing emissions.In more recent periods,clearing for industrial activities has also played a role,but not at commensurate levels.The United Nations Climate Change Secretariat defines land use,land-use change,and forestry(L
314、ULUCF),also referred to as forestry and other land use,as“a greenhouse gas inventory sector that covers emissions and removals of GHGs greenhouse gases resulting from direct human-induced land use such as settlements and commercial uses,land-use change,and forestry activities.”7 The impacts of LULUC
315、F on climate are directchanging the global carbon cycle.LULUCF activities either add CO2 to the atmosphere or remove it,thus bringing about changes in biodiversity and climate patterns.Since international trade involves mainly commodities produced where resources are most abundant,several countries
316、clear forests to enable productive activities des-tined for export.On average,the harvest of one-fifth of global cropland area was des-tined for export in the 2000s,and almost all growth in cropland area was for internationally traded crops(Kastner,Erb,and Haberl 2014).Demand for the final and inter
317、mediate products made with forest-risk commodities is global,but produc-tion and associated land-use change are geographically decoupled from the associated demand(Henders,Persson,and Kastner 2015).Commodities whose production entails deforestation vary between regions and countries;in the case of A
318、frica,they are largely livestock meat and some cereals.Specifically,production of cattle meat contributes just over a quarter,and the remain-der is from the production of a diverse mix of other cereals,roots and tubers,pulses,and other oilseeds(Pendrill et al.2019).In Latin America,the production of
319、 cattle THE TRADE AND CLIMATE CHANGE NEXUS20meat accounts for more than 60 percent of embodied deforestation.In Asia and Pacific,the production of palm oil and forestry products each accounts for a third of embodied deforestation.For example,in Argentina,Brazil,Indonesia,and Malaysia,the production
320、of soybeans and palm oil during the 19902014 period led to a forest loss of more than 60 million hectares.The problem:Increasing deforestation caused by fuel agricultural exports despite suboptimal productivity per acreage Tree cover loss has been significant in Africa,with the remaining primary for
321、est cover mainly in the Democratic Republic of Congo and distributed sparsely in parts of West Africa and East Africa.Between 2001 and 2019,tree cover loss accelerated in Africa.The Democratic Republic of Congo experienced the greatest loss,ranking sixth in the world in terms of forest cover loss,lo
322、sing 14.6 million hectares over the past two decades.The Democratic Republic of Congo is followed by Madagascar(3.89 million hectares)and Mozambique(3.29 million hectares),Cte dIvoire(3.03 million hect-ares),and Tanzania(2.51 million hectares).(The Russian Federation had the highest relative tree co
323、ver loss in the world,equivalent to 64.0 million hectares,which repre-sented 8.4 percent of tree cover in 2000.)Forests present a significant stock of global carbon,accumulated through the growth of trees and increase in soil carbon.Tampering with primary forestsconverting primary to managed forests
324、,illegal log-ging,and unsustainable forest managementresults in greenhouse gas emissions and can have additional physical effects on the regional climate(IPCC 2019).In the past decade,the value of the poorest countries oil and gas exports has almost halved,whereas agriculture and textile manufacturi
325、ng exports have increased gradually(figure 2.4).In 2019 oil and gas extraction exports were US$45.3 billion,down from US$85.1 billion in 2012.Agriculture and textile manufacturing exports FIGURE 2.4 Categories of Exports from the Poorest Countries to the world(mirror data),201219Source:International
326、 Trade Statistics(COMTRADE)data.0 20 40 60 80 100 120 140 2001720182019Value(US$billions)Manufactured textilesAgricultureForestryRecyclingFishingManufactured foodMiningOil and gas extractionElectricity,gas,and hot water supplylow-And mIddlE-InComE CoUntrIES,CArBon EmISSIonS,And
327、 trAdE21both increased by about US$5.0 billion,while average forestry exports amounted to US$1.8 billion over the same period.In Sub-Saharan Africa,land is used mostly for agriculture;between 1990 and 2018,agricultural land grew by 4 percent,while forest area declined by almost the same percentage.A
328、frica is the only region where emissions due to agriculture and related land use are higher than those due to energy.Africa remains an agricultural powerhouse,and recent investments in large-scale commercial farming are having an adverse effect on the environment.By 2013,the value of agricultural pr
329、oduction in Africa had tripled compared to levels in 1980;growth was almost identical to or lower than that of South America,but comparable to that of Asia(NEPAD 2013).Between 1990 and 2017,Africas agricultural emissions ranged from 1.7 million to 1.8 million gigagrams,fol-lowed by South America,whi
330、ch saw a substantial reduction over the same periodfrom 1.8 million to 1.1.million gigagrams.Globally,total emissions not associated with land use have been growing(except for Europe),driven largely by energy,espe-cially in low-income food-deficit countries and South Asia.Industrial processes have a
331、lso been adding increasingly to CO2 emissions in these same regions.Europe is the only region exhibiting a decline in both total emissions(excluding land use)and energy.Although more land is being allocated to agriculture,yields are still very low,sig-naling that current output may have been achieva
332、ble with less land-use change.The increase in agricultural output in Africa has been driven by the expansion of cropland rather than an increase in yields.For many crops,yields in Africa remain far below the averages obtained elsewhere in the world.For example,in Sub-Saharan Africa,the area of land
333、dedicated to cereal production has been increasing since 1960,but up to 2017 yields did not grow by a commensurate amount(figure 2.5).More specifically,yields did not even double(growing by a factor of 1.8),while land hectarage almost FIGURE 2.5 Cereal Production versus Yield on Harvested land in Sub-Saharan Africa,19602016Source:Food and Agriculture Organization,Food and Agriculture Statistics Di