1、International food trade and natural resources Background paper forThe State of Agricultural Commodity Markets(SOCO)2022International food trade and natural resources Background paper forThe State of Agricultural Commodity Markets(SOCO)Stefano Schiavo University of TrentoFood and Agriculture Organiz

2、ation of the United NationsRome,2022Required citation:Schiavo,S.2022.International food trade and natural resources.Background paper for The State of Agricultural Commodity Markets 2022.Rome,FAO.https:/doi.org/10.4060/cc2771enThe designations employed and the presentation of material in this informa

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10、rbitration Rules of the United Nations Commission on International Trade Law(UNCITRAL).Third-party materials.Users wishing to reuse material from this work that is attributed to a third party,such as tables,figures or images,are responsible for determining whether permission is needed for that reuse

11、 and for obtaining permission from the copyright holder.The risk of claims resulting from infringement of any third-party-owned component in the work rests solely with the user.Sales,rights and licensing.FAO information products are available on the FAO website(www.fao.org/publications)and can be pu

12、rchased through publications-salesfao.org.Requests for commercial use should be submitted via:www.fao.org/contact-us/licence-request.Queries regarding rights and licensing should be submitted to:copyrightfao.org.Cover photograph:Shutterstock|iii|AbstractThe paper provides a review of the literature

13、on the distribution of natural capital endowments across countries and its impact on determining trade flows.It illustrates the role trade plays in alleviating environmental pressures and the potential negative effects of trade on the environment.Finally,it discusses a range of relevant policy measu

14、res that can be adopted to reduce environmental spillovers.|v|ContentsAbstract.iiiChapter 1-Introduction and conceptual framework.11.Introduction.3Chapter 2-Virtual trade of natural resources.72.Virtual trade of natural resources.92.1 Virtual water trade.92.2 Virtual land trade.122.3 Virtual emissio

15、ns and pollution.132.4 Discussion.14Chapter 3-Negative environmental impacts of trade.173.Negative environmental impacts of trade.193.1 Water stress.203.2 Land use change,deforestation and biodiversity loss.213.3 Greenhouse gas emissions and climate change.22Chapter 4-Policy implications.254.Policy

16、implications.274.1 Trade policy.274.2 Global vs.local governance.284.3 Suggestions.29Chapter 5-Conclusions.315.Conclusions.33REFERENCES.35|vi|CHAPTER 1Introduction and conceptual framework|3|1 IntroductionIn the last four decades,trade in agricultural goods has increased six-fold,leading to the emer

17、gence of a truly global food system or,in the words of Robinson(2018),the“globalization of agriculture”.In fact,nowadays,food accounts 80 percent of international flows of goods,while around 25 percent of agricultural production is traded across borders.International food trade entails the decouplin

18、g of consumption from local production and the availability of domestic resources such as water and land.This process has triggered the emergence of a new dimension of the debate on the merits of trade,centered on the potential increase on the environmental pressures generated,or at least channeled

19、by international trade flows.On the one hand,international trade has the potential to enhance global efficiency,and thus contribute to the conservation of natural resources,if goods are sourced from places featuring a higher efficiencylower resource intensity per unit of production.On the other hand

20、,trade can be associated with an increase in the environmental footprint of the food system if new opportunities created by accessing foreign markets and liberalization,which can trigger an expansion of production that leads to unsustainable agricultural practices,deforestation or the loss of biodiv

21、ersity.The fact that a large part of the environmental footprint of the food system is related to goods that are traded does not imply that trade causes environmental damages(Copeland et al.,2021).In the absence of trade,factors of production would find other uses and crops grown elsewhere,which can

22、 generate pressure on natural resources than the world is experiencing today.In general,international trade can either increase pressure on natural habitats and resources in areas with high potential for agricultural production or reduce the global footprint of the food system by allowing production

23、 to take place elsewhere.It is local conditions that shape farmers incentives.Trade can be an issue in poorly regulated contexts or a solution when it allows access to alternative sourcing patterns that reduce overall environmental pressures.An additional source of concern is the possibility that gl

24、obalization leads to a race-to-the-bottom in environmental protection,which would increase the overall pressure on natural resources as all countries scramble to retain activities with large material footprints and thus lower their standards and regulations.A related,but a conceptually different vie

25、w is that some countries develop a“comparative advantage”in pollution(or environmentally harmful activities),also known as the pollution haven hypothesis.In this second case,however,the location of activities matters only if environmental pressures are the source of the comparative advantage that dr

26、ives specialization.If,on the contrary,it stems from differences in preferences,for example,because nature conservation is considered a luxury good whose demand increases more than proportionally as income rises,then,the global footprint of the food system would not change.On the contrary,internatio

27、nal trade can be viewed as an adaptation strategy to lower the global impact of climate change on the food system.Gouel and Laborde(2021)find that the possibility to change sourcing patterns offered by international trade is as important as changes in the crop mix in determining countries ability to

28、 face the negative impacts of rising temperatures on agricultural production.Moreover,the free movement of goods can have an additional positive effect in the face of weather shocks and climate-induced uncertainty,by reducing price volatility(see Verma et al.,2014 for an application to the US corn m

29、arket).From a theoretical point of view,there are three main channels through which trade can affect the environment.The first is a simple scale effect whereby higher(agricultural)output requires|4|International food trade and natural resourcesInternational food trade and natural resources more inpu

30、ts such as land,water,fertilizers.This mechanism is likely to increase environmental pressures on exporting countries.The second channel is a composition effect driven by comparative advantages.The localization of production according to comparative advantages should lead to more efficient use of na

31、tural resources,at least if resource endowments and resource efficiency are a source of comparative advantage and can drive sourcing patterns.Third,trade can affect technology by providing greater incentives for the adoption of modes of production that save on scarce factors and facilitate technolog

32、ical spillovers(Fracasso and Vittucci Marzetti,2015).Using data from 1995 to 2009,Copeland et al.(2021),assess several greenhouse gas(GHG)emissions and pollutants and find that the technique effect is much larger than the composition effect and,in many countries,larger than the scale effect.An impor

33、tant element for the current discussion is that for two pollutants primarily associated with agriculture,namely ammonia and nitrous oxide,the composition effects play a more systematic and important role,compared to other pollutants and GHGs,suggesting that shifting resources out of agriculture and

34、into the secondary and tertiary sectors contribute to reducing some sector-specific pollutants.A simple Heckscher-Ohlin framework where comparative advantages are based on relative endowments of factors of production,market integration leads natural resource-intensive food production to relocate to

35、countries that are abundant in land and water.For instance,Dombi et al.(2021)uses a multi-regional input-output table to explore the material footprint of food consumption and provide a decomposition of the various factors that have driven the increase in environmental pressures between 1990 and 201

36、3.Population growth appears the main force in increasing natural resource use,whereas international trade counteracts this tendency by shifting production to areas with a lower material footprint.The savings associated with international flows of “virtual”land and water,defined as the factor content

37、 of traded(agricultural)goods,have been analyzed by a large body of literature reviewed in Section 2.Results suggest that trade does promote the conservation of water(Hoekstra and Chapagain,2008),although there are counter-examples,for instance,the inter-regional flows in China and India,and where p

38、ossible trade-offs exist across different resources(water vs.land)or environmental goals(e.g.water conservation,pollution,GHG emissions).One critical point in the discussion of the environmental benefits and costs of international trade is the lack of an appropriate benchmark and the difficulty in e

39、stablishing a clear-cut causal nexus between trade integration and the use(or abuse)of natural resources.For instance,most of the literature dealing with virtual water trade(see Hoekstra and Chapagain,2008 and the ensuing works)assess the merit of trade by comparing the current situation with a noti

40、onal scenario in which all countries produced domestically the food they consume,typically finding large water savings.This ought to be overly optimistic because in case trade is restricted,price changes are likely to induce shifts in consumption patterns that favor products more easily produced dom

41、estically.At the opposite side of the spectrum,building on multi-regional input-output tables(see for instance Wiedmann and Lenzen,2018),trade is attributed to the whole environmental damage of final consumption that takes place in countries different from the production site,irrespective of the fac

42、t that without international transactions the same amount of food still needs to be produced elsewhere.This review paper focuses on international trade in food and agricultural products and its effects on natural resources and the environment.It takes an empirical stance by primarily surveying the a

43、vailable evidence while theories or models.From time to time,when broadening the perspective can provide readers with a sense of the different mechanisms at play,the paper goes|5|Introduction and conceptual frameworkbeyond these self-determined boundaries whose purpose is simply to guarantee a coher

44、ent framework and a reference point in an otherwise extremely vast literature.The rest of the paper is organized as follows:Section 2 reviews the arguments on the positive effects of trade on efficiency by looking at the literature of the “virtual trade”of natural resources such as water,land and bi

45、odiversity.Section 3 focuses on the possible negative environmental spillovers of international trade on exporting countries.Section 4 provides an overview of policy-relevant issues and possible measures to maximize the beneficial effects of international flows,while reducing harmful consequences.Fi

46、nally,section 5 offers some concluding points.|6|CHAPTER 2Virtual trade of natural resources|9|2 Virtual trade of natural resourcesInternational food trade entails the de-coupling of consumption from local production and the availability of domestic resources such as water and land.Because direct wa

47、ter trade is often impractical and land trade is impossible,trade in agricultural goods represents one way to alleviate water and land scarcity by allowing for the international division of labour and for specialization based on resource endowments.Since the early 1990s,vast literature has blossomed

48、 that describes the complex web of “virtual”flows in natural resources associated with international trade in food and agricultural commodities and analyzes their determinants.In fact,this is just the re-branding of an old idea in economics,namely that trade in goods is a substitute for trade in fac

49、tors of production,since goods contain the factors that are used to produce them(Leontief,1953;Leamer,1980).Globally,different estimates(as reported in Chen et al.,2018)put the share of virtual resources embedded in international trade in the range of 2032 percent in the case of water,and between 24

50、37 percent for land.The bulk of research deals with“virtual water”,a concept coined by the late geographer Tony Allan(1997;1998)as a possible solution to water-related conflicts,that has been operationalized and popularized by Arjen Hoekstra and co-authors(Hoekstra and Hung,2005;Hoekstra and Chapaga

51、in,2008).Within this field,innumerable case studies have investigated the structure,evolution and determinants of virtual water trade(VWT)for specific crops or countries,especially arid or semi-arid zones,which supposedly can reap large benefits from the imports of water-intensive crops(see DOdorico

52、 et al.,2019,for a recent review of the literature).China,for instance,has applied this by often looking at intra-national flows across Chinese regions,with VWT mainly flowing from the water-scarce North to the water-rich South due to the rapid industrial development of coastal regions in the last 2

53、0 years.However,less effort has been devoted to virtual land trade,and even less research exists on broader aspects such as biodiversity or environmental services.2.1 Virtual water tradeBetween 70 and 80 percent of world freshwater resources are devoted each year to agricultural production.Internati

54、onal food trade allows for population growth to no longer depend on local resources may enhance global efficiency by fostering specialization and overall saving in water,land and other natural resources that are unevenly distributed across the world.As long as VW flows are unrelated to water scarcit

55、y conditions,however,the policy relevance of these findings is limited.Moreover,water savings are not alike:only blue water savings(that is,surface and groundwater)alleviate water stress because green water(which accounts for soil moisture from precipitation)has no alternative uses and therefore can

56、not be diverted elsewhere.The literature on water endowments as a determinant of virtual water exports finds mixed results.An early analysis of 131 WVT by Kumar and Singh(2005)find almost no correlation between VWT and water availability.The authors suggest that land plays a greater role in determin

57、ing net VWT than water does,since access to land implies access to the water available in the soil,and land represents a tighter constraint on agricultural production,so that a number of water-scarce,but land-rich countries may indeed be able to export VW.In fact,there is a strong link between water

58、 withdrawal for agricultural uses and cropped area.|10|International food trade and natural resources These findings are confirmed by a number of subsequent studies such as Fracasso(2014),Fracasso et al.(2016),Sartori et al.(2017),DOdorico et al.(2019).Duarte et al.(2019)noting that land and renewab

59、le water are relevant in determining virtual water flows,although their absolute values play a more important role than bilateral relative endowments.This is not surprising as countries specialization patterns are likely shaped by global or regional comparative advantages,rather than bilateral ones.

60、Adopting a gravity model augmented with land and water endowments,Fracasso(2014)finds that both natural resources are significantly associated with virtual water exports,while indicators of water stress only correlate with imports.Studying the case of China,Zhao et al.(2019)confirms that water endow

61、ments do not explain regional VWT flows,whereas land is much more important as water-scarce but land-rich regions find it more convenient to allocate land to non-agricultural activities.In this context,physical water transfer schemes such as the South-North Water Transfer Project,may represent a sol

62、ution as they allow agricultural production to take place in land-abundant regions where the opportunity cost of land is low,while at the same time reducing the water stress experienced in those areas.Conversely,Karandish et al.(2021)concludes that when analysing the case of Islamic Republic of Iran

63、,indicating that local conditions are crucial.Debaere(2014)finds that more water abundant countries tend to export more water-intensive products,as predicted by a simple Heckscher-Ohlin framework where factor endowments determine comparative advantages,specialization and trade.Yet,the role of water

64、in determining export patterns is less critical than other traditional factors.While Debaere(2014)finds no significant role for land,his analysis spans to all sectors of the economy,not just agriculture,where land is particularly relevant.Restricting the analysis to the agricultural sector reverses

65、the original findings:land is a significant determinant of exports,whereas water no longer is.1 Delbourg and Dinar(2020)use a gravity model to study the determinants of VW flows.They find that relative water endowments and productivity both contribute to shaping food trade patterns,which is in line

66、with both Ricardian and Heckscher-Ohlin theories of international trade,although this is not true for all products.In fact,in some cases,other factors such as land or labour can play a crucial role,or specific climate conditions are necessary and therefore determine the location of crop production.W

67、ater productivity matters up to a certain point,and water is often not the biding constraint.There are several explanations for the lack of a well-defined role for water as a determinant of VWT.First,from a theoretical point of view,a simple Heckscher-Ohlin model focuses on relative factor endowment

68、s,whereas most empirical applications use absolute water availability instead(Fracasso,2014;Wichelns,2015).Second,differences in endowments should be reflected in different opportunity costs of factors of production and thus in prices.If this is not the case,then no trade would ensue.However,water i

69、s seldom priced to reflect scarcity and also land is not always allocated to competing uses based on market prices.While this may be a wise choice,as much as it reflects concerns about conservation of natural resources or fair access to them,it also implies that endowments will not play a crucial ro

70、le in determining food trade.In fact,Kumar and Singh(2005)suggest that forcing users to pay for water of limiting water usage can induce large improvements both in water efficiency(yield per unit of water)and water productivity 1 The analysis is possible thanks to the availability of the original da

71、taset used in Debaere(2014).Focusing on the agricultural sector only restricts the sample to just 700 observations,making estimates less precise.|11|2.Virtual trade of natural resources(which has to do with the allocation of water across different crops and types of use).Third,agricultural productio

72、n depends on a host of complementary factors,so that countries with a lot of water but,say,scarce in land will not be able to export water-intensive crops.Dalin et al.(2017)find that 11 percent of groundwater depletion is embedded in trade,and around two-thirds of it is exported by just three countr

73、ies,namely India,Pakistan and the US.Because the share of food that is traded is around 18 percent,groundwater depletion rises less than proportionally with trade,suggesting international flows are enhancing efficiency.A similar conclusion is supported by the evidence presented by Rosa et al.(2019),

74、noting that between 2000 and 2015 food trade grew by 65 percent,but the share of unsustainable irrigation embedded in agricultural exports increased much less(18 percent),indicating that trade does not necessarily drive water scarcity.Most of the virtual water literature agrees on the positive effec

75、t international trade has on global water use.Liu et al.(2018)indicates that estimates of water savings linked to VW trade vary a great deal and different methodologies yield quite different results.In fact,estimates range from 164 billion m3 per year(plus an additional 112 bil m3 of irrigation wate

76、r depletion,de Fraiture et al.,2004)to 455 bil.m3/year(Oki and Kanae,2006),while a more recent review of the literature by DOdorico et al.(2019)put water savings in the range of 230350 bil.m3 per year.The source of the(virtual)gains from trade is driven by productivity differences between importing

77、and exporting countries.It is however important to distinguish between blue and green water,because only the former has alternative uses and,therefore,an opportunity cost.In fact,80 percent of global cropland is rainfed(DOdorico et al.,2019),but irrigated land is twice as productive,and 40 percent o

78、f global food is produced with irrigation.Hence,there is a trade-off between land and water use,in addition to the intertemporal tension between current crop yields(enhanced by irrigation)and future sustainability(threatened by groundwater depletion for agricultural use).Kagohashi et al.(2015)invest

79、igates the channels through which trade contributes to water saving,and find that while the scale effect puts additional pressure on natural resources,both technological improvements and the composition effect lower water use.Dang and Konar(2018)complement these findings by highlighting that the ben

80、eficial effect of trade on water use is limited to the agricultural sector,and suggest the bulk of it comes from the adoption of water saving technology.This is somehow strange given that water is not priced competitively and therefore farmers do not always have incentives to invest in this kind of

81、innovation.Trade can contribute towards resolving the tension between water saving and cropland expansion.Restrictions to trade will make it harder to meet competing goals by limiting the range of tools that are available.Reducing water usage requires a combination of increase in cropland,more inter

82、national trade,the intensification of agriculture and a shift toward less water-demanding crops.Rather than focusing on a single natural resource,Xu et al.(2020)take a more holistic approach and assess the impact of international trade on nine sustainable development goal(SDGs)targets that are relat

83、ed to environmental issues and for which it is possible to build precise quantitative metrics.2 The global effect of trade(against a notional no-trade benchmark)over 2 These are SDG 6.4(sustainable water withdrawals and supply);SDG 7.2(increase the share of renewable energy);SDG 7.3(energy efficienc

84、y);SDG 8.4(resource efficiency in consumption and production);SDG 9.4(clean and sustainable industrialization);SDG 12.2(sustainable management and efficient use of natural resources);SDG 13.2(integrate climate|12|International food trade and natural resourcesthe 19952009 period is positive,yet uneve

85、nly distributed.Advanced countries unambiguously benefit from globalization,whereas developing and emerging economies as a group lose out,although there are improvements in later years.Distant trade is more beneficial than adjacent trade for high-income countries,while it lowers SDG scores for many

86、LDCs,which on the contrary,benefit from trade with close partners.Dalin and Rodrguez-Iturbe(2016)review the impact of food trade on the environment,which encompasses water,land,pollution and GHG emissions.One of the key findings is that the impact depends on the location of production,suggesting tha

87、t trade policy in itself cannot address localized negative spillovers on natural resources generated by agricultural activities.Virtual water trade is associated with global water saving,with the result driven by trade of wheat,corn and meat.Chinese soy imports are also a large source of water savin

88、g,although sourcing from Brazil and South-East Asia favors deforestation.Although VWT is associated with global water saving,as long as VW flows are unrelated to water scarcity conditions,the policy relevance of these findings is limited.What is more,because not all VW flows entail saving blue water

89、,it is difficult to assess the actual contribution of trade to the conservation of water.2.2 Virtual land tradeVirtual land trade(VLT)has increased from 128 million hectares(Mha)in 1986 to 350 Mha in 2016,following the globalization of agriculture(Qiang et al.,2020).This notwithstanding,trade accoun

90、ts for only 24 percent of the total land footprint(Meyfroidt et al.,2013),suggesting that domestic markets still represent the main driver of agricultural and forestry production.Yet,for some products,such as Brazilian oilseeds or Russian timber,the shares are much higher and reach almost 50 percent

91、.As of 2008,the increased efficiency allowed for trade is estimated to have reduced cropland demand by almost 90 Mha per annum,relative to a notional scenario where each country produced domestically the food it consumes(Kastner et al.,2014a).Infante-Amate et al.(2018)and Roux et al.(2021)quote evid

92、ence from Kastner et al.(2012)to argue that,at a global level,a notional autarky scenario would require an increase in the land dedicated to agriculture of around 8 percent.One issue with the literature on virtual land trade is that findings are sensitive to the data and methodology used(Kastner et

93、al.,2014b;Schaffartzik et al.,2015).Top-down analyses using multi-regional input-output tables that start from monetary values and convert them into land use,are not considered very reliable.At the same time,no well-defined methods exist to compute the land footprint of crop production.The globaliza

94、tion of food trade results in an increasingly complex network of VLT flows where both the number of trade partners and the size of each bilateral relationship have grown.VL exports are much more concentrated than imports,with a stable group of major exporters(Argentina,Canada,Australia,and the Unite

95、d States of America),recently joined by Brazil,change measures into national policies);SDG 15.1(sustainable use of terrestrial ecosystems);SDG 15.2(sustainable forest management).|13|2.Virtual trade of natural resourcesRussia Federation and Ukraine,featuring large land endowments.On the other hand,a

96、lmost all virtual land importers have a per capita land endowment that is below the world average.Infante-Amate et al.(2018)review the Spanish case by looking at historical data spanning the 20th century.The evidence shows a widening gap between the cropland embedded in consumption and the actual la

97、nd dedicated to agricultural production in Spain,which testifies for a structural transformation of the economy,made possible by an increase in productivity and crop yields,and also for increasing reliance on international trade.Virtual land import is estimated to save around 6.4 Mha of land every y

98、ear,corresponding to a striking 36.8 percent of Spanish cropland.Of course,increased efficiency may well create environmental damages depending on where and under which conditions it takes place.Roux et al.(2021)examine whether international trade manages to reduce human pressure on the environment

99、by improving the mix of origin,i.e.,the sourcing patterns behind human consumption.Rather than looking at the hectares of land embedded in agricultural products,they propose an alternative metric,namely the Human Appropriation of Net Primary Production(HANPP).This sums the change in biomass producti

100、vity due to land use change and the biomass removed during harvest.The advantage of such an indicator is that it reflects the extent of land use,and its intensity.However,the authors point out that an increase in HANPP is not necessarily problematic,as similar values would have different implication

101、s depending on whether they result from deforestation,or the conversion of grassland.The paper finds that virtual HANPP was flat during 19861999 and trended upward afterward.Moreover,sourcing patterns do not always contribute to reducing environmental pressures.In particular,after 1999,the evolution

102、 of trade worsened the mix of origin effect so that by 2011 the sourcing patterns of the global food systems is less efficient than it was in 1986.Most of this negative effect comes from the rapid increase in agricultural exports from South America and South Asia,but also derives from rising food de

103、mand in Sub-Saharan Africa which is met by inefficient domestic production.Hertel et al.(2020)estimate that greater integration by African countries in world markets would result in less cropland being required in that region by 2050,with technology transfers improving agricultural productivity play

104、ing the most important role.Hence,increasing pressures on natural resources can come either from“too much”or“too little”market integration,highlighting that international trade is a tool rather than a deep determinant of environmental harm per se.All in all,the analysis presented in Roux et al.(2021

105、)suggests that the mix of origin effect has played a rather small role in driving the evolution of HANPP over the last 30 years or so,much smaller than changes in population,agricultural intensity,and per-capita consumption patterns.2.3 Virtual emissions and pollutionA number of studies have extende

106、d the analysis of virtual flows to pollution.Especially relevant for agricultural trade is the virtual flow of nitrogen(N),an important pollutant found in many fertilizers.Huang et al.(2019)find that Chinese imports reduce environmental degradation associated with nitrogen pollution by shifting agri

107、cultural production to places with higher soil fertility and,consequently,requiring less fertilizer use.In fact,products for which China is a net importer have lower nitrogen yield than the world average,whereas the opposite holds in the case of crops for which China is self-sufficient(such as rice)

108、,suggesting that at least in the case of nitrogen the pattern of specialization driven by comparative advantages fosters efficiency and reduces environmental harm.|14|International food trade and natural resourcesOf course,access to imports could increase(domestic)pollution if it leads to conversion

109、 toward crops that are more nitrogen intensive(as would be the case for a shift from soybean to rice in China,see Sun et al.,2018).This reasoning can be easily generalized to all natural resources and environmental pressures:the impact on each of them ultimately depends on local(i.e.,production-rela

110、ted)conditions.2.4 DiscussionThe leading exporters of virtual water are India,China,Pakistan,and the United States of America.However,some authors such as,(Mekonnen and Hoekstra,2020)add Islamic Republic of Iran and Indonesia(Chen et al.,2018).Virtual land exporters are Argentina,Canada,the United S

111、tates of America,Australia,and Brazil(Chen et al.,2018).This pattern of specialization resonates well with the prediction of trade theory,whereby market integration leads to the concentration of production in countries where the opportunity costs of inputs and factors of production are lower.As a re

112、sult,the virtual export of natural resources,being water or land,is very concentrated,suggesting that just a few countries have increasingly specialized in the provision of agricultural products to world markets.While most economists would consider this fact a simple outcome of the theory of compara

113、tive advantages,in the natural science and ecology literature,this is viewed as evidence of the presence of structural imbalances in world trade,and it represents a major source of concern.The second piece of circumstantial evidence brought against trade concerns is increasing groundwater depletion.

114、Almost 50 percent of the worlds population lives in places where aquifers are overexploited,with the main driver being crop irrigation,which accounts for 70 percent of groundwater use(Pastor et al.,2019).In fact,almost 40 percent of the food comes from irrigated land,30 percent of which is unsustain

115、able(Pastor et al.,2019).Yet,a water-centric approach that associates trade with the globalization of pollution and the externalization of water use(see,for instance,OBannon et al.,2014)is partly misleading,as water is often not the main driving force behind trade flows.Moreover,as forcefully noted

116、by Wichelns(2015),there is no clear counterfactual against which one can assess the current level of market integration.What happens if trade suddenly halts,and each country produces domestically everything it needs?Besides being simply unfeasible for many countries,a notional scenario in which inte

117、rnational flows are banned would not reduce the material footprint of the food system by the amount usually attributed to trade,but rather change the location of production in ways that may well increase pressure on natural resources.Despite the overall water saving associated with international tra

118、de(Hoekstra and Chapagain,2008;Dalin and Rodrguez-Iturbe,2016),Dalin et al.(2017)note that efficiency and sustainability do not always go hand-in-hand:soybean imports in China are water and land efficient but contribute to unsustainable water depletion in the United States of America and is associat

119、ed with biodiversity loss and deforestation in Asia and Brazil.Hence,there are possible trade-offs among competing environmental objectives.Moreover,domestic production is often not a viable alternative or,at least,not one that would reduce the impact on natural resources.Higher crop yields,which ar

120、e instrumental in lowering the environmental pressure of the food system,are associated with higher pollution from fertilizer use and the intensification of agriculture.The trade-off between competing claims is very evident in this respect,and research on the subject is inconclusive(Dalin and Rodrgu

121、ez-Iturbe 2016).A similar claim is advanced by Liu et al.(2018)in the context of virtual water flows,noting that very little is known about gray water,which is linked to environmental damage and pollution.|15|2.Virtual trade of natural resourcesOne explanation for the lack of a prominent role for tr

122、ade in promoting efficiency is the well-known fact that the marginal cost of water and land does not reflect environmental costs so negative externalities can occur and land-rich countries with large,unprotected areas are likely to supply a lot of land-intensive products.Moreover,agricultural produc

123、tion embeds a host of complementary inputs,not just land(or water,or fertilizer),and there are possible trade-offs across different natural resources,whose binding role will depend on local conditions.As mentioned in the Introduction,international trade can play an important role in adapting to clim

124、ate change.Market integration allows the diversification of sourcing patterns,making the food system more resilient to weather shocks,the adverse effect of rising temperatures on agricultural production,or increased water scarcity and soil degradation.A last indirect channel through which trade can

125、positively affect the conservation of natural resources is via its impact on income.As long as environmental protection is a normal good(and even if it behaves like a luxury good),rising incomes generate pressure for more stringent policies,and trade openness can have a beneficial effect on the envi

126、ronment(Copeland et al.,2021).Because this mechanism is not directly related to trade in agricultural commodities,it cannot be developed further.CHAPTER 3Negative environmental impacts of trade|19|3 Negative environmental impacts of tradeAgricultural production is a key driver of resource use and en

127、vironmental pressure,and it can lead to unsustainable water withdrawals,water and soil pollution,deforestation,and degradation of natural habitats(Foley et al.,2005).Because market integration creates incentives to expand crop production in some countries,a number of scholars(Lenzen et al.,2012;Wied

128、mann and Lenzen,2018;Rosa et al.,2019)postulate a link between international trade and environmental degradation(Baylis et al.,2021),although direct evidence about a causal relationship between trade and environmental damage remains limited.Advocates of consumption-based accounting(aka footprints,se

129、e,for instance,Wiedmann and Lenzen,2018)stress the need to hold consumers more accountable for their choices and suggest importing countries are responsible for the depletion of natural capital experienced by producing countries.Besides the difficulty of allocating the costs and benefits of food pro

130、duction across consumers and producers,a further complication stems from the fact that footprints cannot inform policymakers of the consequences of trade restrictions so long as it does not incorporate precise information on local conditions.This Section reviews the main arguments on the negative co

131、nsequences of food trade,following the tripartite structure used in Section 2 and looking at water,land,and emissions.In addition to possible detrimental effects on specific natural resources,which can be traced down to the presence of externalities due to poorly defined property rights,there are tw

132、o general concerns put forward in the natural sciences literature.The first question is whether trade can improve resource efficiency,and the second is whether the global food system is more prone to shocks.According to Wiedmann and Lenzen(2018),over the last 3040 years,the globalization of agricult

133、ure has not led to a significant reduction in the material footprint of advanced countries,once their domestic and external footprints are lumped together.As such,trade would affect the location of production without contributing to improving efficiency.Similarly,Wood et al.(2018)note that over time

134、 the per-capita environmental footprint of humanity has increased,although their analysis is not confined to agricultural trade.The lack of a well-defined counterfactual against which it is possible to gauge the role of trade and other drivers of environmental pressure somewhat weakens the argument.

135、The observation that many advanced countries have an external footprint larger than their domestic one is often considered a sign of malaise and evidence of the pernicious effects of trade on the environment.For instance,Lenzen et al.(2012)claim that“30 percent of global species threats are due to i

136、nternational trade”.The loss of biodiversity and natural habitats are critical issues and are often driven by land use changes and deforestation,which,in turn,respond to economic incentives and market failures(there are no property rights for biodiversity,so that its loss is not internalized by mark

137、ets and there are negative spillover effects).Yet,trade restrictions would not,for instance,curb domestic consumption,which often represents the largest share of food demand in any given country.Contrary to the notion that trade can act as a useful adaptation strategy to cope with climate change,som

138、e scholars express concerns about the vulnerability of a global food system that relies on unsustainable practices(e.g.,Dalin et al.,2017).The working hypothesis is that by de-coupling consumption from production,countries become less aware of and more vulnerable to|20|International food trade and n

139、atural resourcesInternational food trade and natural resourcesclimate-related shocks and/or the depletion of natural resources.For this effect to be relevant,one needs to make several assumptions.The first is that the presence of a border blurs perceptions about the environmental footprint of the fo

140、od system,above and beyond the separation between agricultural production and food consumption that is present even within countries,making consumers less aware of the effects of their choices.Second,markets must not convey proper signals on natural resource scarcity,so that resource depletion does

141、not lead to higher prices that would stimulate resource-saving investment.This is,unfortunately,not far from reality in many countries.Chang et al.(2016)emphasize that ecosystem services are not priced and therefore subject to true externalities,and it is well known that irrigation prices seldom ref

142、lect scarcity.As a result,too many resources are used for human activities,undermining long-term sustainability.Third,if a negative shock hits an exporting country,it must be more troublesome to replace imports than to compensate for a shortfall in domestic production.In this respect,there is little

143、 evidence that imports are inherently riskier than domestic production,unless the benchmark is a crisis situation in which a government may be able to commandeer crop distribution and/or impose price controls.Sartori and Schiavo(2015)find that the global food system has not become inherently more vu

144、lnerable or unstable despite its complexity has increased substantially in the past decades.However,unfettered markets may be more volatile,especially if there are low reserve stocks(Marchand et al.,2016)and specific measures to guarantee food access and affordability are necessary for some contexts

145、(although this is not related to environmental issues).Of course,incomplete markets and uneven rules on the exploitation of natural resources imply that the globalization of agriculture may increase the environmental footprint if it leads to the relocation of production to countries with laxer stand

146、ards(the pollution haven hypothesis)or weaker governance of natural resources.3.1 Water stressMekonnen and Hoekstra(2020)focus on the blue water footprint of food,which comprises surface water and groundwater,highlighting the risks associated with unsustainable water practices.In fact,more than 50 p

147、ercent of the blue water footprint comes from places where the environmental flow requirements(the amount of freshwater necessary to sustain aquatic ecosystems and,as a result,support sustainable livelihoods)are not respected.Agriculture accounts for 70 percent of water withdrawals,reaching higher s

148、hares in Africa and Asia and food production is responsible for 96 percent of the infringements,with a growing share being outside the country of final consumption and two-thirds of the total footprint located in just five countries(China,India,Islamic Republic of Iran,Pakistan and the United States

149、 of America).Moreover,a small number of internationally traded crops(cotton,rice,wheat,sugarcane and soybean)account for around two-thirds of unsustainable virtual water flows(Mekonnen and Hoekstra,2020).According to DOdorico et al.(2019),excessive water extraction accounts for roughly 20 percent of

150、 irrigation,and the overuse of groundwater represents a serious challenge in some countries and areas,including rich parts of the world such as the United States of America.The role of markets and their contribution to economic growth and development(with emphasis on agricultural markets)|21|3.Negat

151、ive environmental impacts of tradeFood consumption that relies on these sources is therefore at risk in the medium-long-run,and this is true irrespective of whether final consumers are located a short distance from where crops are grown or thousands of kilometers away.Shifting the burden of resource

152、 use to other countries may reduce the perception of water scarcity and thus postpone a reckoning that may be necessary.Yet,the focus on water as the main bottleneck to food production provides policymakers with only a partial and somehow distorted perspective.Food is produced by a bundle of inputs

153、whose use is determined by their opportunity cost.In fact,DOdorico et al.(2019)recognize that trade is not driven by water needs,while Wiedmann and Lenzen(2018)concur that income is the most important driver of virtual water trade.Dalin and Rodrguez-Iturbe(2016)notice that water productivity does no

154、t amount to sustainability,so virtual water trade may increase efficiency,while simultaneously putting additional pressure on scarce water resources.Along the same lines,Wichelns(2015)stresses that concepts like virtual water or water footprint are of limited policy relevance because they do not acc

155、ount for the opportunity cost of water and for local conditions,which are critical to assessing the merit of alternative water uses.3.2 Land use change,deforestation and biodiversity lossIn the last 30 years,the world has lost approximately 178 Mha of forest area(FAO,2020).Land appropriation by agri

156、cultural production not only exerts a negative effect on the environment by contributing to GHG emissions and reducing carbon storage,but also because deforestation is associated with biodiversity loss and environmental degradation.For instance,Green et al.(2019)find significant species losses drive

157、n by land conversion and appropriation by agriculture in the Brazilian cerrado,while Ortiz et al.(2021)highlight that biodiversity is 40 percent lower in cropland relative to areas covered by primary vegetation.This,in turn,triggers a feedback loop as the loss of biodiversity negatively affects agri

158、culture by reducing ecosystem services such as pollination and environmental resistance.Chang et al.(2016)emphasize that ecosystem services are not priced and therefore subject to true externalities.As a result,too much land ends up being used for human activities.Although the domestic market is oft

159、en responsible for the largest share of impact than any foreign country,even in export-oriented agricultural systems such as Brazil(Green et al.,2019),new market opportunities created by trade liberalization may increase the incentive for agricultural expansion and land appropriation,with negative e

160、ffects on deforestation and the preservation of natural habitats(Dalin and Rodrguez-Iturbe,2016).Hence,while the expansion of cropland in areas previously not dedicated to agriculture can enhance efficiency,it may also threaten fragile environments and generate global spillovers(an increase in GHG e

161、missions from deforestation would feed a vicious circle by hastening climate change and leading to further environmental degradation elsewhere).This is especially the case when land governance is weak,either because of ill-defined property rights or prioritization of agricultural production over con

162、servation(Torres et al.,2017).In fact,uncertainties about the impact of trade on deforestation have become a major stumbling block in the ratification of the EU-Mercosur trade agreement(Abman et al.,2021),although evidence of a direct link between trade and biodiversity loss remains limited.In an ea

163、rly contribution that aims at determining the causal effect of trade on the environment,Frankel and Rose(2005)find little evidence that openness has any significant adverse effect on|22|International food trade and natural resourcesInternational food trade and natural resourcesdeforestation(or pollu

164、tion),controlling for income or other relevant factors.3 One of the few examples where a trade shock has had a direct and sizable impact on species conservation is a study by Taylor(2011),using historical information to draw a causal link between the surge in demand for leather triggered by a Britis

165、h industrial innovation and the collapse in the buffalo population in North America in the late 19th century.Similarly,Eisenbarth(2018)finds that demand shocks that increase exports can explain the depletion of fisheries around the world.These works suggest that a surge in foreign demand may determi

166、ne the over-exploitation of poorly-regulated natural resources.However,Ortiz et al.(2021)make clear that a more local food system per se is unlikely to be beneficial to biodiversity,mainly because the use of more suitable locations to grow food(as induced by comparative advantages),reduces the requi

167、red amount of inputs such as land,water and fertilizers.Chen et al.(2018)emphasize that the impact of food production depends heavily on local conditions,and even in a critical context such as Brazil,Green et al.(2019)find that the production of soy for exports has a very different environmental foo

168、tprint depending on regional agricultural practices.In general,unless appropriate measures to protect natural habitats are put in place in producing countries which help farmers integrate the trade-off between short term supply considerations versus longer-term sustainability issues reducing interna

169、tional trade does not guarantee that food production takes place where environmental pressures are minimal.A further channel through which the international flow of goods can affect biodiversity is the spread of invasive alien species(Westphal et al.,2008).Interestingly,it is not the type of trade t

170、hat matters,such as the share of agricultural imports over total trade,but rather the sheer amount of international transactions.3.3 Greenhouse gas emissions and climate changeWest et al.(2010)estimate that deforestation and conversion to cropland contribute between 1220 percent of global emissions

171、yearly.While not all the increased production is destined for international markets,in some areas(e.g.,Brazil and Indonesia)and for some crops(soybeans and palm oil),the opportunities generated by market integration rank high among the determinants of land use change.When combined,food accounts for

172、roughly 30-35 percent of GHG emissions(Poore and Nemecek,2018;Crippa et al.,2021),with strong heterogeneity across both products and countries.Consequently,the location of agricultural activities matters a great deal.In fact,the environmental impact of food production can vary 50-fold among producer

173、s of the same good,even in similar geographic regions,with trade-offs between emissions and usage of natural resources.For instance,aquaculture saves on land,but generates far more GHG emissions than vegetable proteins,whose production is more land intensive.Differences in agricultural practices,and

174、 the different effects that even the best practices have in different regions,imply that specialization and international trade may not always lead to more efficient use of natural resources or a reduced environmental impact(even if one abstracts from transport-related emissions and pollution).Inten

175、sive systems,an outcome of specialization,have a lower per unit impact,although the overall pressure they put on local ecosystems is stronger and could be unsustainable in some cases.If current resource scarcity 3 Frankel and Rose(2005)find no evidence that trade increases air pollution;on the contr

176、ary they report a causal link between trade openness and lower concentrations of sulphur dioxide in the air when looking at a group of 40 countries in the early 1990s.The role of markets and their contribution to economic growth and development(with emphasis on agricultural markets)|23|3.Characteriz

177、ing changes in consumption patternsand considerations about stock depletion are not factored into prices,then efficiency and sustainability may not proceed in parallel,and trade-offs may emerge.Significant cross-country differences in GHG emissions suggest that the relocation of agricultural product

178、ion triggered by trade integration can substantially impact the food systems carbon footprint,and this heterogeneity has important implications on the net effects of the local versus global sourcing of food.While the consumption of domestically-produced food seems an obvious way to reduce a countrys

179、 carbon footprint,once differences in production practices and emissions are combined,the picture is far less clear.In fact,the GHG emissions due to the transport of traded goods are the most evident(and global)negative externality directly linked to trade,but their magnitude is small.While the dire

180、ct emissions from transport are relatively small,in some cases they more than offset the gains due to higher agricultural productivity(Cristea et al.,2013).Avetisyan et al.(2014)find that,for some food items,in particular those of animal origin,the fall in transport-related emissions are dwarfed by

181、the increase that would take place if all countries were to re-shore their agricultural production.In fact,domestic emissions dominate the contribution of the food system to global emissions in about 90 percent of the country-product pairs they examine.The relatively small effect of transportation a

182、nd shipping is consistent with results from more general works that do not focus on agricultural goods.Cristea et al.(2013)and Shapiro(2016)both find that a shift from autarky to free trade“only”increases overall CO2 emissions by 35 percent,although there are very large differences across industries

183、 and trading partners.Maritime shipping in bulk carriers tend to be more fuel efficient than other means of transportation lowering the overall impact of some product-country-pair combinations.The world has witnessed a decoupling of population growth and food-related emissions,with the latter growin

184、g more slowly than the population in the last 40 years.This,together with a reduction in CO2 intensity and CO2 per capita emissions over time,in a period of rapid expansion of international trade,is consistent with the notion of specialization lowering the environmental impact of the food system at

185、a global level,even if Crippa et al.(2021)find a number of specific countries where the trend is reversed.Production,land use,and land use change are responsible for the bulk of the GHG emissions associated with the food systems,and account for more than 70 percent of the total.Amid later(beyond the

186、 farm gate)stages,distribution is less relevant than packaging,with“food miles”accounting for less than 5 percent of GHG emissions and the bulk of it due to local or regional road transport rather than international shipping.Of course,there is large heterogeneity,with some specific products,such as

187、bananas and sugar cane,for which transport accounts for 40 percent of the total carbon footprint.West et al.(2010)highlight the tension between the need to increase food production and the role of forests as carbon sinks;the trade-off is particularly adverse in tropical areas,which feature lower agr

188、icultural yields(up to 50 percent)and higher carbon storage potential(up to+100percent)with respect to temperate zones.4 Conservation and reforestation of the tropics is only possible if more trade is allowed,as the amount of food that is needed will not diminish simply by imposing export restrictio

189、ns.4 The opposite holds for arid regions,where low vegetation implies low carbon storage.In these areas,on the other hand,increased agricultural production would put additional pressure on possibly scarce water resources.CHAPTER 4Policy implications|27|4 Policy implicationsDespite the complexities t

190、hat link agricultural trade and natural resources,there are at least two broad lessons can be drawn from the discussion.The first is that unless appropriate measures to protect natural habitats are in place at the production stage,trade restrictions do not guarantee that food production takes place

191、where environmental pressures are minimal.Second,the need to recognize trade-offs and tensions among competing environmental claims and realize that actions aimed at mitigating pressure on a specific resource,like water,may well exacerbate tensions in other dimensions of the ecosystem.Vos et al.(201

192、9)find that competing perspectives on water use,although this can be easily generalized to natural resources,do not account for existing trade-offs among water and land-use,blue and gray water,short-term productivity,and long-term sustainability,and so on.5 This,together with the lack of well-define

193、d counterfactuals limits the policy relevance of many of the works that address the relationship between agricultural trade and natural resources.Still,it is possible to distill some relevant policy implications or at least dispel some common misconceptions.4.1 Trade policyFrom a theoretical point o

194、f view,trade policy remains a second-best(that is,sub-optimal)solution,because tariffs and non-tariff barriers to trade do not address the source of externalities and cannot target domestic consumption.Ideally,one would like a system of free trade so that comparative advantages can allocate crop pro

195、ductions where natural resources have the lowest opportunity costs and are used most efficiently combined with local conservation measures to ensure the protection of fragile environments and the elimination of negative externalities.Abman et al.(2021)find that regional trade agreements with specifi

196、c provisions aimed at limiting deforestation and biodiversity loss are an effective tool to limit the negative effects trade can have on the environment.This effect mainly works through a reduction in land use change following trade liberalization.However,the global impact of such measures is unclea

197、r,as deforestation could simply shift to areas or countries not covered by such provisions.Hence,multilateral coordination should be preferred to a host of overlaying bilateral or regional agreements.Coordinated trade policy can be used to achieve environmental effects in other countries,by forcing

198、upon them part of the costs of protection.The idea behind the notion of climate clubs(Nordhaus,2015)informs the carbon border adjustment mechanism recently proposed by the European Union as part of its strategy to counter climate change.Global coordination is key as even relatively large countries o

199、r“clubs”may achieve little on their own(Copeland et al.,2021).For trade to properly allocate production where resources are more efficiently used,subsidies that prop up specific crops or sectors should be eliminated.Not only do they reduce efficiency and distort the allocation of resources across co

200、untries and sectors,but they can have adverse environmental effects.For instance,cotton production,which absorbs 33 percent of unsustainable irrigation(Rosa et al.,2019),is heavily subsidized in the United States of America and prominently 5 Grey water represents the amount of freshwater required to

201、 assimilate a load of pollutants based on natural background concentrations and existing quality standards.The role of markets and their contribution to economic growth and development(with emphasis on agricultural markets)|28|International food trade and natural resourcesamong American exports.Alon

202、g the same lines,production externalities can be reduced by combining local conservation measures and adequate pricing of natural resources,reflecting the scarcity and intertemporal sustainability considerations.Kumar and Singh(2005)highlight that charging a price for(blue)water used in irrigation o

203、r setting quantity limits can be effective to increase water efficiency.4.2 Global vs.local governanceEffects of agricultural production on natural resources are eminently local and therefore best dealt with at the local level.Because most of the negative effects of the food system occur at the prod

204、uction stage,where the final consumers are located is immaterial to environmental conservation.Hoekstra(2011)has been a vocal advocate of global water governance,suggesting that as virtual water transfers shift environmental pressures beyond national borders,global factors such as climate change aff

205、ect local conditions,and multinational corporations play an increasing role,the world is slowly moving toward the privatization of water.The counterargument is the subsidiarity principle,whereby any issue should be addressed at the lowest possible level of governance in order to guarantee solutions

206、that are tailored to specific local needs and conditions.The main question then becomes whether it is possible to solve issues related to the unsustainable use of natural resources at a level that is lower than global or,in other words,whether the globalization of agriculture necessarily calls for g

207、lobal solutions?In fact,global externalities are very few.Deforestation,with the associated GHG emissions,is the foremost example because the effects of climate change may well occur very far away from where GHGs have been released into the atmosphere.Moreover,emissions can feed a vicious circle sin

208、ce they hasten climate change and thus lead to further environmental issues.The loss of biodiversity and ecosystem services is another channel through which deforestation can have global negative effects by increasing the opportunity for animal-human interactions and thus facilitating the transmissi

209、on of zoonotic diseases(Johnson et al.,2020).6On the other hand,environmental degradation or increasing pressure on water resources are not inherently global.Because environmental impacts heavily depend on local conditions,policy interventions should be tailor-made to the specific context and a one-

210、size-fits-all approach is misguided.The limited policy guidance offered by the concept of virtual water is stressed by Gawel and Bernsen(2013)and Wichelns(2015).These scholars emphasize that a large water footprint may not be problematic under some conditions and comparing WFs across countries is po

211、intless unless we have precise information on production sites and on the opportunity cost of water.Wichelns(2015)stresses that the savings associated with VW trade is only notional and that efficiency and abundance cannot be combined.Sharp cross-country differences in water footprints do not,by the

212、mselves,make water scarcity a global issue.Water saving in Europe(a large sink of virtual resources)does not have beneficial effects in arid or semi-arid regions of Africa.Nor does a ban on trade in water-intensive goods necessarily benefit water-scarce regions,as water is often not the main constra

213、int to agricultural production in food-importing countries.6 The argument is akin to the result of the optimal tariff rate for a large country in international trade theory|29|4.Policy implcationsOn the other hand,local issues may become international under some circumstances.If water deficits or en

214、vironmental degradation led to migration(Borgomeo et al.,2021),it makes sense to tackle the issue at the international or regional level.In this case though,restricting trade is likely to exacerbate problems,as areas featuring severe water scarcity can benefit from access to food produced elsewhere.

215、One argument in favor of global,or at least internationally coordinated,policies is the possibility that national conservation efforts have unintended consequences in third countries.In this case,the problem is not that action by a single country would not be enough to solve a problem,or that there

216、might be a problem of free-riding.Rather,the argument is similar to the“pollution heaven”hypothesis,whereby the combination of stringent domestic regulation plus international trade shifts the environmental burden onto other countries where agricultural practices have a larger footprint,thus making

217、the world worse off.This phenomenon is labeled the“illusion of preservation”by Berlik et al.(2002).4.3 SuggestionsOne of the main challenges facing humanity is to increase food production to match the population growth,while lowering the associated environmental pressure.Access to advanced technolog

218、y and innovation,which can be facilitated by international trade,will play an important role in helping developing countries,where the agricultural sector plays a larger role,promote intensification and resource efficiency while limiting adverse,local and global,effects on the planet.Along with tech

219、nical change to reduce the amount of natural resources needed to produce a given amount of food,policies that nudge people toward diets with a lower environmental footprint can also limit the over-exploitation of natural resources.Roux et al.(2021)estimate that 19 percent of the global harvested bio

220、mass is used for food,while 71 percent feeds livestock.As such,dietary changes that steer consumption away from animal-based products have the potential to lower the impact of the food system.The heterogeneity in the impact of different policy measures and agricultural practices,together with a lack

221、 of clear-cut evidence on the relationship between agricultural productivity and pollution(Copeland et al.,2021)suggest policy experimentation will be crucial to develop a set of effective tools to reconcile increasing food demand with the need to protect the environment.One of such areas of interve

222、ntions concerns schemes offering payments for environmental or ecosystem services,which have been attracting attention and resources from both public and private donors.However,evidence on their actual effects is still limited and somehow controversial(Miteva et al.,2012).One problem is that these i

223、nstruments often are assigned multiple objectives ranging from environmental protection to local development.Moreover,results seem to depend on local conditions,most notably enforcement and the presence of comprehensive conservation and development strategies(Costedoat et al.,2015).Direct support to

224、 farmers engaging in environmental protection to compensate for foregone revenues or increasing costs stemming for environment-friendly agricultural practices can help lower the tension between income support and conservation,but more evidence on the effectiveness of such schemes is needed(see Jayac

225、handran et al.,2017,for a pilot study in Uganda,which has delivered positive results).|30|International food trade and natural resourcesInternational food trade and natural resourcesNon-state market-driven(NSMD)governance,such as certification schemes or labeling,have also become increasingly popula

226、r.The assumption is that by increasing consumers awareness of the environmental,or social footprint of specific products(timber,cocoa,palm oil,to cite a few)it may be possible for“certified”crops to command a premium price,thus rewarding lower yields and environmental protection.Yet,the actual effec

227、tiveness of such schemes is disputed both in the general press(Whoriskey,2019)and by scholarly research(Kroeger et al.,2017).On the one hand,issues such as mismanagement,weak monitoring,capture,corruption and even fraud have emerged as critical limitations.On the other hand,scientific research on th

228、e topic is still scant.Kroeger et al.(2017)find that deforestation continues despite NSMD rules aimed at prohibiting the conversion of forested land to agriculture,and this appears to hold for different institutional settings(Brazil,Indonesia,Cte dIvoire)and crops(soy,palm oil,cocoa).Studying soy pr

229、oduction in the Brazilian cerrado,Green et al.(2019)find that certifications are not always effective in preventing biodiversity losses in vulnerable areas.Responsibility for this outcome lies mainly with a lack of market uptake so the premium received by farmers for sustainable agricultural practic

230、es is too small(van der Ven et al.,2018).Chang et al.(2016)estimate that a five percent increase in the price of Indonesian palm oil would be enough to internalize the value of lost ecosystem services driven by forest conversion and appropriation by agriculture,but the current premium fetched by cer

231、tified palm oil is just one percent.Moreover,the existence of regulatory loopholes and the fragmentation of environmental governance also represent a problem.van der Ven et al.(2018)stress how cocoa and palm oil production rests on a large number of smallholder farmers,who lack the financial and tec

232、hnical capacity to implement necessary reforms.On the other hand,the presence of multiple certification schemes with different criteria and standards creates sourcing problems for large cocoa traders who control a large fraction of the market and would be in the position to steer the sector toward m

233、ore sustainable practices.CHAPTER 5Conclusions|33|5 ConclusionsAgricultural trade can enhance global efficiency in the use of natural resources.At the same time,it may exacerbate the negative effects of externalities in contexts marked by weak governance.Moreover,efficiency and sustainability cannot

234、 go hand-in-hand.Local policy measures are needed to account for this trade-off,as well as to account for possible negative externalities that lead to the over-exploitation of the environment.Trade restrictions are the second-best solution as they do not affect domestic demand and do not address the

235、 source of externalities.Moreover,global coordination is necessary to avoid bilateral or regional agreements simply displacing environmental damage to areas that enjoy a lower degree of protection.Yet,trade is not“unfair”or problematic merely because it allows countries to consume more than could be

236、 domestically produced.While such an argument clashes with the very notion of gains from trade,the notional scenario in which each country produces domestically all the food that it needs is simply unfeasible.Moreover,trade restrictions do not guarantee that crops are grown where natural resources a

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