RUI: Agricultural Trade and Adaptation to Environmental Change

Middlebury College, Middlebury VT

Investigators

Abstract

Abstract One of the main economic effects of predicted changes in environmental factors will be largely driven by the agricultural sector, particularly in areas where most of the labor force works in agriculture and crops are already grown close to the limits of their thermal tolerance. This research investigates the extent to which increased trade between regions and across countries can help offset the adverse effects of environmental change. The project uses an estimated model of agricultural production and trade linking a large number of regional markets and countries. The model is used to run experiments comparing the effects of changes in environmental factors with existing high transport costs and policy barriers to those when these costs and barriers are reduced or removed. This research expands on an existing model of agricultural trade by incorporating both an explicit model of land use choice based on recent advances in the international trade literature and a larger set of crops. The estimated model is used to simulate the baseline equilibrium with existing high trade costs and baseline productivity and then compare these results to those under counterfactual simulations with (i) lower trade costs; (ii) predicted productivity under environmental change; and (iii) both. The rich set of output of the model is then used to analyze the heterogeneity in effects on producers, consumers, and overall welfare in each simulation across a large number of regions. This research engages undergraduate research assistants in data collection, estimation and programming of the model, analysis of the model output. Furthermore, packaging of the model in a user-friendly format with complete documentation and open access will enable other researchers to use it for their experiments. This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.