Modelling the impact of policies to reduce environmental impacts in the New Zealand dairy sector

Agriculture remains a major sector of the New Zealand economy, with the vast majority of farm and food production exported. The accelerating intensification of farming in New Zealand over recent decades raises concern over the current sustainability of New Zealand farming, and whether it can remain so in the future. In this study, we focus on the impacts of policies to reduce environmental impacts of dairy farming, with a particular focus on nitrogen pollution and greenhouse gases (GHG) emissions. We use a modified version of the Global Trade Analysis Project (GTAP) model and database, with improved specification of the agricultural sector and land-use. We augment the model with environmental indicators for New Zealand, including nitrogen balances and GHG emissions. We simulate a range of scenarios involving reductions in fertiliser use and stocking rates on dairy farms, from an updated 2010 database. In particular, we consider seven scenarios, with the objective of exploring reductions in the dairy stocking rate and the application of nitrogenous fertiliser to dairy farms to target reductions in the dairy sector’s nitrogen balance of 10%, 20% and 30%. Reducing fertiliser use and stocking rates are two of the approaches that dairy farmers can take in order to reduce their emissions of nitrogen and GHGs. Our results suggest that the nitrogen balance could be reduced by 10% with a 16% cut in nitrogenous fertiliser and a 5% fall in the stocking rate. Reducing fertiliser use and stocking rate by 31% and 11% respectively could result in a 20% cut to the dairy sector’s nitrogen balance. To achieve a 30% reduction in the nitrogen balance, our results suggest that the cut back in fertiliser use would need to be 45%, with the stocking rate reduced by 19%. Across these scenarios, our results indicate that value added in the dairy farm sector could fall by between 2% and 13%, while export earnings from dairy products may fall by between US$269 million and US$1,145 million

Assessing Socioeconomic Impacts of Transport Infrastructure Projects in the Greater Mekong Subregion

This study attempts to quantify the links between infrastructure investment and poverty reduction using a multi-region general equilibrium model, supplemented with household survey data for the Greater Mekong Subregion (GMS). Infrastructure investment is an important step in economic development, with improvements in transportation infrastructure boosting economic opportunities throughout the region, for example by significantly reducing travel times and costs. In this study, we concentrate on quantifying the effects of some of the key linkages between upgraded infrastructure, economic growth, and poverty reduction. We model the impact of both reducing transport costs and improving trade facilitation in the GMS. Our findings suggest strong gains to the GMS countries as a result of infrastructure development and trade facilitation with national poverty reduced throughout the region. However, the impact on various segments of these populations differs, depending in part on factor returns.greater mekong subregion; poverty reduction; infrastructure investment

Tariff Rate Quotas and New Zealand’s Meat and Dairy Trade

The tariff rate quota (TRQ) system was formalised in the Uruguay Round with the aim of maintaining and improving market access for agricultural products. Under this system, a lower tariff rate is applied to imports up to the quota limit, with a higher (and often prohibitive) tariff rate levied on products imported beyond this quota. However, the success of the TRQ system has been limited, with dairy and meat products in particular still facing relatively high barriers to international trade. In this paper, we examine the impact of the TRQ system on New Zealand’s meat and dairy trade. We draw together theoretical and empirical insights and present preliminary findings arising from interviews with key stakeholders. In particular, we examine whether the TRQ system has achieved its objectives from the perspective of the dairy and meat sectors in New Zealand and we analyse problems that appear to exist with the system. We also examine implications of reform of the TRQ system, including lower in- and over-quota rates, increased quota limits and more transparent and efficient administration methods.Agribusiness, Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, Farm Management, International Relations/Trade, Land Economics/Use, Livestock Production/Industries,

Challenges and Opportunities for Trade and Financial Integration in Asia and the Pacific

While it is commonly accepted that multilateral liberalization will bring the greatest global gains from liberalization, regional agreements may be much more feasible in the short term. The dictum from the traditional trade theory on the superiority of unilaterally applied free trade for a small economy under perfect competition is universally accepted but rarely applied to policymaking. Reasons for this are many, ranging from using trade policy for non-economic objectives (e.g., employment), to circumstances in an actual economy and markets being different from those of the economic model (e.g. existence of economies of scale, imperfect competition or imperfect information). Nevertheless many countries have embraced the advantages of open trade regimes and have pursued liberal trade unilaterally or more often through membership in the multilateral trading system, the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO). On the other hand, both trade theory and the international trading rules allow for the discriminatory trade policies in the forms of preferential or regional trade agreements.trade policies, GATT, WTO, regional, agreement, goods, Asia, Pacific, GDP

International trade negotiations and the trans-border movement of people: A review of the literature

We review the international and New Zealand literatures on the two-way interaction between international migration and agreements designed to enhance cross-border trade or investment. Benefits and costs of migration, to the extent that these may feature in trade and migration negotiations, are discussed. While trade and migration can be substitutes in some contexts, they will be complements in other contexts. Liberalisation of services and the movement of people are likely to offer much more significant gains than liberalisation of remaining barriers to goods trade. Significant scope for liberalisation under GATS mode 4 (the movement of natural persons) may remain. However, temporary migration is already promoted on a unilateral and bilateral basis within immigration policy frameworks that may provide greater flexibility than GATS mode 4. With respect to both trade and migration, the more diverse the exchanging countries are, the greater the economic benefits tend to be. However, greater diversity may also imply greater social costs. This paradox of diversity needs to be addressed through appropriate social policies accompanying enhanced temporary and permanent migration

Transport infrastructure and trade facilitation in the Greater Mekong Subregion

As trade is an important driver of growth and infrastructure is a necessity for trade, infrastructure development has a key role to play in economic development. This study aims to quantify the potential benefits of the development of the economic transport corridors, along with the implementation of the Cross-Border Transport Agreement (CBTA) in the Greater Mekong Subregion (GMS). Some of the key linkages between upgraded infrastructure, economic growth, and sectoral responses are explored using a computable general equilibrium (CGE) framework. The study provides a static view of one-off gains from a conservative estimate in a reduction in transport costs and improvements in trade facilitation. The findings show clear gains from improvements in physical land transport and the more substantial gains from improved trade facilitation. The results also provide a glimpse into the potential gains from intra-regional trade, highlighting the potential markets within the GMS. The implications of these results are that once a sufficient physical system is in place, additional benefits are marginal compared with improvements in policy initiatives under the heading of trade facilitation. While the GMS does not have the level of physical infrastructure that would be considered adequate for its desired level of economic activity, the results show that investing in soft aspects now still has substantial payback. In the future, as a greater physical base is put in place, the region should enjoy further benefits from expanded markets having a solid trade facilitation system in place. In sum, the CBTA and transport corridor development can significantly improve transit times and trade service costs, albeit with some drawbacks, throughout the region

The current round of agricultural trade negotiations: Should we bother about domestic support?

The current WTO agricultural trade negotiations began in March 2000, and became part of the Doha Round in late 2001. The previous Uruguay Round reached agreements in the areas of market access, export competition and domestic support. The current Round is seeking agreements under similar headings. Reaching agreement over reductions in domestic support to farmers is complicated by a number of factors, such as the extent to which such support impacts on production decisions, the wishes of governments to support farmers for pursuing multifunctional outcomes from agriculture, and the categorisation of a myriad of policy instruments into green, blue and amber boxes. It therefore poses the risk of considerably extending the negotiations and diverting attention away from other areas of reform. But the sustainabilility of many domestic support policies requires imposition of trade barriers so reform of trade barriers may force governments into reforming domestic support without requiring specific international agreements. Quantitative assessment, using the GTAP applied general equilibrium model is used to analyse trade reform scenarios, with and without specific changes in domestic support. It is concluded that substantial trade expansion and welfare gains can be achieved even when domestic support is excluded from the multilateral agreement, and that improved market access makes a far greater contribution to welfare gains than reforms to domestic policies. Once substantive reforms to border policies have been achieved, attention can then be turned to the lower-priority task of reforming domestic support

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Asia's Changing Role in World Trade: Prospects for South - South Trade Growth to 2030

Developing Asia's rapid economic growth has been shifting the global economic and industrial centers of gravity away from the North Atlantic, raising the importance of Asia in world trade, and boosting South–South trade. How will trade patterns change over the next 2 decades in the course of economic growth and structural changes in developing Asia and the rest of the world? In particular, what can be expected of developing Asia's intraregional trade and its trade with other developing country regions? This paper addresses these questions by projecting a core baseline for the world economy from 2004 to 2030 and comparing it with alternative scenarios for 2030. We employ the global economywide GTAP model and Version 7.1 of the GTAP database, and assume for the core projection that trade-related policies do not change over the next 2 decades. Alternative scenarios explore (i) slower economic growth rates in the "North", (ii) slower productivity growth in primary sectors, and (iii) various trade policy reforms in developing Asia without and with policy reforms also in the "North" and in South–South trade. Projected impacts on international prices, sectoral shares of regional gross domestic product and trade, "openness" to trade, and welfare gains from trade reforms are highlighted, in addition to their effects on regional shares of global gross domestic product and trade. The paper concludes by drawing out implications for regional and multilateral trade policy

Growth in densely populated Asia: implications for primary product exporters

Economic growth and integration in Asia is rapidly increasing the global economic importance of the region. To the extent that this growth continues and is strongest in natural resource-poor Asian economies, it will add to global demand for imports of primary products, to the benefit of (especially nearby) resource-abundant countries. How will global production, consumption and trade patterns change by 2030 in the course of such economic developments and structural changes? We address this question using the GTAP model and Version 8.1 of the 2007 GTAP database, together with supplementary data from a range of sources, to support projections of the global economy from 2007 to 2030 under various scenarios. Factor endowments and real gross domestic product are assumed to grow at exogenous rates, and trade-related policies are kept unchanged to generate a core baseline, which is compared with an alternative slower growth scenario. We also consider the impact of several policy changes aimed at increasing China's agricultural self-sufficiency relative to the 2030 baseline. Policy implications for countries of the Asia-Pacific region are drawn out in the final section