climate change and agricultural trade: how effective is reform as an adaptation measure?
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World Bank and WTO: Climate Change and Agriculture Trade - Risks and Responses September 22, 2009 Washington, DCTRANSCRIPT
Climate Change and Agricultural Trade: How effective is reform as
an adaptation measure?
Gerald C. Nelson
Senior Research Fellow
Environment and Production Technology Division
World Bank and WTO Climate Change and Agriculture TradeRisks and Responses
22 September 2009
Preview of Results
Climate change alters comparative advantage
Agricultural trade flows change dramatically
Unchecked climate change will result in a 20 percent increase in malnourished children by 2050
Reduced agricultural protection mitigates the negative effects some
Results still considered preliminary. IFPRI Food Policy Review released October 5 at IFPRI
Page 2
Outline
Climate Change Modeling Methodology
Impacts: Crop Supply, Demand, and Trade
Climate Change Adaptation Costs
The Effects of Changes in Protection
Page 3
MODELING METHODOLOGY FOR CLIMATE CHANGE IMPACTS
Integrating Location-specific Biophysical and Socioeconomic Modeling is Critical
Climate change will bring location-specific changes• in precipitation, temperature and variability
Need to reconcile • limited resolution of macro-level economic models that
operate through equilibrium-driven relationships with • detailed models of dynamic biophysical processes –
crop models Provide more realistic modeling of climate change
effects (biophysical and economic) on global/regional agriculture
Page 5
Global Change Model Components
GCM climate scenarios• NCAR (wetter) and CSIRO (drier) using SRES A2
DSSAT crop model• Biophysical crop response to temp and precip
ISPAM • Spatial distribution of crops based on crop calendars,
soil characteristics, climate of 20 most important crops IMPACT2009
• Global food supply demand trade model. Results to 2050 with global hydrology
Climate Change Affects Comparative Advantage, Rice Importing Country
Page 7
Rice
Wheat
dwwr
P
P
R2000
W2000
R2050
W2050
Rice importsWheat exports, 2000
Increases in rice imports and wheat exports, 2050
Climate Change Affects Comparative Advantage, Rice Exporting Country
Page 8
Rice
Wheat
dwwr
P
P
R2000
W2000
R2050
W2050
Rice exportsWheat imports, 2000
Reduction in rice exports and wheat imports, 2050
Key point: Climate change might increase or decrease trade flow. It depends on• Biophysical determinants of relative advantage• Socioeconomic determinants of demand
Rising average temperatures
Page 9Source: http://data.giss.nasa.gov/gistemp/graphs/
… could increase much more
Page 10Source: Figure 10.4 in Meehl, et al. (2007)
AVERAGE ANNUAL PRECIPITATION CHANGES BY
GCM
Watch Sub-Saharan Africa, the Amazon, and South Asia
Change in Precipitation, 2000-2050CSIRO, A2, AR4
Change in Precipitation, 2000-2050NCAR, A2, AR4
BIOPHYSICAL PRODUCTION RESULTS
Climate-change-only effects on yield and area
Climate induced percentage change in yield in 2050: Irrigated Rice
NCAR A2
Climate induced percentage change in yield in 2050: Rainfed Rice
NCAR A2
Climate induced percentage change in yield in 2050: Rainfed Maize
NCAR A2
Climate induced percentage change in yield in 2050: Irrigated Wheat
NCAR A2
FOOD SUPPLY AND DEMAND RESULTS
IMPACT2009Biophysical effects from crop and hydrology models
andeconomic effects from global agriculture model
Impact on International Food Prices
Page 20
Rice Wheat Maize Soybeans -
50
100
150
200
250
300
350
400
450
2000 2050 No climate change 2050 CSIRO NoCF 2050 NCAR NoCF
Do
llar
s P
er M
etri
c T
on
Price increases without climate change
Greater price increases with climate change
Climate Change Plus Economic Impacts on Rice Production
Page 21South Asia East Asia and
the PacificEurope and Central Asia
Latin America and the Car-
ibbean
Middle East and North
Africa
Sub-Saharan Africa
-
50,000
100,000
150,000
200,000
250,000 2000 2050 no CC 2050 with CC
Mil
lio
n M
etri
c T
on
s
Impacts on Maize Production
Page 22
South Asia East Asia and the Pacific
Europe and Central Asia
Latin America and the Car-
ibbean
Middle East and North
Africa
Sub-Saharan Africa
-
50,000
100,000
150,000
200,000
250,000
300,000 2000 2050 No CC 2050 with CC
Mill
ion
Me
tric
To
ns
Impacts on Wheat Production
Page 23
South Asia East Asia and the Pacific
Europe and Central Asia
Latin Amer-ica and the Caribbean
Middle East and North
Africa
Sub-Saharan Africa
-
50,000
100,000
150,000
200,000
250,000
300,000
2000 2050 No CC 2050 with CC
Mil
lio
n M
etr
ic T
on
s
Impacts on Cereal Trade Flows
Page 24
CSIRO developing country imports are about 150 million mt
Impact on Per Capita Calorie Availability
Page 25
Per capita calorie availability increases without climate change Per capita calorie availability
falls with climate change
Impact on Childhood Malnutrition
Page 26
South
Asia
East A
sia a
nd P
acific
Europ
e an
d Cen
tral A
sia
Latin
Am
erica
and
Car
ibbe
an
Mid
dle
East a
nd N
orth
Afri
ca
Sub S
ahar
an A
frica
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000 2000 2050 No CC 2050 with CC
Mil
lio
ns
of
Ch
ild
ren
Child malnutrition falls without climate change except in SSA
Child malnutrition increases with climate change
CLIMATE CHANGE ADAPTATION COSTS
Our Definition of Agricultural Adaptation
Agricultural investments that reduce child malnutrition with climate change to the level with no climate change
What types of investments considered?• Agricultural research• Irrigation expansion and efficiency improvements• Rural roads
Page 28
Adaptation Costs are Large!
Required additional annual expenditure • Wetter NCAR scenario = US$7.1 billion • Drier CSIRO scenario = US$7.3 billion
Regional level• Sub-Saharan Africa - 40% of the total, mainly for rural
roads• South Asia - US$1.5 billion, research and irrigation
efficiency • Latin America and Caribbean - US$1.2 billion per year,
research• East Asia and the Pacific - $1 billion per year, research
and irrigation efficiency
Page 29
Developed Country Adaptation Expenditures Help
With additional investments in the developed countries, spillover effects to the developing world reduce the need for adaptation investments slightly
NCAR scenario, developing country adaptation costs• Developing countries investments only -> US$7.1 billion • With additional developed country productivity
investments -> US$6.8 billion
Page 30
What about changes in protection?
Protection in IMPACT defined as PSE and CSE
Two experiments• Double protection – multiply PSE and CSE by 2• Eliminate protection – set PSE and CSE to 0
Page 31
1 1PS PW MI PSE
1 1PD PW MI CSE
2000 Maize Prices, Protection Experiments
Page 32
Argentina Australia Brazil China France India USA -
20
40
60
80
100
120
140
160
180
200
PS (US$) PS (US$) complete liberalizationPS (US$) double protection
Compare Brazil liberalization To France liberalization
Double protection has greater effect than elimination
Results from the Experiments: 2050 Cereal Trade Flow Changes
Page 33
South
Asia
East A
sia a
nd th
e Pac
ific
Europ
e an
d Cen
tral A
sia
Latin
Am
erica
and
the
Carib
bean
Mid
dle
East a
nd N
orth
Afri
ca
Sub-S
ahar
an A
frica
Devel
oped
Cou
ntrie
s
Devel
opin
g Cou
ntrie
s -200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
200,000
NCAR NCAR-IncLib NCAR-IncProCSIRO CSIRO-IncLib CSIRO-IncPro
Mill
ion
mt
Results from the Experiments: 2050 Child Malnutrition Changes
Page 34
Developing Countries110
115
120
125
130
135
140
Baseline protec-tion
Increased Protec-tion
No Protection
Baseline protection
Increased ProtectionNo Protection
Baseline protection
Increased Protection
No Protection
Mil
lio
n m
aln
ou
rish
ed c
hil
dre
n
No Climate Change NCARCSIRO
Conclusions
Climate change will have negative impacts on agricultural production and food security in developing countries
Agriculture is critical for • Employment• Economic development and • Food security
Argues for significant expenditures to reduce the adverse impacts of climate change
Reduced agricultural protection (border and domestic) helps some.
Page 35
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