THE ROLES AND IMPLICATIONS OF AGRICULTURAL AND ENERGY RESOURCES TRADE IN A CLIMATE CHANGE-MITIGATING WORLD

Abstract

Global dependence on agricultural and energy resources trade has grown significantly in the past several decades. In the coming decades, the roles and implications of international trade of various commodities will change, influenced by and important for achieving climate mitigation goals. As globalization increases, new energy technologies emerge, and new climate-oriented trade policies are enacted, there is a need to understand the resulting implications (opportunities and vulnerabilities) on exporters and importers. I present three essays that use the Global Change Analysis Model (GCAM) to evaluate future, inter-regional trade dynamics in a climate-mitigating world. Essay 1 focuses on Latin America and the Caribbean (LAC), a key agricultural exporting region. I show that agricultural market integration (i.e., the reduction of trade barriers) and climate mitigation policies could increase agricultural production and trade opportunities for many LAC economies (particularly in southern South America). Total net export revenue across LAC could reach $110-$270 billion annually by 2050. However, these opportunities could also pose significant economic and environmental trade-offs, including emissions reduction challenges, potential loss of livestock production, increased consumer expenditures, and deforestation and water scarcity pressures. Essay 2 explores the role of liquefied natural gas (LNG) trade as a rapidly emerging technology compared to pipeline natural gas. I analyze how advances in LNG technology, limitations on trade, and climate mitigation policies could affect global and regional vulnerabilities in energy supply. Globally, new additions in LNG and pipeline export infrastructure, range from 330-1330 and 130-440 million tons per annum (MTPA), respectively, by 2050 across scenarios, with the lower end of this range achieved through a transition to a net-zero energy system and limited trade. The results also highlight diverging risks for different gas exporters. For example, Russia, which produces gas largely for pipeline exports, may face larger underutilization due to advances in LNG technology and geopolitical shifts than regions oriented towards domestic and LNG markets, such as the USA and Middle East. Essay 3 evaluates whether import-restrictions on deforestation linked oil crops (i.e., oil palm and soybean) can be effective in reducing deforestation and land use change (LUC) emissions as well as their broader economic implications. I find that current EU restrictions will likely have minimal impact. If extended beyond the EU, import restrictions could drive reductions in cumulative LUC emissions in key oil-crop exporting regions— up to 0.9% in Indonesia, 1.5% in the rest of Southeast Asia, 3.8% in Argentina and 6.7% in Brazil, relative to a scenario with no import restrictions. However, these key exporters could also face losses ranging $4.1-$61 billion in cumulative agricultural production revenue by 2050.