Agriculture, trade, and climate change adaptation: a global CGE analysis for Morocco and Turkey

Abstract

ABSTRACTThe extent to which agricultural trade liberalisation can be an adaptation strategy in the face of climate change remains to be an open discussion in the literature. We set out to answer this question in the context of Morocco and Turkey by taking into account the impact of climate change on agricultural international markets at the global level. We use the GTAP model, combined with a newly developed global database on climate change impacts on agricultural crop sectors by 2050 as captured by yield projections. Results suggest that the more trade is liberalised, the higher global welfare gains are. However, the gains are not large enough to offset the loss from climate change impacts on agricultural productivity globally. In Morocco, agricultural trade liberalisation, on average, induces additional welfare losses. The main drivers are the deterioration in the terms of trade that offsets all the potential gains from the better allocation of economic resources due to free trade. For Turkey, trade liberalisation induces net welfare gains under all scenarios. The larger the tariff elimination scheme, the larger the net gains due to the more efficient allocation of economic resources, which partially offset the impact of declining terms of trade.