HOW DO AGRICULTURAL TRADE POLICIES AFFECT THE REGIONAL ENVIRONMENT? AN INTEGRATED ANALYSIS FOR THE AUSTRIAN MARCHFELD REGION

Abstract

Abstract It is still difficult to derive general findings and conclusions from either economic theory or empirical studies on the relationship between trade and environment. Consequently, we aim to analyse environmental effects of agricultural trade policies in the Austrian Marchfeld region by applying an integrated modelling framework that accounts for heterogeneity in agricultural production and emission. Monte-Carlo simulations have been performed in order to assess the uncertainty of model parameters and policy impacts. The model results indicate that changes in trade policies have statistically significant but small effects on the environment in March-feld. Policy makers should rather concentrate on identifying efficient domestic environmental policies, which are in accordance with WTO trade rules. Keywords agricultural trade policies, agri-environmental payments, integrated assessment modelling, Monte-Carlo simulations, nitrate pollution, soil organic carbon 1 Introduction According to economic theory, trade may have ambiguous effects on welfare if production and/or consumption of a traded good generates positive or negative externalities (A