How Does Agricultural Trade Liberalization Have Environmental Impacts? Evidence from a Literature Review

Abstract

The liberalization of world trade has led to a significant increase in agricultural trade, which has brought to light various environmental externalities, including climate change, deforestation, and water pollution. While economic studies tend to overlook the environmental effects of agricultural trade liberalization, recent research has shown a growing interest in related aspects. As such, it is crucial to conduct a comprehensive analysis of the environmental impacts of agricultural trade liberalization. This study aims to address this issue by conducting a systematic review of the relevant literature from the past two decades. Research has revealed that agricultural trade liberalization has both positive and negative impacts on the environment. The various mechanisms through which these effects are observed include scale, structural, transport, and technology effects. Most studies have concluded that agricultural trade liberalization has a significantly negative impact on the environment. To address this issue, four potential solutions have been proposed, including factor allocation, policy adjustment, technological innovation, and improvements to compensation mechanisms. Future research should aim to develop a comprehensive model that can effectively examine the environmental impacts of agricultural trade policy distortions and the criteria used to select environmental measures. By doing so, we can gain a deeper understanding of the complex relationship between agricultural trade policies and their environmental consequences.