Trade-induced land-use transitions and greenhouse gas emissions: The case of the EU-Mercosur free-trade agreement

Abstract

Currently, land use change (LUC) accounts for approximately 18.8% of all greenhouse gas (GHG) emissions globally, and up to 66% and 70% in Brazil and Paraguay respectively. However, owing to measurement difficulties, examining the effects of changing trade patterns is often overlooked in studies. This study aims to investigate the induced effects of LUC and their consequences concerning GHG emissions for the EU-Mercosur free trade agreement. A multi-regional computable general equilibrium (CGE) model with an explicit land module is used to simulate the effects of the free trade agreement. GHG emissions are calculated for LUC, fossil energy CO2, and non-CO2 emissions to capture a wide range of sources and reveal their relative contributions. The study finds that as a more extensive liberalization scheme is implemented, the majority of global GHG emissions change are driven by LUC, consisting up to 89.9% of the total increase. These findings align with previous studies. Nonetheless, we argue that for Latin America, where LUC and deforestation are historical problems, careful consideration of LUC and agriculture GHG sources is necessary to address the potential environmental impacts of trade agreements.