Food Trade, Biodiversity Effects and Price Volatility

Cecilia Bellora and Jean-Marc Bourgeon

Working Papers from HAL

Abstract: Biotic factors such as pests create biodiversity effects that increase food production risks and decrease productivity when agriculture specializes. Under free trade, they reduce the specialization in food production that otherwise prevails in a Ricardian two-country setup. Pesticides allow farmers to reduce biodiversity effects , but they are damaging for the environment and for human health. When regulating farming practices under free trade, governments face a trade-off: they are tempted to restrict the use of pesticides compared to under autarky because domestic consumption partly relies on imports and thus depends less on them, but they also want to preserve the competitiveness of their agricultural sector on international markets. Contrary to the environmental race-to-the-bottom tenet, we show that at the symmetric equilibrium under free trade restrictions on pesticides are generally more stringent than under autarky. As a result, trade increases the price volatility of crops produced by both countries, and, depending on the intensity of the biodiversity effects, of some or all of the crops that are country-specific.

Keywords: agricultural trade; food prices; agrobiodiversity; pesticides (search for similar items in EconPapers)
Date: 2017-12-20
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
Note: View the original document on HAL open archive server: https://hal.science/hal-01669332
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Working Paper: Food trade, Biodiversity Effects and Price Volatility (2016)
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