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Carbon leakage and agriculture: A literature review on emissions mitigation policies

Theodoros Arvanitopoulos, Grégoire Garsous () and Paolo Agnolucci

No 169, OECD Food, Agriculture and Fisheries Papers from OECD Publishing

Abstract: The risks of carbon leakage associated with climate policies in the agricultural sector remains under-researched. Studies to date suggest that carbon pricing policies implemented by a single country, or small group of countries, reduce global emissions but also affect the international competitiveness of these countries’ agricultural sectors and induce carbon leakage. While carbon leakage can be prevented with trade-related measures that adjust emissions prices at the border, such measures applied in developed countries could potentially lead to significant welfare losses for developing countries that heavily rely on agricultural exports. That said, important caveats apply to the reviewed studies: i) from an environmental perspective, estimations of carbon leakage rates alone do not offer a comprehensive assessment of how optimally agricultural activities are allocated across countries; ii) most of the studies estimate the effects of additional environmental policies, such as carbon taxes, and ignore the effects of existing policies, including market distorting and potentially environmentally harmful support for agricultural production.

Keywords: Climate change; Environmental policies; Trade (search for similar items in EconPapers)
JEL-codes: F18 O13 Q15 Q17 Q54 (search for similar items in EconPapers)
Date: 2021-10-27
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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