Carbon Taxes, Agricultural Competitiveness and Trade

Nicholas Rivers and Brandon Schaufele

No 1302E, Working Papers from University of Ottawa, Department of Economics

Abstract: This study evaluates the implications of an actual carbon tax on the international competitiveness of the agricultural sector. Applying uniformly to all fossil fuels combusted within its borders, the province of British Columbia unilaterally introduced a carbon tax on July 1, 2008. Using commodity-specific trade flows and exploiting cross-provincial and inter-temporal variation, we find little evidence that the implementation of the carbon tax is associated with any meaningful effects on agricultural exports despite the sector being singled out as “at risk” by the provincial government. Allowing for heterogeneous responses by commodity, some statistically insignificant negative effects are shown for specific exports. Discussion of potential policy remedies to address the potential impacts of the tax on firm profitability and international competitiveness is also included.

Keywords: Agricultural trade; British Columbia; carbon tax; competitiveness; unilateral climate policy. (search for similar items in EconPapers)
JEL-codes: H23 Q17 Q5 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2013
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-law
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