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Border Measures in the Context of Adaptation and Mitigation to Climate Change








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    Book (stand-alone)
    Border and related measures in the context of adaptation and mitigation to climate change
    The State of Agricultural Commodity Markets (SOCO): Background paper
    2018
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    Although international trade is not specifically mentioned in the Paris Climate Agreement, trade can play a facilitating role in achieving the mitigation and adaptation objectives of signatories to the Agreement. Trade policies can also undermine those objectives. The focus of this paper is on examining how the facilitating role of trade can be achieved. One of the challenges created by the ‘bottom-up’ approach of self-declared national mitigation targets adopted in the Agreement is that if the economic costs of greenhouse gas (GHG) emissions are internalized in production and consumption, the implicit price of carbon will differ across countries. This creates the potential for trade distortions. Domestic mitigation policies in importers will almost inevitably result in some carbon leakage, i.e. offsets to reductions in domestic emissions through additional emissions generated in supplying imports. But an important distinction needs to be made between carbon reallocation and carbon misallocation resulting from changes in trade volumes. In the reallocation case, trade leads to a shift in production to lower-emitting producers thereby contributing to global mitigation. In the misallocation case, the opposite occurs. This paper analyses how various border measures, including border tax adjustments (BTAs) might be used to reduce potential carbon misallocation. The conclusion is that technical and legal constraints on the effective application of border measures for food and agricultural products to prevent carbon misallocation are extremely challenging and their use could open the door to protectionism. The use of carbon standards and labelling offers an alternative approach to reducing misallocation and promoting reallocation. It poses fewer technical difficulties and reduces the potential for legal challenges. An added advantage of labelling is that it can help to promote changes in consumption that will be needed to reduce the carbon footprint of food and agriculture. The use of the approach could be facilitated through the adoption of international standards for carbon measurement and labelling, such as those being developed through the International Organization for Standardization (ISO). Labelling is not a panacea and may have limited effectiveness when consumers base their consumption decisions primarily on the basis of price. For this reason, the use of domestic policy measures that increase carbon efficiency in agriculture (reduce emissions per unit of output) and limit changes in land use that contribute to emissions will also be important for achieving mitigation aims under the Paris Agreement. An increasing number of regional trade agreements (RTAs) have incorporated environmental provisions, with the most common types of provisions focusing on environmental cooperation. Recent agreements recognise the importance of mutually supportive trade and environmental policies, and national commitments to multinational environmental agreements. RTAs could play a supporting role to the Paris Climate Agreement, by fostering international cooperation on climate mitigation measures in the context of freer trade.
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    Domestic Support Measures in the Context of Adaptation / Mitigation to Climate Change
    The State of Agricultural Commodity Markets (SOCO) 2018: Background Paper. Rome
    2018
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    Climate Smart Agriculture (CSA) has been promoted as a key approach in addressing the effects of climate change. First launched in 2009, CSA refers to agricultural technologies that are well suited to increase farmer livelihoods in the face of a changing climate by 1) raising agricultural productivity; 2) building resilience of livelihoods and farming systems; and 3) reducing carbon emissions. While government implementation of mitigation and adaptation policies may be an effective means to help address climate change, concerns arise, if CSA policies run counter to international trade disciplines. In particular, CSA policies could come into direct conflict with WTO trade rules, if these policies serve to insulate domestic producers from competition. Thus, they could potentially distort production and trade. This paper examines CSA policies in the context of the WTO agreements, including domestic support disciplines under the WTO Agreement on Agriculture.
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