Page 108 - Climate Change and Food Systems

climate change and food systems: global assessments and implications for food security and trade
climate change versus no climate change. Both scenarios assume exogenous rates of labour, capital and productivity growth to describe 2050. The climate change shock also imposes yield impacts and labour productivity shocks, some derived from studies that predate CMIP3. They find that developing countries’ food self-sufficiency ratio declines from 100 percent to 88 percent, while that of high-income countries rises from 96 percent to 129 percent between 2004 and 2050.
CGE models can also be applied to examine whether trade can moderate the expected rise
in production and price volatility under climate change. Verma, Hertel and Diffenbaugh (2014) examine the US ethanol sector under moderate US corn price volatility projected to occur in response to near-term global warming. The authors conclude that if ethanol biofuels are mandate-driven, price volatility will be exacerbated. However, if market- driven, then the emergence of the corn ethanol sector will both magnify corn price volatility (inherited via more integrated energy markets through crude oil price fluctuations) and moderate the climate-driven supply volatility. The latter dominate with a net impact showing price volatility reduced by 27 percent. In contrast, mandates on ethanol production increase future price volatility
by 54 percent under future climate after 2020. Liberalized international corn trade serves to reduce the impact of near-term climate change on US corn price volatility by 8 percent.
One of the important recent developments
in global agriculture has been the growth of policy-supported biofuels, especially in the US and the EU. Although the biofuel policy support was justified in part as a contribution to lower GHG emissions, the role of biofuels has become contentious owing to the concern about the negative environmental impact from indirect land use change (ILUC) and its association with more carbon emissions (linked to deforestation). Several CGE-based analyses have examined the issue
of biofuel mandates on global food production, prices and trade (Keeney and Hertel, 2011; Al- Riffai, Dimaranan and Laborde, 2010; Banse et al., 2011). The Keeney and Hertel analysis concludes
with a cautionary note on the implications of supply shocks for US coarse grains on global markets. The Al-Riffai et al. analysis show that the EU biofuel mandate has a net positive environmental impact from trade despite a slight increase in indirect land use change (mostly from sugar ethanol expansion in exporter Brazil) and that direct emissions are lower due to the shift to more emission-efficient ethanol (sugarcane ethanol from Brazil). While these analyses do help in evaluating policy trade- offs, one should not draw broader inferences
from them owing to the specificity of the policy instruments analysed. For example, while biofuel production shift into Brazil sugar ethanol may be relatively emission-efficient (compared to rapeseed biofuel), this cannot be generalized, as sugar ethanol production in other countries would require irrigation – a resource expected to become more scarce under climate change.
More recently, attention has turned to the climate-water linkages and the mediating role
of trade. Calzadilla et al. (2011) also analyse the adaptive role of trade in a study of global trade reform and climate change using Global Trade Analysis Project (GTAP)-W (Berrittella et al., 2007),
a 16-region, static CGE model that also includes water as an input into crop production. However, given that production is treated at the national
as opposed to river basin level, the inclusion
of irrigation water as input into production was deemed unsatisfactory. Liu et al. (2014) expanded this work by developing an improved model version GTAP-BIO-W, which restricts water supply and demand within a specific river basin. The model was linked with the IMPACT-WATER model, using the latter to generate estimates on the irrigation stress at the river basin level due to climate change. These estimates are applied as inputs into the GTAP-BIO-W to model how climate-induced future irrigation shortage will affect crop production, food prices and the resultant effects on bilateral trade patterns. The authors conclude that global irrigation shortfalls do not always translate into less total regional crop output, as the outcome depends
on price effects and regional supply response. Second, regional irrigation shortfalls tend to boost
88