Environmental and trade policy for sustainable agriculture and industry

Economic activity and globalization have increased hand in hand over time and are now at unprecedented levels. At the same time, citizens and their governments are more cognizant than ever of the impact of human activity on the environment. Many have thus called to question the sustainability of economic growth in general, and international trade in particular. It is the central task of researchers to provide advice on how to make economic growth and globalization environmentally sustainable.

The question of whether the benefits of international trade exceed its environmental costs is as complicated as it is controversial. On the one hand, international trade allows consumers to access a wide range of goods that wouldn’t otherwise be available. International trade also allows countries to specialize in production of goods for which they have a comparative advantage, which contributes to higher standards of living. On the other hand, however, many people have legitimate concerns about possible detrimental effects of international trade on the environment. For example, international trade can make it more difficult to reduce global emissions of greenhouse gases, as tougher rules in one country may encourage production to move to “pollution havens” with less stringent regulations.

Economists analyse the impacts of international trade using theoretical models and also by analysing historical data. Much of my research contributes to correctly measuring the impact of economic integration, such as through trade policies. This work has spanned both agriculture and other industries. In my future research, I plan to continue with policy evaluation, with a focus on international trade and the environment.

The main challenge in policy evaluation is to ensure that the researcher can isolate the impact of a particular policy on a particular outcome of interest. The process of inferring the causal effects of a policy can be challenging because it is seldom possible to perform randomized controlled trials to evaluate economic policies. Economists often rely on accidents of history, so-called “natural experiments”, in order to identify the impacts of policies.

In the future I plan to analyse the impact of environmental policies and trade policies, and provide advice on how to design effective policies. I am particularly interested in studying how to design trade policies when responding to weather volatility caused by climate change. A fundamental question is the degree to which societies should be self-sufficient or specialize in production of a smaller number of products. Full self-sufficiency makes countries very sensitive to their own negative production shocks due to weather or other factors. However, specialization and trade makes importers sensitive to production shocks in other countries. Striking the right balance between self-sufficiency and international trade involves trade-offs that can be analysed using economic theory and methods.