Climate change, agriculture and trade policy: CGE analyses at regional, national and global level

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2013
Dudu, Hasan
This thesis investigates the effects of climate change on the Turkish economy by using computable general equilibrium (CGE) models at regional, national and global level. The physical impact of climate change is first translated into yield and irrigation requirement shocks by using a crop-hydrology model developed for this study. Then these are introduced into the CGE models as productivity shocks to investigate their effects on the overall economy. Simulation results suggest that climate change will come into play after 2035, and its effects on the economy will get worse after 2060. The final economic effects at regional and global levels will depend on the location and structure of agricultural production. Trade liberalization is considered as a policy response to contain the negative impact of the climate change. The results indicate that trade liberalization helps, but the positive effects are limited. International trade plays a key role in the response of the economy to the climate change shocks. Trade liberalization with the European Union is found to have positive effects on welfare of households, however these effects are low compared to the harm caused by climate change. Moreover, it was also noted that these positive effects increased as climate change effects are worsened. At the global level, the simulation results suggest that there is a significant uncertainty about the impact of climate change on the global economy. The effects are not homogenous for different regions of the world or different sectors in a region. On the other hand, effects of trade liberalization are not affected by the uncertainty in the climate change scenarios. Our results suggest that adverse effects of climate change on welfare can be alleviated by trade liberalization in most parts of the world.

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Citation Formats
H. Dudu, “Climate change, agriculture and trade policy: CGE analyses at regional, national and global level,” Ph.D. - Doctoral Program, Middle East Technical University, 2013.