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V. Global issues and national
responses
A. Env ir onmental im pli cations of the WTO, and econom ic im pli cations
of MEAs.
B. Env ir onmental im pli cations of the Asia n econo mi c crisis and
associated refo rms
C. Decentrali zation of fiscal and envi ronmental m anda tes
Sour ces:
* Wha ll ey and Wigle 1991
* Strutt and And erson 1998
Dinan et al 1999.
Coxhead 2002.
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Soil erosion effects of global
trade reforms: Indonesia
• Soil erosion is estimated to cost Indonesia
~$400m/yr
– About 0.4% GDP per yr
– 80% on-site, 20% off-site
• How is this affected by global trade reform?
• Strutt (1998) uses GTAP to assess this.
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Key features of the model
• Includes variable land between agr and forestry,
by region (Java-Bali, Sumatra,OI)
• Land is also mobile among ag. sectors
• Cereals (except irr. rice) more erosion-intensive
• Erosion reduces land quality (on-site effect) and
also productivity of some downstream sectors.
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Policy experiment
• Uruguay Round trade reforms:
– 17 commodity groups, including:
• Rice, wheat, coarse grains,other crops
• Wood & paper products
• Textiles & apparel (NB: MFA)
– 6 country groups:
• Indonesia, industrialized APEC, developing APEC,
EU, China, ROW
• NB: China assumed not to be a signatory
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Table 4: Welf are effects of Uruguay Round liberali zation ($US milli on)
Region
Welf are
Allocative Terms of
On-sit e
Off-site
chang e
effic iency trade effect produc tiv damage
effect
it y e ffect effect
Indones ia
1,016
833*
180
4**
-1.5***
China
-998
-1,026
29
Ind. APEC
25,455
18,699
6,768
Dev. APEC
6,268
9,679
-3,395
EU
11,537
11,691
-153
ROW
1,556
4,985
-3,340
World
44,834
44,861
-1
* Of wh ich $625 m i s gain in textiles and apparel efficie ncy a fter MFA quo ta
elimi nation
** Due to land reduc tion in non-gra in crops
*** Due to incr ease in coarse gra ins
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Table 6: Change in soil erosion in Indones ia (per cent)
Sector
Initia l erosion
Change in land
share
use
Change in
erosion
Coarse grains
43
2.79
1.20
Non-grain c rops
46
-0.93
-0.43
Forestry
111
-0.78
-0.09
Total
100
0
0.69
0.69% incr ease in erosion is valued at about $US 1.5 m, or
< 0.15% of total welf are gain from Uruguay Round reforms
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Conclusions
• With global adoption of Uruguay Round
trade reforms,
– Production & erosion rise in coarse grains
sector, but fall in non-grain & other sectors.
– Net land productivity gain is positive
– Off site effect changes are very small
– Total effects are tiny in relation to total $ gain.
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