Impacts of changes in consumption, production and trade policies in China and India on trade and greenhouse gases emissions, particularly in New Zealand

Abstract

Population growth, urbanisation and rising incomes are changing the level and composition of food consumption in emerging countries. In India and China particularly, this development is accompanied by shifts in dietary patterns away from staples towards more livestock products. However, livestock production has been identified as a large contributor to climate change. Changes in China and India’s consumption and production patterns are likely to affect other countries by altering their agricultural production, food consumption and trade of agricultural commodities, as well as greenhouse gases (GHG) emissions from their livestock sector. An additional important consideration for producers and exporters concerns the reduction of international trade barriers that may lead to changing patterns of global agricultural production and trade. This may also affect the total amount of GHG emissions from changing levels of livestock production. New Zealand is a small open economy heavily dependent on agricultural exports. Therefore, changes in consumer diets and regulatory trade policies in China and India may have implications for domestic consumption, production and trade as well as agricultural GHG emissions in New Zealand. The main objectives of this thesis are to assess the potential impacts of changes in meat and dairy consumption and production, as well as different trade policies in China and India, on New Zealand trade and GHG emissions from agricultural commodities. The analytical approach employs the Lincoln Trade and Environment Model (LTEM), a partial equilibrium model that forecasts international trade, production and consumption of agricultural commodities, and GHG emissions from livestock production. A number of scenarios were developed simulating different ranges of consumption and production of meat and dairy commodities in China and India as well as full trade liberalisation in both countries. For New Zealand, some of the most significant results suggested that producer returns from beef and skim milk powder were predicted to increase significantly if India and China were to partially adopt US dietary patterns. However, the associated effect of these changes was a moderate increase in GHG emissions from the beef and dairy sector. In contrast, if China and India would significantly increase meat and dairy consumption and production by relatively large growth rates that are evenly distributed across all commodities, New Zealand producer returns particularly from the dairy sector were predicted to fall as a consequence of both declines in dairy prices and production. In turn, this would lead to a decrease in GHG emissions from dairy in New Zealand following decreased production. Full trade liberalisation in China and India was predicted to increase producer returns in New Zealand across all meat and dairy commodities but would also slightly increase GHG emissions from livestock. Results from this thesis are important for policy makers when negotiating further trade policies with India and China, as well as national and international climate policies.