• Location: University of British Columbia
• Research Team: Dr. Sumeet Gulati and Tegan Adams
• Duration: October 2009 – March 2011
Brief Project Description/Overview:
This research asks two questions:
1. Assuming a hypothetical price for carbon emissions what would be the appropriate border tax adjustments for carbon emissions (or embodied energy) associated with the production and transport of different food categories from different countries to Canada?
2. What would be the impact of such a border tax adjustment on imports of these food categories from different countries to Canada?
We shall calculate border tax adjustments for food categories such as, beef, chicken, pork, eggs, dairy, grain, field grown vegetables, greenhouse grown vegetables and fruit by country of import (for all Canada’s current trading partners). We will then estimate how this border tax will affect food category trade patterns.
Based on our results, we will be able to answer questions such as: which foods from which countries will face the largest (or smallest) border taxes and why? Which of our trading partners would see the largest (or smallest) contractions in bilateral food exports? A carbon tax has already been introduced in BC. It is likely that other carbon regulations will come into play shortly. As these regulations evolve, costs of food production in Canada will rise. As producing food domestically becomes more expensive, concerns regarding imports from countries not affected by carbon regulations will become prominent. In all likelihood, with the introduction of a domestic agreement pricing emissions there will be an accompanying border tax adjustment or other similar provision. Most recently for example, the US Congress suggested provisions to address Carbon Emissions and Jobs Leakage. One provision of significant interest proposed for the US is a border tax adjustment scheme that will serve to prevent carbon leakage from trade and outsourced goods (including food). Our research will help us understand the implications of such a provision in Canada. Our research will involve the following steps:
1. Calculate the carbon emissions generated from the production and transportation of the imported food categories to Canada.
2. Assume a hypothetical price for CO2 (for example 30$ per tonne of CO2), and its scope (for example it could be that only fossil fuel use in agriculture is subject to the price for emissions produced).
3. Based on 1 calculate the appropriate border tax adjustment for the hypothetical policy expressed as an ad-valorem tariff by food group and country. And finally,
4. Estimate the impact of this ad-valorem tariff on the patterns of trade for these food categories by country.
To determine the embodied energy relative to foods imported to Canada we will estimate the production and transport emissions of food categories. Production emissions for each food category will be calculated relative to their consumption of agri-inputs domestically (feed, energy supply-demand, agricultural chemicals, land-use emissions). Transport emissions will be relative to the distance each food group travels, the transport vehicle used and the quantities shipped. We shall make a set of assumptions on the method of transportation (air, boat, rail or a combination) based on data available and the perishability of the food considered. We shall combine this with relevant distances depending on the method of transportation (for example land distances could be from, mapquest.com, marine distances from marinechain.com and air distances travelled from mapcrow.com) and the emissions factors by weight method to get transport emissions. Quantities shipped are available through Industry Canada’s Trade data.
We will use this information and details on the hypothetical CO2 policy to calculate the appropriate border tax adjustment. The border tax adjustment will act similar to a tariff relative to embodied energy of foods imported to Canada.
We shall predict the potential impacts of such a border tax on imported foods based on effects of previously implemented tariffs on foods. Based on historic trading data we shall thus estimate a relationship between tariff (or non-tariff barriers) and trade patterns by food category and country. We shall use Agriculture and Agri-Food Trade and Industry Canada trade data to get import prices and quantities by food category (from 1970 to 2008). We will also obtain additional trade data from FAO Stats on Food Trade to Canada. Trade policy data will derive from the Trade Analysis and Information System.