The Effect of Carbon Taxes on Agricultural Trade

Canadian Journal of Agricultural Economics, 2015, Vol. 63 (2), p. 235-257.

43 Pages Posted: 16 Aug 2013 Last revised: 7 Aug 2015

See all articles by Nicholas Rivers

Nicholas Rivers

University of Ottawa - Graduate School of Public and International Affairs

Brandon Schaufele

University of Western Ontario - Richard Ivey School of Business

Date Written: December 27, 2013

Abstract

This study evaluates the implications of an actual carbon tax on international trade in the agricultural sector. Applying uniformly to all fossil fuels combusted within its borders, the province of British Columbia unilaterally introduced a carbon tax on July 1, 2008. In 2012, the province granted an exemption from the tax to certain agricultural sectors. Using commodity-specific trade flows and exploiting cross-provincial and inter-temporal variation, we find little evidence that the carbon tax is associated with any meaningful effects on agricultural trade despite the sector being singled out as “at risk” by the provincial government. Our findings suggest that there is not compelling evidence to support exempting the agricultural sector from the tax. Discussion of potential policy remedies to address the tax’s potential effects on firm profitability and international competitiveness is also included.

Keywords: carbon taxes, trade, competitiveness, British Columbia, agriculture

JEL Classification: F18, H23, Q1, Q5

Suggested Citation

Rivers, Nicholas and Schaufele, Brandon, The Effect of Carbon Taxes on Agricultural Trade (December 27, 2013). Canadian Journal of Agricultural Economics, 2015, Vol. 63 (2), p. 235-257.. Available at SSRN: https://ssrn.com/abstract=2310566 or http://dx.doi.org/10.2139/ssrn.2310566

Nicholas Rivers (Contact Author)

University of Ottawa - Graduate School of Public and International Affairs ( email )

75 Laurier Avenue East
Ottawa, Ontario K1N 6N5
Canada

Brandon Schaufele

University of Western Ontario - Richard Ivey School of Business ( email )

1151 Richmond Street North
London, Ontario N6A 3K7
Canada

Register to save articles to
your library

Register

Paper statistics

Downloads
197
Abstract Views
1,084
rank
156,519
PlumX Metrics