Climate Change, Agriculture and Trade Liberalization: A Dynamic CGE Analysis for Turkey

EconAnadolu 2013: Anadolu International Conference in Economics III

43 Pages Posted: 25 Jan 2014

See all articles by Hasan Dudu

Hasan Dudu

European Union - Institute for Prospective Technological Studies (IPTS)

Erol H. Cakmak

Middle East Technical University (METU) - Department of Economics

Date Written: June 19, 2013

Abstract

This paper analyses the effects of climate change and trade liberalization on Turkish Economy between 2008 and 2099 by using a recursive dynamic CGE model. Results of a crop-irrigation requirement model are used to generate climate change shocks. The results suggest that the effects of climate change will be effective especially after 2030s with acceleration after 2060s. GDP loss gets as high as 3.5 percent. Main drivers of the loss in GDP are the significant decline in private consumption and up to two percent increase in imports. A trade liberalization scenario where tariffs on imports from EU are eliminated unilaterally by Turkey is also simulated to investigate the interaction between climate change and trade liberalization. Trade policy alleviates the negative effects of climate change only marginally for Turkey, as suggested by the literature for many other regions in the world. Trade liberalization with EU causes a trade diversion effect and decreases imports from other trading regions. The main adjustment mechanism of the economy under trade liberalization works through the substitution of factors for intermediate goods, imported consumption goods and intermediate inputs for domestic goods. Maize, oilseeds, fruits and processed food benefit from trade liberalization while production of other crops generally decline.

Suggested Citation

Dudu, Hasan and Cakmak, Erol H., Climate Change, Agriculture and Trade Liberalization: A Dynamic CGE Analysis for Turkey (June 19, 2013). EconAnadolu 2013: Anadolu International Conference in Economics III. Available at SSRN: https://ssrn.com/abstract=2384476 or http://dx.doi.org/10.2139/ssrn.2384476

Hasan Dudu (Contact Author)

European Union - Institute for Prospective Technological Studies (IPTS) ( email )

Edificio Expo, C
Inca Garcilaso, s/n
Sevilla, E-41092
Spain
+34954488443 (Phone)

Erol H. Cakmak

Middle East Technical University (METU) - Department of Economics ( email )

Inonu Bulvari
Ankara
Turkey
++90 (312) 210 3088 (Phone)
++90 (312) 210 7964 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
39
Abstract Views
362
PlumX