Climate Policy

Global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture

We study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level. We use a two-sector Schumpeterian model of growth, in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population. Agriculture demands land as an input, itself treated as a scarce form of capital. In our model both population and sectoral technological progress are endogenously determined, and key technological parameters of the model are structurally estimated using 1960–2010 data on world GDP, population, cropland and technological progress. Introducing random shocks to the evolution of total factor productivity in agriculture, we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages, and that it significantly affects both optimal consumption and population trajectories.

Can Tariffs be Used to Enforce Paris Climate Commitments?

We evaluate the potential for using border carbon adjustments (BCAs) and welfare-maximizing tariffs to compel non-compliant countries to meet emissions reduction targets pledged under the Paris Climate Agreement. Our analysis employs a numerical economy-wide model with energy sector detail and, given recent actions by the new US administration, considers BCAs on US exports. We find that BCAs result in small reductions in US emissions and welfare. Consequently, the US is better off when it does not restrict emissions and faces BCAs on its exports than when it implements policies consistent with the Paris Agreement. However, targeted welfare-maximizing tariffs could inflict greater cost on the US than if it complied with its pledged emissions reductions. We conclude that BCAs are an ineffective enforcement mechanism but carefully chosen tariffs could be a mechanism to enforce the Paris Agreement.

Almost 25 percent of the world’s malnourished population lives in sub-Saharan Africa (SSA), where more than 300 million people depend on maize (corn) for much of their diet. The most widely produced crop by harvested area in SSA, maize is also highly sensitive to drought. Because maize in this region is grown largely on rain-fed rather than irrigated land, any future changes in precipitation patterns due to climate change could significantly impact crop yields.

Charting a better future for Africa

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