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The Effect of Carbon Taxes on Agricultural Trade
Author(s) -
Rivers Nicholas,
Schaufele Brandon
Publication year - 2015
Publication title -
canadian journal of agricultural economics/revue canadienne d'agroeconomie
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.505
H-Index - 37
eISSN - 1744-7976
pISSN - 0008-3976
DOI - 10.1111/cjag.12048
Subject(s) - carbon tax , agriculture , economics , international economics , commodity , profitability index , government (linguistics) , emissions trading , business , international trade , natural resource economics , greenhouse gas , finance , geography , ecology , linguistics , philosophy , archaeology , biology
This study evaluates the implications of an existing 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 intertemporal 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.