International trade damages tropical nature

24 Mar 2016 NUS scientists reported that international trade causes large net economic losses in tropical countries through the destruction of ecosystem services.

International trade generates economic benefits to exporting countries but also leads to nature getting replaced by agricultural land. A team led by Prof Roman CARRASCO from the Department of Biological Sciences in NUS found that the benefits brought about by trade do not compensate for the losses of ecosystem services in most tropical countries. As a result of international trade, the majority of tropical countries incur net losses that amount to US$1.7 trillion per year. Tropical countries are severely underpricing the agricultural commodities they produce and thus effectively subsidizing consumption by importing countries.

This research relates to the problem of rapid tropical deforestation due to agricultural expansion. This deforestation is supported under the assumption that countries are better off by engaging in agricultural activities. The team shows that this is not necessarily the case and that tropical countries need to rethink their land-use development strategies.

The loss of forests implies that ecosystem services, such as carbon sequestration, flood protection or pollination, decrease in the country due to land occupation for international trade. By quantifying the magnitude of the problem, the results can be used to support agricultural export and land-use policies in tropical countries.

Future research would need to assess the steps needed to reduce the environmental costs of deforestation, while still meeting the global demand for agricultural products. The introduction of an ecosystem services tax on international trade, price premiums for environmentally friendly agricultural produce or agricultural intensification to spare land could be potential solutions.

It is the first time that the implications of international trade on ecosystem services have been quantified at the pantropical level.

Figure shows the distribution of biomes (Biome) within cropland areas in year 2000 and net ecosystem services lost through international trade plus agricultural, forest and livestock rents in tropical countries (NET ES + AR expressed in US$ billions). No cropland includes mosaic land-uses. [Image credit: Roman Carrasco]

Reference

Chang J, Symes WS, Lim F, Carrasco LR.“International trade causes large net economic losses in tropical countries via the destruction of ecosystem services.” (2016) Ambio 1-11.