Trade and Climate Mitigation Interactions Create Agro-Economic Opportunities With Social and Environmental Trade-Offs in Latin America and the Caribbean

Abstract: The Latin America and the Caribbean (LAC) region plays key roles in both meeting global agricultural demands and maintaining carbon sinks due to its abundant land and water resources. In this study we use the Global Change Analysis Model to evaluate the opportunities and challenges posed by two global-scale drivers: agricultural market integration (i.e., reduction of trade barriers) and land-based climate mitigation policy. We evaluate their potential individual and combined impacts on agricultural production and trade revenues across LAC's economies through mid-century, as well as the resulting impacts on agricultural consumers and integrated land-water-climate systems across LAC's diverse sub-regions. Increased global market integration results in increased agricultural production and trade revenues for many LAC economies, driven by their evolving comparative advantages. Climate mitigation measures on CO2 and non-CO2 greenhouse gases increase revenues due to increased agricultural prices from land competition and emissions abatement. The combined outcomes from both drivers are complex and sometimes non-linear, highlighting the importance of understanding the interactions between multiple drivers. Our results show that increased agricultural production and trade opportunities, from either of the two drivers, pose significant trade-offs that require careful multi-sectoral planning, such as emissions reduction challenges, potential loss of livestock production when pursuing land-based climate mitigation strategies, increased consumer expenditures, and changes in land-use or water withdrawals, resulting in deforestation or water scarcity pressures. There is considerable heterogeneity in economic and environmental outcomes across LAC sub-regions and agricultural commodities, illustrating the value of considering outcomes at finer scales.