Trade and Environment �in an Inter-Connected World��Virtual seminar to Google Modeling Group��by��Channing Arndt, Director�Global Trade Analysis Project��May 13, 2025���

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

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www.gtap.agecon.purdue.edu

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Outline

• Overview of GTAP

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• Three applications in three categories
• Regional approaches to confronting climate change
• Cooperation in the Tigris-Euphrates river basin (multi-region general equilibrium)
• Using structural models to understand the past
• The green revolution and the environment (gridded partial equilibrium)
• Global to local to global
• Production implications for Brazil of a US-China trade war (linked MRGE and gridded PE)

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Global Trade Analysis Project

• What is GTAP?
• GTAP supports a global network of researchers and decision-makers conducting quantitative analysis of global issues.
• Goal
• Improve the quality of quantitative economic analysis of global issues in support of deliberate decision-making.
• Philosophy
• Collaboration in data and community building and an open marketplace for ideas.
• Influence
• Has become the common "language" for conducting economic analysis of global policy issues, leading to GTAP-based results being influential in trade, climate change, energy, and environment decision-making.

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GTAP Consortium and Advisory Board

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What does GTAP do?

• Lowers barriers to high quality analysis
• Data (www.gtap.org/databases/)
• Bilateral trade patterns, production, consumption, intermediate use of commodities/services, land use, nutrition, greenhouse gas emissions, and other modules

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• Models (www.gtap.org/models/)
• Global general equilibrium models and gridded partial equilibrium approaches targeted at food and the environment.

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• Training (www.gtap.org/gtap-u/)
• Education platform with the goal of expanding access and improving educational and career opportunities for students and professionals, worldwide

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• Conducts research
• One of the largest concentration of top-flight economywide modelers in the world

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• Serves as a platform (www.gtap.org/events/)
• Annual Conferences on Global Economic Analysis,
• GTAP virtual technical and policy seminar series, and
• Journal of Global Economic Analysis (www.jgea.org)

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Core GTAP Data Base

• Value flows of economic activity at the global level
• 65 sectors for each of the 160+ countries/regions
• Time-series: 2004, 2007, 2011, 2014, 2017, 2019
• Extensions (e.g., power, migration) and satellites (e.g., emissions and nutrition accounts)
• GTAP 12 pre-release (to consortium members) March 2025
• New features of GTAP 12
• Increased geographical coverage and/or update
• Other balance of payments components
• Mainstreaming land use and cover along with emissions

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GTAP is an Assembler: Key inputs

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GTAP Satellite and Data Base Extensions

Core Satellite Data:

• GTAP-E: Energy and CO₂ emissions
• GTAP-Power: Electricity disaggregated into 11 generation technologies plus T&D
• GDYN: International profit flows
• GMIG: International migration and remittances
• GTAP-AEZ and LULC: 18 Agro-ecological zones 7 land cover types
• GTAP-MRIO: Bilateral trade and tariff flows by end-users (firms, priv hhld, inv and gov)

New Satellite data for GTAP DB 11

• SSP projections
• GTAP-NTMs: AVEs of Non-Tariff Measures
• GTAP-Tariffs: Forward looking tariffs of all FTAs until 2050
• GTAP-FDI-FAS: Foreign Direct Investment and Foreign Affiliate Sales
• GTAP-LAB: ILO occupation merged with World Bank’s gendered labor database
• GTAP Domestic margins
• GTAP-BIO: Biofuels (plus Water: rain-fed vs. irrigated agriculture)

Other extensions

• GTAP-CE: Circular Economy
• Critical minerals
• Complementary Greenhouse Gas Emissions (Processed CO₂, NO₂, N₂O and 25 F-gases)
• Air Pollution (9 air pollutants)
• GTAP Food Balance Sheets including food loss and waste

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Three Examples of Ongoing Work (1)

1. OECD
• Aiming to produce a flagship Environmental Outlook report on the ‘triple planetary crisis’-- climate change, pollution, and biodiversity loss– by Fall 2025.
• A ‘core contribution’ is an integrated modeling framework linking the OECD’s in-house ENV-Linkages global CGE model, which is underpinned by GTAP data and satellite accounts, and the IMAGE modelling framework maintained by Netherlands Environmental Assessment Agency.
• GTAP is engaging with OECD to write the final chapter providing conclusions and policy recommendations.

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Three Examples of Ongoing Work (2, 3)

2. Trump Tariffs
• Internal analysis ongoing within most consortium members.
• Published analysis with the Brookings Institution.

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• Mitigation and Trade
• Forthcoming report by the World Bank.
• Fossil fuels are a significant driver of trade.
• Shifts to low carbon technologies often imply a shift to domestic sources of energy and a reduction in global trade volumes.

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Three applications in three categories

1. Regional approaches to confronting climate change
• Cooperation in the Tigris-Euphrates river basin (multi-region general equilibrium)

• Using structural models to understand the past
• The green revolution and the environment (gridded partial equilibrium)

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• Global to local to global
• Production implications for Brazil of a US-China trade war (linked MRGE and gridded PE)

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Cooperation in the Tigris-Euphrates River Basin

Based on Taheripour, F., Haqiqi, I., Golub, A. A., Sajedinia, E., & Karami, O. (2024). Hydroeconomic insights for transboundary water challenges and potential collaboration in the Tigris-Euphrates river basin. Environmental Research Communications, 6(11), 115030.

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Tigris – Euphrates basin

Source: Daggupati et al. (2017)

Objectives

• Quantify changes in water scarcity by 2050 in the Tigris-Euphrates river basin
• Under alternative climate futures
• Under alternative climate futures and changes in upstream water policies
• Evaluate economic outcomes of these changes in water scarcity
• Assess collaborative and noncollaborative actions among the riparian countries in the Tigris-Euphrates river basin

Approach

• General Circulation Models (GCM) projections of future temperature and precipitation
• Ensemble Average
• Selected Model
• Hydrological model (Haqiqi 2019) based on Water Balance Model (Vörösmarty, Federer and Schloss 1998; Grogan 2016) to project water scarcity, given temperature and precipitation scenario
• Global computable general equilibrium model GTAP-BIO-W (Taheripour et al. 2020) to quantify economic implications of the changes in water supply

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GTAP Model Basic Schema

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Scenarios

Changes in the index of water scarcity in the TE river basin under baseline scenarios between 2016 and 2050, %

Changes in real GDP under climate of 2050, %

Potential Benefits of Full Collaboration

Final Remarks on Regional Collaboration

• Regional collaboration is HARD.
• However, effective collaboration can yield real benefits
• European Union
• Brexit (a counterexample).
• Climate change likely expands the benefits of regional collaboration.
• Collaboration in water management in the Tigris-Euphrates river basin is one example.
• Other likely examples include:
• Food trade (AfCFTA)
• Electricity trade (ASEAN).

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The Green Revolution and �the Environment

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*Based on Baldos, U. L. C., Cisneros-Pineda, A., Fuglie, K. O., & Hertel, T. W. (2025). Adoption of improved crop varieties limited biodiversity losses, terrestrial carbon emissions, and cropland expansion in the tropics. Proceedings of the National Academy of Sciences, 122(6), e2404839122. https://doi.org/10.1073/pnas.2404839122

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Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Productivity growth is a key driver of agriculture

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Since 1961, agricultural output almost quadrupled

Dr. Norman BORLAUG

(1914-2009)

Father of “Green Revolution”

Data Sources: FAOSTAT, UN World Population Prospect 2022, World Bank Commodity Price Data

World

Much of Ag TFP Growth Explained by R&D

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Source: Fuglie (2018)

Motivation

• In developing countries, crop innovations from national and international agricultural research centers have made significant contributions to raising total factor productivity since the 1960s.
• These gains in agricultural productivity have generated large direct implications for human welfare, notably poverty reduction, and have likely contributed to growth and development processes.
• However, the implications of TFP growth for the environment are less well understood.
• This study uses the latest productivity estimates from historical crop improvements in developing countries and a gridded equilibrium model of global agriculture to assess the impacts of improved crop varieties on cropland use, threatened biodiversity, and terrestrial carbon stocks.

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Land use change emissions from cropland

• Land use change emissions module converts changes in cropland cover to changes in carbon storage
• Based on carbon storage maps from West et al (2010)
• Assumes carbon stored above and below ground for potential vegetation for each grid cell using IPCC (2006) guidelines
• Cropland land use expansion results in release of stored carbon to the atmosphere

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West, P.C., H.K. Gibbs, C. Monfreda, J. Wagner, C.C. Barford, S.R. Carpenter, and J.A. Foley (2010). Trading carbon for food: Global comparison of carbon stocks vs. crop yields on agricultural land. Proceedings of the National Academy of Sciences (PNAS) 107(46), 19645–19648. Doi: 10.1073/pnas.101107810

Biodiversity hotspots contain the most biologically diverse and threatened terrestrial species

“Around the world, 36 areas qualify as hotspots. Their intact habitats represent just 2.5% of Earth’s land surface, but they support more than half of the world’s plant species as endemics — i.e., species found no place else — and nearly 43% of bird, mammal, reptile and amphibian species as endemics.”

(Conservation International https://www.conservation.org/)

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SIMPLE-G: a Simplified International Model of agricultural Prices, Land use and the Environment -�Gridded Version

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Extensive Margin

of Supply

Intensive Margin

of Supply

5 min grid cells (~120000)

Estimated change (in %) in average crop total factor productivity due to diffusion of modern crop varieties

Calculated using country and crop specific estimates from Fuglie & Echeverria (2023) and crop production maps from Monfreda et al (2008)

1961 to 2015

In percentage change in Total Factor Productivity

-20

-10

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0

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Experimental Design

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Baseline vs. Historical Counterfactual �

World cropland use was lower by 16.03 [95% CI, 12.33 to 20.89] million hectares worldwide

Cropland expansion is larger (red areas in B) in the presence of the improved technologies in adopting areas (gray shaded areas in B) where productivity improvements result in increased profitability.

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Global LUC emissions under the historical baseline are lower by 5.35 [95% CI, 3.75 to 7.22] billion metric tons of CO₂ equivalent compared to the counterfactual scenario without improved crop technologies

Baseline vs. Historical Counterfactual �

Around 1,043 threatened animal and plant species [95% CI, 616 to 1,503] globally were saved due to slower cropland expansion under the historical baseline with improved crop varieties relative to the counterfactual scenario over the period 1961–2015

Baseline vs. Historical Counterfactual �

Summary

• Globally, cropland savings outweighed cropland expansion given the diffusion of improved crop technologies in the developing world (i.e. “land-sparing” approach to nature conservation)
• But the results at the grid-level are more nuanced
• In innovating areas, which benefited the most from improved crop technologies, crop profitability increased, leading to greater returns to cropland and further expansion.
• In other locations, market-mediated effects via international trade (i.e., lower crop prices) lowered returns to land, which slowed cropland expansion.
• Overall, improved crop technologies contributed to avoided losses in threatened animal and plants biodiversity as well as terrestrial carbon

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Final Remarks on Backcasting Structurally

• Valuable in multiple domains
• Covid-19
• Growth and poverty
• Trade and industrial policy

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• Potential for a healthy convergence of approaches
• Data driven
• Structurally aware

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Production Implications for Brazil of a US-China Trade War

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*based on Wang, Z. 2024.“GTAP-SIMPLE-G: Integrating Gridded Land Use, Crop Production and Environment Impacts into Global General Equilibrium Model of Trade”. Journal of Global Economic Analysis 9, no. 2. :1-69. https://doi.org/10.21642/JGEA.090201AF

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Motivation

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Soybean trade nexus between the US, Brazil and China

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What we know

• National responses: record high soybean production and export in Brazil (Colussi et al. 2024)

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• Global drivers: China’s retaliatory tariffs on US soybean (Li, et al. 2019)

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• Existing studies: impacts on the US and China (e.g. Li et al. 2019; Itakura 2020) and spillover effects to Brazil (Dhoubhadel, Ridley and Devadoss 2023).

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Motivation

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Soybean trade nexus between the US, Brazil and China

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What we know

• National responses: record high soybean production and export in Brazil (Colussi et al. 2024)

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• Global drivers: China’s retaliatory tariffs on US soybean (Li, et al. 2019)

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• Existing studies: impacts on the US and China (e.g. Li et al. 2019; Itakura 2020) and spillover effects to Brazil (Dhoubhadel, Ridley and Devadoss 2023).

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What remains under-addressed

• Local responses to global drivers on crop output, land use and the environment

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• Global responses to local drivers (conservation policy, infrastructure, etc)

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Model

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GTAP V7 (Corong et al. 2017)

General Equilibrium (GE) model focusing on national economy and trade

SIMPLE-G* (Baldos et al. 2020)

Partial Equilibrium (PE) model focusing on gridded crop production and input use

• Grid-cell level crop supply and land use
• Spatial heterogeneity and spillover effects
• Fine-scale environmental impacts

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• National level
• Biliteral trade flows
• Multiple crops
• Ag / Non-ag sectors

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GTAP–SIMPLE-G**

*:Simplified International Model of agricultural Prices, Land use, and the Environment: the gridded version.

**: Wang, Z. 2024.“GTAP-SIMPLE-G: Integrating Gridded Land Use, Crop Production and Environment Impacts into Global General Equilibrium Model of Trade”. Journal of Global Economic Analysis 9, no. 2. :1-69. https://doi.org/10.21642/JGEA.090201AF

Model structure

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Overall structure

• Global level (A)
• Demand: household, firms, government, saving
• Bilateral trade flows
• Non-gridded regions (B)
• Regional production system
• Gridded regions (C)
• Gridded crop production and land use system
• Flexible generalization to any number of regions

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Structure of GTAP-SIMPLE-G

Model summary

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*: At gridded level

Data

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Gridded land use – MapBiomas

Gridded land use pattern in 2017

• Resolution: 30 meter

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• Aggregated to 5 arcmin

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Data

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Gridded crop production – SPAM2010

Gridded crop output value in 2017

• Global coverage of 42 crops by irrigation types
• Aggregate to 8 GTAP crops (Chepeliev 2020), downscale FAO data

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Simulation

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Experiment: China’s 25% tariff on US’s soybean export

• Oilseed: expansion
• Sugar crops: reduction (substitution effect)

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• Other grains:
• reduction (substitution effect) vs. expansion (scale effect)
• Local heterogeneity in response: soybean – corn multi-cropping

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Change of crop output quantity (compared with baseline 2017)

Simulation

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Change of land use area (compared with baseline 2017)

Experiment: China’s 25% tariff on US’s soybean export

Cropland

• Expansion in center region, mainly due to soybean
• Decline in eastern region, mainly due to sugar cane

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Pasture

• Opposite pattern
• Drives pasture pattern from central to east Brazil

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Forest plantation

• Mainly decline

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Final Remarks: Global to Local to Global

• Drivers of environmental damage are often global

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• Solutions to environmental problems are principally local

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• Economic case for nature – poorer people more dependent on natural capital
• 2021 World Bank Report

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• Institutions are key

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Future direction: Global – Grid – Ground (G3)

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G3 framework

• Global level: GTAP
• Global trade and national policies
• Gridded level: SIMPLE-G
• Local-specific policies, climate change impacts
• Ground level: Machine learning
• Interactions between economic drivers and fine-resolution features

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Example application: Deforestation projection

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“Fish-bone effect” (deforestation along the road network)

Thank You

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu

Center for Global Trade Analysis

Department of Agricultural Economics, Purdue University

403 Mitch Daniels Blvd, West Lafayette, IN 47907-2056 USA

Global Trade Analysis Project

Stay Connected with GTAP!

​

www.gtap.agecon.purdue.edu