The Impact of Trade Liberalization in the Rice Market on Environmental Quality

• Main Authors: Lee, Hui Chun, 李蕙君
• Other Authors: Sun-Tien Wu, Chung-Huang Huang
• Format: Others
• Language: zh-TW
• Published: 1996
• Online Access: http://ndltd.ncl.edu.tw/handle/72479351422976199886

碩士 === 國立中興大學 === 資源管理研究所 === 84 === Following the establishment of WTO and activation of global and local environmental protection, the interlinkage between trade and environment attracts more and more attention in recent literature. Environment economists are particularly interested in the impact of freer trade on environmental quality. As a staple food, rice is one of the most important agricultural products in Taiwan. Excessive use of chemicals (e.g., pesticides and fertilizers) has, however, caused environmental contamination through various channels. Nation-wide concern is now focused on whether or not environmental quality will be worsen and to what extent the degradation will be as a result of freer trade. Such issues are not only totally ignored by previous studies, but complicated by the lack of information about actual application of chemicals and proper measurement of shadow rent for rice production.This paper intends to develop a rational expectation model to measure the impact of trade liberalization on environmental quality in terms of chemical intensity. With the government intervention in the form of price support and diversion program taken into account, an acreage response function was derived under the uncertainty of production as well as the shadow rent. Chemicals used for rice production were then estimated by using the concept of hedonic function and input complements. Land and chemical inputs were integrated to construct an environmental quality indicator. How the marginal impact and the elasticity of freer trade on environmental quality could be measured was also explained and empirically estimated.The laws of motion of acreage and shadow rent were estimated by the maximum likelihood method, and so were the hedonic functions of chemicals. It revealed that the demands for inputs decrease with the expected shadow rent. More importantly, freer trade in terms of lower tariff tends to worsen environmental quality both theoretically and empirically, and such negative impact increases with freer trade at an increasing rate. The results imply that more investment on environmental improvement is warranted as free trade continues. Economic instruments as well as regulatory measures to chemical intensity also deserve serious contemplation.