Global Trade and Climate Change

While the fate of the Kyoto Protocol on climate change remains uncertain after years of negotiations, the time for a more comprehensive agreement is fast approaching. One of the reasons is the link between global trade and greenhouse gas emissions.

The problem of “food miles” is emerging as an early consequence of increasing long-distance trade. The fossil-fuel energy spent to transport food products often exceeds the energy contained in the foods themselves. To add insult to injury, transportation is a major source of carbon-dioxide emissions.

Sustain, a U.K.-based food and farming alliance, has shown that iceberg lettuce flown from Los Angeles to London requires 127 calories of fuel for every food calorie. Sustain also reports that countries often end up swapping food instead of importing critical items that cannot be produced locally. The U.K., for example, imported 126 million liters of milk and exported 270 million liters in 1997.

Researchers at Iowa State University have found that fruits and vegetables travel an average of 1500 miles within the U.S., a 22 percent increase since 1981. When imported foods are added to the mix, the average distance from farm to the dinner table increases significantly. Studies show that a basic diet with imported ingredients can consume four times the fossil-fuel energy and emit four times the carbon dioxide compared to domestically produced ingredients.

Merchandise trade currently accounts for only about 20% of global GDP, with agriculture representing just a small part of global trade. But even at these relatively low levels of trade, the transportation sector consumes nearly 60% of the world’s oil and produces a quarter of all energy-related carbon-dioxide emissions. Oil use by transportation has almost doubled since 1973. Transportation-related emissions are growing at about 2.5% annually -- faster than any other sector in the economy.

Any dramatic increase in global trade could add substantially to the world’s annual carbon-dioxide emissions. Particularly problematic is the growing use of trucks and airplanes at the expense of slower and more efficient trains and ships. Technological breakthroughs for freight transport are not yet on the horizon. Improvements in fuel efficiency are possible, but studies show that they would encourage more long-distance transport due to lower operating costs and are unlikely to prevent emissions growth in the face of increasing demand.

Given the general scientific consensus that carbon-dioxide emissions will have to drop below 1990 levels within a few decades in order to stabilize the climate at the lower end of various warming scenarios, long-distance trade poses a serious challenge. If the world’s future economic development depends largely on global trade, then in the absence of radically new transportation technologies, we are likely to face the ultimate conflict between the economy and the environment. If global trade in agricultural products is the only way out of poverty for hundreds of millions of rural poor in developing countries, the conflict may well turn out to have an additional tragic dimension.

The very essence of trade -- transporting goods from producers to consumers -- takes a toll on the environment. Free trade may appear to be the solution to many economic problems when social and environmental “externalities” are ignored. Global warming is only one such externality, but its sheer scale and complexity make it a litmus test for whether the emerging global economy can be sustained in the long run.

Remarkably, the World Trade Organization and the World Bank -- the two premier institutions that promote global trade -- are silent about the links between trade, transportation, and climate in their annual pronouncements on trade and economic prospects. Proponents of global trade no doubt believe that better technologies will emerge, but neither policies nor plans exist for the enormous task of replacing the world’s freight transportation infrastructure with a cleaner, low-emissions version.

Nor are there meaningful discussions about a more structured and intelligent trade regime that can maximize economic benefit while minimizing resource use and pollution. A clear alternative to indiscriminate long-distance trade is a hierarchical approach that first emphasizes local and regional trade, and reserves long-distance trade for goods that cannot be produced using local resources -- a model that thoughtful critics of globalization have proposed.

A missing link in today’s globalizing economy is a way for the market to sense the environmental costs of trade. An international agreement to cap and trade greenhouse-gas emissions -- looking beyond the Kyoto Protocol to include emissions from international freight transport -- would allow the market to respond by choosing optimal trading distances. Limits on emissions would also spur the development of next-generation technologies for freight transport.

Without timely and effective environmental regulation at the international level, global trade may well fail the test of sustainability -- and leave the world poorer instead of richer.

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Kumar Venkat works in Silicon Valley's high-tech industry and writes about the social and environmental impacts of technology.