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Alejandro Nadal and Timothy A. Wise

The Environmental Costs of Agricultural Trade Liberalization: Mexico-U.S. Maize Trade Under NAFTA Working Group on Environment and Development in the Americas March 29-30, 2004. Alejandro Nadal and Timothy A. Wise. U.S. Advantage on a Tilted Playing Field. U.S. vs. Mexico in corn production:

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Alejandro Nadal and Timothy A. Wise

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  1. The Environmental Costs of Agricultural Trade Liberalization: Mexico-U.S. Maize Trade Under NAFTAWorking Group on Environment and Development in the AmericasMarch 29-30, 2004 Alejandro Nadal and Timothy A. Wise

  2. U.S. Advantage on a Tilted Playing Field • U.S. vs. Mexico in corn production: • Nearly four times the area • Over three times the yield/hectare • Eleven times the production • At least three times the farm subsidies per hectare • Sold at less than half the price • Effect of NAFTA: • Accelerated tariff reduction, 3 years instead of 15 • Tripling of U.S. exports to Mexico • 47% drop in producer prices

  3. U.S. Maize in Mexico

  4. Decline in Real Maize Prices, 1993-2002

  5. Mexico: Important Market for U.S. Corn

  6. An Analytical FrameworkAgricultural Trade Liberalization and the Environment Pollution Haven: • Assumes North-South pollution flow • For agricultural trade, could be the reverse Globalization of Market Failure: • Negative environmental externalities in North • Positive environmental externalities in South • Liberalized trade magnifies environmental harm • Environmental impact greater than sum of its parts

  7. Which crop uses the most chemicals? Illinois is typical of other states In every case, corn uses more chemicals than soy or winter wheat planted in the same state

  8. FertilizerRunoff Excess nitrogen fertilizer runoff contributes to the dead zone in the Gulf of Mexico

  9. Pesticides Herbicide decrease: *real improvement *tech. change Insecticide decrease: *misleading *potency still high *NOT a sign of positive impact of Bt corn use

  10. % of corn irrigated, 1997 Irrigation • 1997: 15% of US corn irrigated • 1992: 14% irrigated • Three-fourths is in four states over the Ogallala aquifer All other states: 5%

  11. Dry-State U.S. Corn Production

  12. The Rise of Genetically Modified Corn

  13. Whose Subsidies Are Bigger?

  14. US Corn: Declining Prices and Dumping

  15. Environmental Impacts in Mexico • Rise in intensive farming • Geographically very concentrated: esp. Sinaloa • High chemical and water use • Threats to traditional producers • Feared loss of maize diversity • Mexico center of origin; over 40 landraces • Important global resource; key to crop-breeding • Will economic pressure cause abandonment of land, loss of stewardship and diversity?

  16. Images of maize planting

  17. Trends in Mexican Agriculture Declining government credit Declining commercial credit

  18. Trends in Mexican Agriculture:Declining Investment

  19. Declining Agricultural Subsidies

  20. Declining Subsidies for Maize

  21. Savings for the Consumer?Rise in Tortilla Prices Despite Falling Corn Prices

  22. Foreign Investment: No Answer for Peasants

  23. Map of Poverty Shadows Map of Biodiversity • Threats to agro-biodiversity: • Shift to more profitable crops • Move out of agriculture • Loss of traditional knowledge • Migration, abandoning land

  24. Traditional Maize: No reason to worry? Rise in planted area Rise in production Not so fast:*peasant survival strategy *alternative crops depressed *alternative livelihoods few Need closer analysis of: *migration trends *diversity impacts

  25. Marginalization by DDR, 2000

  26. Marginalization and International Migration, 2000 International migration rates highest not for poorest.Internal migration rates are highest for poorest producers.

  27. Diverse producers (DDRs with over 60% using native seeds): • Represent 68% of maize producers. • Suffer high levels of poverty (over 70%) • Show low levels of international migration • Show the highest levels of internal migration • Have expanded production and cultivation with fewer people

  28. Policy Regime for Sustainable Corn Production in Mexico • Price differentials • Credit • NAFTA and WTO-compatible subsidies • Technical assistance • Crop failure insurance • Trade fairs • National Corn Institute • In Situ conservation of corn genetic resources

  29. Conclusions Pollution haven: North not always more sustainable than South, especially in agriculture. Globalization of market failure: Environmental externalities can be exacerbated by trade, with harm to both sides. Environmental contributions of traditional agriculture: Need to assess non-market ecological values prior to liberalization; “inefficiency” may be beneficial. Agro-biodiversity: Key concern in some areas. Macroeconomic policies: Rising demand for some agricultural products could be harnessed to stimulate sustainable agriculture and in situ conservation. Look beyond trade agreements: Important to not simply isolate NAFTA impacts from overall political economy.

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