1
Effects of Agri-Environmental Payment Policies on Agricultural Trade
Joseph Cooper, Mark Peters, and Roger Claassen1
Accepted Paper
AAEA Summer Meeting, Montreal, CA, 2003
May 14, 2003
1 The first and third authors are economists in the Resource Economics Division, Economic Research Service
(USDA), 1800 M Street, NW, Washington DC, 20036-5831, USA (E-mail: jcooper@ers.usda.gov and
claassen@ers.usda.gov, respectively), and the second is an economist with the Agricultural Marketing Service,
USDA, but was with ERS when he contributed to this paper. The views expressed are the authors’ and do not
necessarily represent policies or views of their respective institutions.
2
Effects of Agri-Environmental Payment Policies on
Agricultural Trade
Joseph Cooper, Mark Peters, and Roger Claassen
Abstract
In many OECD countries, including the U.S., interest in developing agri-environmental
payment programs is currently strong. In the future, the inclusion of an agri-environmental
payment program into the WTO’s “green box” could be more easily challenged by WTO
member countries on the basis that it has more than “minimal” trade-distorting impacts on
production. The goal of this paper is to conduct an ex ante analysis of the trade impacts of
stylized examples of agri-environmental payment programs that have been proposed for
implementation in the near future. To simulate the production and trade impacts of these
programs, we use a partial equilibrium model of the U.S. agricultural sector in a sensitivity
analysis across a range of design options for agri-environmental payments. For the three agri-
environmental payment scenarios evaluated, the maximum change in exports ranges from a 7
percent decrease (wheat) to a 1 percent increase (soybeans). We do not expect the programs
that decrease U.S. production, which would tend to have an upward pressure on world
commodity prices, to be challenged before the WTO.
I. Introduction
Cooper, Johansson and Peters (2003) present an environm