The Effects of Agricultural Raw Product Exports on Environment Quality

مجله اقتصاد و توسعه کشاورزی

Article 6, Volume 30, Issue 1, April 2016, Pages 58-69   

Document Type: Research Article

DOI: 10.22067/jead2.v30i1.48343

Authors

H. Mohammadi^* ; L. Abolhasani; M. Tirgari

Ferdowsi University of Mashhad

Abstract

Introduction: The relationship between openness, trade and environmental damaging are the most important problems in the early 1990s. Some scientists assume the environmental quality is a normal good and increasing income increases demand for environmentally safe products. Therefore, Firms will be encouraging the using of safer and less polluting procedure. On the other hand other scientists assume international trade grows the environmental degradation through environmentally polluting industries and expand economics scales in developing countries. While environmental standards are low in these countries, the expansion of trade will lead to more pollution. Some experimental studies have confirmed a negative relationship between trade and environment. The effect of import and export of trade is not considered as important components of trade, despite very consideration of the relationship between openness, trade and environmental by researchers while in general part trade may have different effect on environmental.
Materials and Methods: The base model is used to study the relationship between economic growth and environmental indexes and trade. Grossman and Krueger (1991) and Shafik and Bandvpady (1992) used the trade intensity variable, obtained from the ratio of exports plus imports divided by GDP as the World Trade openness of an economy measure. Grossman and Krueger (1991), the first person who developed environmental Kuznets curve (EKC) used multiple versions of the model. Instrumental variable regression model has been estimated using panel data of period 1998 and 2009 for 73 countries, including 27 development countries and 46 developing countries. Countries with more than 0.9 Human Development Index eligible as developed countries and countries by Human Development Index between 0.7 to 0.9 considered as developing countries., based on the standard international trade classification. For exports of agricultural raw materials, 5 Classification of goods in the first group of agricultural raw materials ere used. We consider some of the goods are raw agricultural sector as a percentage of GDP and sectors including oil and minerals were removed from it. Therefore, this variable includes food and live animals, beverages and tobacco, crude materials, excluding fuel and other edible animal fats and vegetable oils. The data has been obtained from the global dataset of FAO. Variables such as Animal fats and vegetable oils and the per capita income squared has been omitted because of co linearity. Instrumental variables such as agricultural land (% of land area) and agricultural machinery is taken from WDI. These variables include per capita emissions of agricultural methane, per capita emissions of agricultural nitrous oxide gas, and biological oxygen demand (BOD) per capita. Methane (CH4) is a greenhouse gas that contributes to global warming and ozone pollution. More than fifty percent of the methane gas is due to agricultural activities.
Results and Discussion: The results of the instrumental variable method show that the export of agricultural products in developing countries will increase the emissions of nitrous oxide and methane gas and reduces water pollution. The coefficients of the variables considered positive for developed countries, but only the coefficient of nitrogen oxide emissions is significant. To investigate which of raw agricultural products, subtypes play a greater role in environmental pollution, we have re-estimated equation with place components of agricultural raw products, beverages and tobacco, crude materials excluding fuels and other edible fats and vegetable and animal oils. The results for the three pollutants reported in the table. This result indicates that only the export of drinking and tobacco increased environmental pollution by increasing methane in developing countries. So, none of the variables have significant impact on water pollution. The logarithm of the per capita income and the natural logarithm of the population have a significant and positive impact on environmental pollution caused by emissions of methane and nitrous oxide. The results are quite different for developing countries to developed countries and environment of this group of countries severely affected by any of the primary or raw agricultural commodity groups. The results show an increase in exports of raw materials and drinking reduces pollution of water and increase nitrogen oxide emissions. However, increasing exports would increase water pollution and reduces methane emissions.
Conclusion: The results of the instrumental variables estimator for the group of developed countries and developing countries show that the increase in exports of agricultural raw materials exacerbated the increasing environmental pollution by methane gas emissions in developed countries and pollution due to significant emissions of methane and nitrous oxide will be more intense in developing countries. On the other hand, increasing in the exports of raw agricultural commodities reduce water pollution by developing countries. Increased use of nitrogenous fertilizers and implication of improved farming methods can be effective on water pollution reduction in the case study of this group of countries in during the period under review. This means that the amount of nitrogen in the water reduced degrading bacteria but pollution from greenhouse gas intensity increased further.

Keywords

Environment; Openness of Economics; Pollution; Primary Agricultural Products Export

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