Land Degradation and Trade Liberalization: An Indian Perspective

Abstract

This paper makes an attempt to use GTAP model to understand the interplay between the agricultural trade liberalization and land degradation in India. Like any other developing country, soil erosion happens to be one of the principal environmental problems caused by agricultural production in India. In this paper, our attempt is to simulate the on-site productivity impacts of erosion, along with standard intersectoral and inter-regional economic effects of trade liberalization. The deeper and fuller agricultural trade liberalization opens up opportunities for India’s agriculture. Our result indicates that paddy, wheat, and other agriculture are the sectors in India where production would expand following liberalisation while there would be a fall in production in cereal grain sector and livestock sector. Overall, there is a small increase in India’s welfare to the tune of US $ 360 millions. While India’s agricultural expands due to opening up of opportunities, soil degradation increases with increased use of land. To what extent, the above result would change if we incorporate land degradation feedback mechanism in our analysis? Our results indicates that agricultural trade liberalisation reduces land productivity, but the effects are weak to negate the benefits of India’s welfare from agricultural trade liberalisation.