Virtual land use and agricultural trade: Estimating environmental and socio-economic impacts

Liberalization has caused an increase in the global trade of goods and services. In particular, the value and physical volume of agricultural goods traded have largely increased. As the environmental and social consequences of trade are complex, they are rarely included in the national and international agricultural policies. One reason is that there is a lack of concepts and methods for assessing the environmental and social impacts of trade policies. In this paper we develop a method for quantifying and assessing the land use hidden in the export and import of agricultural goods for the case of Switzerland. For our analysis we focus on arable crops. The first methodological step of our research illustrates the spatial relationship of Switzerland with countries all over the world through the import and export of land use for arable crops. The second step links this spatial dimension with a qualitative assessment of the environmental and socio-economic impacts of agricultural land use. We applied the method to the case of wheat cultivation within Switzerland and import to Switzerland. The major problem we were confronted with was the availability of data, which had both to be reliable and available for the countries wheat is imported from. The results show that the calculation of land use is credible. In spite of the problems related with data availability, the assessment results for each indicator are in agreement with the current situation in the respective countries. In addition, the aggregation seems to accurately reflect the countries' agricultural polices. The developed method is used to estimate the overall environmental and socio-economic impacts of an increase in wheat imports to Switzerland. We argue that this method could be applied for anticipating potential impacts of trade agreements. Still, further research is required for fine-tuning of the utility functions, including a weighting procedure in the aggregation procedure. For practical applications important aspects like water shortage should enlarge our limited set of indicators. In addition the average impact on a country level was assessed. To refine that, different agricultural systems ranging from intensive to extensive to organic should be considered. Beyond our scope was to analyze impacts due to other life cycle stages than the agricultural production. For informed decision, however, information on the whole life cycle of agricultural products is required.