Integrated regional impact assessment of agricultural trade and domestic environmental policies

• Analysing regional environmental effects of international trade policies.
• Empirical analyses on regional trade policy impacts remain important.
• Emphasis on effective agri-environmental programmes.
• Environmental impact of support policies outweighs the impact of trade policies.
• Challenges on the legitimisation of domestic support policies in WTO negotiations.

It remains challenging to derive general findings and conclusions from either economic theory or empirical studies on the relationship between international trade and the regional environment. Consequently, we aim to analyse environmental effects of agricultural trade policies in the Austrian Marchfeld region. We apply an integrated modelling framework that accounts for heterogeneity in agricultural production and environmental outcomes. Scenario analysis is applied to assess regional impacts of different trade policy scenarios. Sensitivity analyses reveal the relative influence of model parameters on outputs. The results indicate that lower domestic tariffs have small beneficial effects on the regional environment. The regional environmental impacts highly depend on the changes in world crop prices through global trade agreements. A laissez-faire market scenario that includes the elimination of trade barriers and agri-environmental payments (AEPs) leads to substantial environmental deterioration. Hence, the alignment of AEPs with WTO trading rules remains an important issue in the trade and environment debate.