Environmental Effects of the African Continental Free Trade Agreement: A Computable General Equilibrium Model Approach

Authors

Marta Bengoa^{1, 2}, Somya Mathur³, Badri Narayanan^{3, 4, *,} , Hanna C. Norberg⁵

¹Department of Economics and Business, Colin Powell School at City University of New York, New York, NY, USA

²South African Research Chair in Industrial Development (SARChI) at University of Johannesburg, Johannesburg, South Africa and CIRANO, Montreal, Canada

³Infinite Sum Modelling, Seattle, USA

⁴School of Environmental and Forestry Sciences, University of Washington, Seattle, WA, USA

⁵Independent Researcher, TradeEconomista, Lund, Sweden

^*Corresponding author. Email: badrig@uw.edu; badri@infisum.com; badrinarayanang@gmail.com

DOI

10.2991/jat.k.210719.001How to use a DOI?

Keywords

Trade; environment; AfCFTA; air pollution; CO2; non-CO2; greenhouse gas

Abstract

Growth and development in middle- and low-income countries often come at an environmental cost, but is that trade-off always necessary? This study uses a computable general equilibrium model to estimate the macroeconomic and environmental impact of the world’s most significant plurilateral trade agreement, the African Continental Free Trade Agreement (AfCFTA). We build a novel dataset using the Global Trade Analysis Project data, which allows us to estimate the effect on emissions of carbon dioxide (CO₂), non-CO₂, and other pollutants. In terms of macroeconomic impact, African nations benefit from gross domestic product growth by 1.2% and employment by 2.1%, with less developed economies, such as Togo and Benin, obtaining the largest macroeconomic gains from trade liberalization. On aggregate, we estimate that the agreement will lead to a marginal, 0.3% increase in CO₂ emissions, a 19.6% increase in non-CO₂ greenhouse gas emissions, and a 21.5% decline in air pollutants. We find considerable heterogeneity across countries. For Nigeria, the rest of Central Africa, and South-Central Africa, the AfCFTA is expected to reduce emissions, while in Ethiopia, Cameroon, and Burkina Faso, estimations show an increase. Transit countries connected to large ports, such as Togo and Benin, are most negatively impacted. We conclude that while the AfCFTA implementation is expected to lead to notable improvements in air quality by reducing air pollutants, the resulting increase in climate-related emissions may require member countries to make concerted efforts to deal with the adverse effects.

Copyright

© 2021 African Export-Import Bank. Publishing services by Atlantis Press International B.V.

Open Access

This is an open access article distributed under the CC BY-NC 4.0 license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - JOUR
AU  - Marta Bengoa
AU  - Somya Mathur
AU  - Badri Narayanan
AU  - Hanna C. Norberg
PY  - 2021
DA  - 2021/07/30
TI  - Environmental Effects of the African Continental Free Trade Agreement: A Computable General Equilibrium Model Approach
JO  - Journal of African Trade
SP  - 36
EP  - 48
VL  - 8
IS  - 2 (Special Issue)
SN  - 2214-8523
UR  - https://doi.org/10.2991/jat.k.210719.001
DO  - 10.2991/jat.k.210719.001
ID  - Bengoa2021
ER  -