Climate Policy and Trade in Polluting Technologies

This paper studies international trade in equipment used in the combustion of fossil fuels. Informed by a theoretical analysis, we identify a type of technology leakage hitherto unexplored in the literature: a country’s export of combustion equipment tends to increase, all else equal, in the stringency of its climate policy. We test this prediction by estimating the impact of carbon pricing on international trade in combustion equipment using detailed data on bilateral trade and domestic carbon prices for the period 1995–2021. Our estimates reveal a robust positive association between the stringency of climate policies and exports of combustion equipment, providing clear evidence for the existence of technology leakage. We argue that standard policies to mitigate carbon leakage are unlikely to prevent technology leakage, raising novel policy questions

Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

We estimate the impact of the removal of a railway transportation subsidy on the adoption of technology for Western Canadian farms, using a unique combination of Census and freight rate data. We exploit the large regional variation in these one-time freight rate increases in order to identify causal effects of increased competitive pressure. Using a difference-in differences methodology we find that higher freights rates – and hence lower farm gate prices – induced farmers to adopt new, more efficient production technology. We also find that farmers experiencing the greatest transportation cost increases also increased fertilizer usage and made significant land use changes

Agricultural Trade Reform, Reallocation and Technical Change: Evidence from the Canadian Prairies

We decompose the impact of trade reform on technology adoption and land use to study how aggregate changes were driven by reallocation versus within-farm adaptation. Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada we find a range of new results. We find that the reform-induced shift from producing low-value to high-value crops for export, the adoption of new seeding technologies and reduction in summerfallow observed at the aggregate level between 1991 and 2001 were driven mainly by the within-farm effect. In the longer run, however, reallocation of land from shrinking and exiting farms to growing and new farms explains more than half of the aggregate changes in technology adoption and land use between 1991 and 2011

Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada

Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyse the role of farm size in adapting to the removal of an export subsidy in 1995. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms of all sizes shifting their production of crops from low value wheat to higher value canola. We find that switching to new labour-saving tillage technologies and away from summerfallow in response to the large negative shock to grain prices caused by the reform varied across the farm size distribution. We develop a theory of heterogenous farms and technology adoption that can explain our findings