© Global Development and Environment Institute, Tufts University

The Environmental Costs of Agricultural Trade Liberalization: Mexico-U.S. Maize Trade Under NAFTA Working Group on Environment and Development in the Americas March 29-30, 2004 Alejandro Nadal and Timothy A. Wise

© Global Development and Environment Institute, Tufts University U.S. Advantage on a Tilted Playing Field U.S. vs. Mexico in corn production: Nearly four times the area Over three times the yield/hectare Eleven times the production At least three times the farm subsidies per hectare Sold at less than half the price Effect of NAFTA: Accelerated tariff reduction, 3 years instead of 15 Tripling of U.S. exports to Mexico 47% drop in producer prices

© Global Development and Environment Institute, Tufts University U.S. Maize in Mexico

© Global Development and Environment Institute, Tufts University Decline in Real Maize Prices,

© Global Development and Environment Institute, Tufts University Mexico: Important Market for U.S. Corn

© Global Development and Environment Institute, Tufts University An Analytical Framework Agricultural Trade Liberalization and the Environment Pollution Haven: *Assumes North-South pollution flow *For agricultural trade, could be the reverse Globalization of Market Failure: *Negative environmental externalities in North *Positive environmental externalities in South *Liberalized trade magnifies environmental harm *Environmental impact greater than sum of its parts

© Global Development and Environment Institute, Tufts University Which crop uses the most chemicals? Illinois is typical of other states In every case, corn uses more chemicals than soy or winter wheat planted in the same state

© Global Development and Environment Institute, Tufts University Fertilizer Runoff Excess nitrogen fertilizer runoff contributes to the dead zone in the Gulf of Mexico

© Global Development and Environment Institute, Tufts University Pesticides Herbicide decrease: *real improvement *tech. change Insecticide decrease: *misleading *potency still high *NOT a sign of positive impact of Bt corn use

© Global Development and Environment Institute, Tufts University 1997: 15% of US corn irrigated 1992: 14% irrigated Three-fourths is in four states over the Ogallala aquifer Irrigation % of corn irrigated, 1997 All other states: 5%

© Global Development and Environment Institute, Tufts University Dry-State U.S. Corn Production

© Global Development and Environment Institute, Tufts University The Rise of Genetically Modified Corn

© Global Development and Environment Institute, Tufts University Whose Subsidies Are Bigger?

© Global Development and Environment Institute, Tufts University US Corn: Declining Prices and Dumping

© Global Development and Environment Institute, Tufts University Environmental Impacts in Mexico Rise in intensive farming *Geographically very concentrated: esp. Sinaloa *High chemical and water use Threats to traditional producers *Feared loss of maize diversity *Mexico center of origin; over 40 landraces *Important global resource; key to crop-breeding *Will economic pressure cause abandonment of land, loss of stewardship and diversity?

© Global Development and Environment Institute, Tufts University Images of maize planting

© Global Development and Environment Institute, Tufts University Trends in Mexican Agriculture Declining government credit Declining commercial credit

© Global Development and Environment Institute, Tufts University Trends in Mexican Agriculture: Declining Investment

© Global Development and Environment Institute, Tufts University Declining Agricultural Subsidies

© Global Development and Environment Institute, Tufts University Declining Subsidies for Maize

© Global Development and Environment Institute, Tufts University Savings for the Consumer? Rise in Tortilla Prices Despite Falling Corn Prices

© Global Development and Environment Institute, Tufts University Foreign Investment: No Answer for Peasants US Foreign Investment in Mexico, Total US FDI$44,000,000,000 In agriculture0.4%$172,000,000 Hog farming69%$120,000,000 Horticulture, flowers26%$45,000,000 All others5%$7,000,000 Coffee %$4,300 Sinaloa, Sonora89%$154,000,000 All other states11%$18,000,000 Oaxaca.00003%$5,400

© Global Development and Environment Institute, Tufts University Map of Poverty Shadows Map of Biodiversity Threats to agro-biodiversity: Shift to more profitable crops Move out of agriculture Loss of traditional knowledge Migration, abandoning land

© Global Development and Environment Institute, Tufts University Traditional Maize: No reason to worry? Not so fast: *peasant survival strategy *alternative crops depressed *alternative livelihoods few Need closer analysis of: *migration trends *diversity impacts Rise in planted area Rise in production

© Global Development and Environment Institute, Tufts University Marginalization by DDR, 2000

© Global Development and Environment Institute, Tufts University Marginalization and International Migration, 2000 International migration rates highest not for poorest. Internal migration rates are highest for poorest producers.

© Global Development and Environment Institute, Tufts University Diverse producers (DDRs with over 60% using native seeds): Represent 68% of maize producers. Suffer high levels of poverty (over 70%) Show low levels of international migration Show the highest levels of internal migration Have expanded production and cultivation with fewer people

© Global Development and Environment Institute, Tufts University Policy Regime for Sustainable Corn Production in Mexico  Price differentials  Credit  NAFTA and WTO-compatible subsidies  Technical assistance  Crop failure insurance  Trade fairs  National Corn Institute  In Situ conservation of corn genetic resources

© Global Development and Environment Institute, Tufts University Conclusions Pollution haven: North not always more sustainable than South, especially in agriculture. Globalization of market failure: Environmental externalities can be exacerbated by trade, with harm to both sides. Environmental contributions of traditional agriculture: Need to assess non-market ecological values prior to liberalization; “inefficiency” may be beneficial. Agro-biodiversity: Key concern in some areas. Macroeconomic policies: Rising demand for some agricultural products could be harnessed to stimulate sustainable agriculture and in situ conservation. Look beyond trade agreements: Important to not simply isolate NAFTA impacts from overall political economy.