Are Carbon Leakages Traceable to EU Environmental Policy Stringency? Empirical Evidence from Agricultural Imports in Selected EU Countries from Their External Trading Partners

Are Carbon Leakages Traceable to EU Environmental Policy Stringency? Empirical Evidence from Agricultural Imports in Selected EU Countries from Their External Trading Partners | Research Square window.SnipcartSettings = { analytics: { enabled: false } }; (function() { var accessVector = localStorage.getItem('access_vector') || ''; window.dataLayer = window.dataLayer || []; if (accessVector) { window.dataLayer.push({ user: { profile: { profileInfo: { snid: accessVector } } } }); } })(); (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start':new Date().getTime(),event:'gtm.js'});var f=d.getElementsByTagName(s)[0],j=d.createElement(s),dl=l!='dataLayer'?'&l='+l:'';j.async=true;j.src='https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f);})(window,document,'script','dataLayer','GTM-K279D39R'); Browse Preprints In Review Journals COVID-19 Preprints AJE Video Bytes Research Tools Research Promotion AJE Professional Editing AJE Rubriq About Preprint Platform In Review Editorial Policies Our Team Advisory Board Help Center Sign In Submit a Preprint Cite Share Download PDF Research Article Are Carbon Leakages Traceable to EU Environmental Policy Stringency? Empirical Evidence from Agricultural Imports in Selected EU Countries from Their External Trading Partners Ayodele Idowu, Obed Adonteng This is a preprint; it has not been peer reviewed by a journal. https://doi.org/ 10.21203/rs.3.rs-7502543/v1 This work is licensed under a CC BY 4.0 License Status: Posted Version 1 posted You are reading this latest preprint version Abstract This study examines whether European Union (EU) environmental policy stringency generates trade-induced carbon leakage in agriculture. Unlike studies on energy-intensive manufacturing, evidence for agricultural trade remains scarce despite its importance in EU climate policy. Using bilateral panel data from 2003 to 2024 for five major EU agri-food importing countries and their leading external agricultural trading partners, we estimate pooled OLS and fixed effects models, quantile regressions, an instrumental variables (IV) strategy. We use EU agricultural emissions as an instrument for EU environmental policy stringency. The first stage confirms strong instrument relevance. In the second stage, a 1-point tightening of EU environmental policy increases agricultural emissions in partner countries by 3.25 Mt of CO2-equivalent, indicating a causal leakage channel through higher EU agri-food imports. The highest emission increases occur in high-fertilizer use systems abroad. The quantile regressions show that the leakage effect is strongest for exporting countries that are already high emitters. Overall, the evidence is consistent with pollution-haven hypothesis. Policy implications highlight the need for EU climate diplomacy, improved measurement and verification systems, and targeted trade-related climate measures for sustainable development. JEL codes: Q56, Q58, F18, Q17 Environmental Economics Agricultural Economics & Policy Econometrics Agricultural trade Carbon leakage Environmental policy EU Instrumental variable Full Text Additional Declarations The authors declare no competing interests. Cite Share Download PDF Status: Posted Version 1 posted You are reading this latest preprint version Research Square lets you share your work early, gain feedback from the community, and start making changes to your manuscript prior to peer review in a journal. As a division of Research Square Company, we’re committed to making research communication faster, fairer, and more useful. We do this by developing innovative software and high quality services for the global research community. Our growing team is made up of researchers and industry professionals working together to solve the most critical problems facing scientific publishing. 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