Emissions leakage and economic losses may undermine deforestation-linked oil crop import restrictions.

Abstract

Import restrictions on deforestation-linked commodities have been enacted with the goal of reducing global deforestation and emissions. However, the limited market share of importers imposing such restrictions and the potential for emissions leakage could reduce their effectiveness. Moreover, they could result in negative economic implications for producers and consumers. We quantify future emissions and economic implications of oil palm and soybean import restrictions. Current EU restrictions are likely to have minimal impact due to the EU's otherwise small and declining share of global palm and soy demand. If extended beyond the EU, import restrictions could lead to reductions in cumulative land use change (LUC) emissions by 2050 in key oil crop exporting regions - up to 1.6% in Indonesia, 2.1% in the rest of Southeast Asia, 4.6% in Argentina, and 8.3% in Brazil compared to a no restrictions scenario. Globally, however, direct forest protection could be more effective than indirect protection through import restrictions due to emissions leakage. Meanwhile, import restrictions could cause major exporters to lose $0.1-$280 billion in cumulative agricultural production revenues by 2050. More broadly, our study highlights that the effectiveness of import restriction policies in reducing global emissions will likely depend on coordinated action across major oil crop producing and consuming regions.