The increasing global environmental consequences of a weakening US–China crop trade relationship

The environmental stresses of existing US–China crop trade

In the past, producing the volumes of crops demanded by China exacerbated US environmental pressures, but potentially relieved the environmental stresses on China and the world. In 2014–2016, on average, to produce the crops exported to China, the United States devoted an additional 12 Mha of harvested area, demanded 4 trillion litres (1 trillion = 1 × 10¹²) more blue water, and increased nitrogen and phosphorus surplus by 0.5 TgN (1 Tg = 1 × 10⁹ kg) and 0.007 TgP (Fig. 2). In contrast, if China’s crop imports from the United States were produced in China domestically with its current technology and management practices, assuming adequate resources and suitable climates and soil conditions, it would require nearly 20 Mha harvested area and 9 trillion litres of blue water, and would lead to nitrogen and phosphorus surpluses of 1.7 TgN and 0.3 TgP. Such drastic shifts in the associated environmental stressors would consequently produce a net increased global burden of environmental stresses, including net additional exploitation of 8 Mha of harvested area and 5 trillion litres of blue water, and further losses of 1.2 TgN and 0.3 TgP to the environment.

If China’s crop imports from the United States were entirely substituted by imports from other regions of the world, the environmental stressors of the production would vary among regions due to the different production efficiencies and available resources (Fig. 2). For example, to produce the same volume of crops demanded by China, Brazil would require an additional 2 Mha of harvested area and would induce an additional 0.5 TgN surplus and 0.22 TgP surplus, compared with the United States, but would substantially reduce blue water demands. Other South American countries would be a less-polluting alternative to the United States given the region’s more efficient nitrogen use and blue water demand, but higher costs and limited resource availability may impede them from replacing the crop supply from the United States entirely¹⁷. Overall, this comparison suggests that the current production reallocations from China to the United States achieved through international trade have relieved environmental burdens for China and the world due to China’s relatively low efficiencies in both water use and fertilizer use compared with the United States and the rest of the world. Admittedly, this comparison with Brazil and other South American countries demonstrates an extreme case of production reallocations from the United States to the rest of the world, and such reallocation is likely to be buffered by market-mediated responses and considerations of biophysical limits; however, it demonstrates the general direction of changes in environmental consequences in the context of weakening US–China crop trade.

The national impacts of the weakening trade relationship

Shifts in crop production portfolios

Under the proposed December 2019 tariff scenario (Table 1), China’s retaliatory tariffs would potentially increase the prices of US agricultural products in China’s domestic market. This would lower China’s demands for US agricultural products, eventually lowering US farmers’ income and discouraging them from producing relevant crops^3,4,5. Given the fact that over 70% of China’s crop imports from the United States are soybeans, domestic soybean prices in the United States are affected, depressing their production in the United States by about 3 Mha. Crops that are less traded with China would be less affected by China’s tariff increase. Hence, over the long term, US farmers would switch to these less-traded crops with China, such as other coarse grains (primarily corn), wheat and other agricultural products. Besides soybeans, non-soybean oilseeds are also among the major crops that China imports from the United States. Under the defined scenario, non-soybean oilseeds are also retaliated, and their production thus contracts in the United States by 0.6 Mha. As a result, the total harvested area in the United States would decline by 1.25 Mha.

Relatively lower-priced soybeans from Brazil and other South American countries, due to the absence of tariffs, would incentivize China’s soybean imports from these countries. China’s rising demands would increase the income of soybean farmers and motivate soybean expansion in Brazil and other South American countries by 3 and 0.8 Mha, respectively, adding pressures to their cropland expansion^19,20,21. China’s retaliation on US soybeans would spur China’s domestic oilseed production in general by 0.5 Mha. However, with intensified agricultural production and limited harvested area expansion capabilities, China would experience limited changes in its crop portfolio and harvested area. As soybean is the major protein source for livestock animals²⁹, tariffs on meat could further disincentivize US soybean production. Since South America mainly competes with the United States in China’s domestic soybean market, the production of all non-soybean crops in South America would experience limited incentives.

Changes in environmental stresses

Shifts in crop portfolios are accompanied by changes in environmental stressors such as nitrogen surplus, phosphorus surplus and blue water demand. Although the total harvested area in the United States would contract by 1.25 Mha, its total nitrogen surplus (expressed as kgN) would increase by 35 million kgN as soybean, a nitrogen-fixing crop with relatively high nitrogen-use efficiency (NUE) and low nitrogen surplus intensity (expressed as kgN ha⁻¹), shifts to other crops (Fig. 3). The reduction of 105 million kgN surplus due to soybean contraction in the United States is less than the additional nitrogen surplus generated by the expansion of other crops, such as other coarse grains, with higher nitrogen surplus intensity. In contrast, Brazil and other South American countries would reduce their nitrogen surplus by 119 million kgN and 81.5 million kgN owing to substitutions of soybean for other non-soybean crops. Globally, the nitrogen surplus increase in the United States is offset by the nitrogen surplus decline in Brazil as a result of the soybean shifts from the United States to Brazil to meet demands of China. Overall, global nitrogen surplus would significantly decline by 154 million kgN due to the contractions of nitrogen-inefficient crops (for example, other coarse grains, wheat, sugar crops and other agricultural products) in South America, and their increase in the United States, where they can be grown more efficiently and with lower nitrogen surplus intensity.

The contraction of the harvested area in the United States would not lead to any reduction in blue water demand. If soybean alone is subject to China’s retaliation, the US blue water demand would increase substantially by 1.6 billion litres (Supplementary Information, section 9 and Supplementary Fig. 7). In this case, the crops that are projected to increase production in the United States either replace soybean production with higher water demand per harvested area (for example, corn in the ‘other coarse grains’ category) or tend to expand in the regions with high blue water demand (for example, ‘other oilseeds’). However, when non-soybean oilseeds are also retaliated, the increase in US water demands would be only 0.1 billion litres, much lower than that of the soybean-only tariff scenario, as these water-demanding crops also decline in production. Although it is unlikely that farmers will invest significantly for irrigation equipment given a short-term policy or market shock^5,30, it is possible for farmers to increase irrigation water use on land already equipped with irrigation infrastructure, to shift crop type (for example, from soybean–corn rotation to continuous corn) and perhaps even to invest in new equipment as the trade tension becomes a norm in the context of growing tensions between the United States and China. Therefore, the reduction of blue water demand for soybean in the United States could be outweighed by the increase in water demand for other crops (Fig. 3d). Under both scenarios, similar patterns are observed on the global scale: global blue water demand would increase because the benefits of blue water savings from shifts in soybeans production (that is, shifts from the United States to Brazil and other South American countries) would be offset by the increasing blue water demand in non-soybean oilseed expansion in water-scarce regions.

Trade-offs and synergies also exist within each region across different environmental stressors. The expansion of soybean, a nitrogen-fixing plant that is relatively more efficient than many other crops, would reduce Brazilian nitrogen surplus by 120 million kgN but increase its phosphorus surplus by 23.5 million kgP. Brazilian soybean is intensively produced in areas with highly weathered, naturally acidic soils that render much of the native and applied phosphorus unavailable to the crop. Brazilian soybean production thus requires higher phosphorus fertilizer and lime inputs than soybeans produced in most temperate regions³¹. With similar PUE levels, the phosphorus surplus increase due to soybean expansion is higher than the phosphorus surplus decline driven by the contraction of other crops—resulting in a net 23.5 million kgP surplus increase in Brazil. Although most of this phosphorus surplus is currently retained in Brazilian soils, the accumulated phosphorus could eventually reach saturation and pollute water bodies³². In addition, the increased demand for phosphorus fertilizer and lime in Brazil may exceed domestic supplies of rock phosphorus reserves and lime. In contrast to Brazil, the United States would suffer from an increase in both phosphorus and nitrogen surplus by 34.7 million kgP and 10.3 million kgN, respectively, as the production shifts from soybean to more fertilizer-intensive crop types, while other South American countries would experience alleviation in both phosphorus and nitrogen surplus by 81.5 million kgP and 5 million kgN, respectively, due to the shifts opposite to those in the United States. Global phosphorus surplus would be further aggravated by 30 million kgP as soybeans are expanded in Brazil where phosphorus use is more inefficient.

Overall, the weakening US–China agricultural trade relationship would worsen the US environmental stressors of both nutrient surpluses and water resource depletion. Such patterns of environmental consequences are primarily driven by China’s retaliation on US soybeans. Additional environmental stresses imposed on the United States could also be affected by the extent of China’s retaliation on non-soybean oilseeds (Supplementary Fig. 7). Brazil would reduce its nitrogen surplus and blue water demand through crop mix changes but face an aggravated phosphorus surplus issue. China would experience limited environmental improvements. Globally, trade-offs exist among nitrogen surplus reduction, increases in phosphorus surplus, increases in blue water demand and increased harvested area.

Sensitivity analyses

While the environmental stressor evaluation in this study adopts standard Global Trade Analysis Project (GTAP) parameters and uses crop-specific environmental stressor intensity databases from reliable sources^13,33,34, uncertainties in these parameters and data could affect the outcomes of the evaluation. To test the robustness of the evaluation outcomes, we designed the following sensitivity analyses focusing on these two major sources of uncertainties.

Regarding the uncertainties associated with the GTAP-BIO model, we first identified parameters to which the production portfolios are most sensitive, varied these parameters by 50% following an independent triangular distribution and obtained the consequent crop portfolio variations³⁵. We then evaluated the resulting variations in global and regional environmental stressors by assuming that crop-specific environmental stressor intensity in each region remained unchanged (see Supplementary Information, section 7 for the rationale for the selection of parameters and the 50% variation). We found that even with 50% variations, parameter uncertainties did not alter the direction of changes in environmental stressors. The environmental consequences in the United States and Brazil are most sensitive to soybean’s trade elasticity and cropland transformation, while China is mostly affected by its protein preferences for animal feed (Supplementary Table 9).

Concerning the uncertainties in crop-specific environmental stressor intensity, we varied each major crop’s intensity of nitrogen surplus, phosphorus surplus and blue water demand following independent triangular distribution. We then assessed the corresponding variations in global and regional environmental stressors by assuming constant average harvested area changes (changes reported in Fig. 3a). We found that the coefficient of variation for each environmental stressor is linearly related to the intensity variation level (Supplementary Table 10). Regional nitrogen surplus changes are more sensitive to the accuracy of the nitrogen surplus intensity estimate for soybean and other coarse grains, and the United States is most sensitive to its estimate of blue water demand intensity for soybeans, other coarse grains and sugar crops (Supplementary Table 10). Hence, potential variations in the data could also moderately weaken or amplify the conclusions made in this analysis but would not change the direction of patterns.

Local hotspots with additional environmental stresses

Heterogeneous distributions of crops and varying crop mixes and RUEs in crop production at subnational scales cause divergence of the local environmental stress changes from the aggregate national changes (Fig. 4). Unique crop portfolios in each grid cell could lead to spatial trade-offs and synergies within each environmental stressor and across different environmental stressors. To investigate the heterogeneous consequences on a subnational scale, we downscaled the modelling results from GTAP for each AEZ to 30 × 30 arcminute grids, following the approach that has been applied in multiple studies^34,36,37. The downscaled results represent one of the plausible changes in crop distribution and subsequent changes in intensities of nitrogen surplus, phosphorus surplus and blue water demand on a subnational scale under the trade tension and based on the model structure and assumptions.

China’s retaliation on US agriculture would lead to the contraction of soybean production mainly in the US soybean/corn belt where the production of other coarse grains expands—resulting in a reduction in total nitrogen surplus (Supplementary Fig. 6b) but an increase in nitrogen surplus intensity for this region (Fig. 4a). The expansion of other coarse grains is much less than the reduction in soybean production, leading to the decline of harvested area for the region. However, because other coarse grain has a higher nitrogen surplus intensity than soybean, the intensity of nitrogen loss increases on the remaining cropland (Fig. 4a). The expansion of wheat would focus on the northern and western regions of the midwestern United States, accompanied by increasing phosphorus surplus intensity. Such phosphorus surplus intensity increase is aggravated by further expansion of wheat production. With the increasing tariffs imposed on all crops, the northwestern United States would experience a reduction in nitrogen surplus reduction as other coarse grains produced in the midwest substitute those produced in this region. Meanwhile, the contraction of nitrogen-efficient non-soybean oilseeds in southern regions would aggravate local nitrogen surplus intensity but relieve local demands for blue water. However, if the non-soybean oilseeds are not retaliated, soybean reduction could potentially incentivize their production in southern regions, reducing local nitrogen surplus intensity (Fig. 4a) but demanding more blue water (Fig. 4c).

In contrast to the contraction in the United States, soybean would expand in South America mainly in the central-west and southern regions of Brazil and the northeastern regions of Argentina. While adding pressures on land use changes in these areas, the expansion of soybean production may relieve nitrogen surplus intensity and blue water demand intensity by replacing wheat, other coarse grains, sugar crops and other agricultural products. Consistent with national-scale analysis, the Brazilian soybean production area may experience aggravated phosphorus surplus intensity but other South American countries would benefit from lower phosphorus surplus intensity due to their different soil types (Fig. 4b).

Considering all three environmental stressors together, China’s retaliatory tariffs would lead to the worsening of one or more environmental stresses in most regions (Fig. 4d). The region with reduced environmental stresses is mainly concentrated in southeast and northeast China, where soybeans and rapeseeds expand at the cost of other resource-intensive crops, and Argentina, where soybean production is incentivized. The rest of China is dominated by intensified blue water demand, while some regions would face increased nitrogen surplus (green areas in Fig. 4d for China) and phosphorus surplus intensity as well (purple areas in Fig. 4d for China). It is notable that 8.3% of the regions in China where crop production is incentivized would face challenges from aggregations of all three environmental stressors (brown areas in Fig. 4d for China). Most regions in the midwestern, southern and northeastern United States are dominated by increases in nitrogen surplus and blue water demand intensity (green areas in Fig. 4d for United States), as part of soybean production shifts to other crops with more intensive nitrogen surplus and/or blue water demand. Northern parts of the western United States show modest intensifying nutrient surpluses, and southern areas of the western United States have slight intensification in nitrogen surplus but intensified blue water demand if non-soybean oilseeds would not be retaliated (Supplementary Fig. 8). The Brazilian Amazon region faces the situation of intensified nutrient losses and blue water demands of existing agricultural practices as a result of a reduction in resource use efficient crops in crop mixes. Since total harvested area devoted to crop production in the Brazilian Amazon is relatively low (less transparent brown areas in Fig. 4d for Brazil), changes in the environmental stressors analysed here may be less of a concern, although any cropland expansion in the Amazon region would probably be important regarding other conservation issues. The rest of Brazil, where the crop production is more active, is dominated by intensified phosphorus fertilizer use and phosphorus losses in soybean-intensive areas.

Source: Resources - nature.com