Global dairy production, consumption, and trade are growing rapidly, driven by population and per capita income growth and increasing health concerns mainly from developing countries, which has aroused concerns about the related carbon emission (mostly in the form of methane) increase. If all of the dairy products consumed were produced locally/domestically in the developing countries/economies (a counterfactual scenario), the carbon emissions in 2018 would be 28 Mt CO2-equiv higher than its status quo (a factual scenario). The present study indicates that unlike in many global trade cases in which carbon leakages are from developed to developing countries, global dairy trade is characterized by net embodied carbon flows from developed to developing countries/economies due to the fact that there is an overwhelming one-way-flow of dairy products from developed to developing countries/economies. The differences in the carbon emission factors between the developed and developing countries/economies provide an opportunity that global dairy trade and production specialization can help to reduce carbon emissions from increasing dairy product demand, and the total reduction potential is estimated to be about 414 Mt CO2-equiv from 2018 to 2030. Free trade agreements such as the Regional Comprehensive Economic Partnership will incentivize larger carbon emission reduction benefits through promoting dairy trade.
Keywords: carbon reduction contribution; dairy products; free trade policy; global trade.