Conference Agenda

International climate cooperation remains challenging as countries differ widely in their economic and spatial structures, which creates uneven incentives to mitigate emissions. Since trade already reflects these geographic differences, it offers a natural lever for climate cooperation. Focusing on the agricultural sector, this paper develops a general equilibrium model that incorporates spatial and structural features in an open economy and couples it with a simultaneous-move climate club formation game. The objective is to study whether trade liberalization can foster climate coalition formation without generating unintended consequences. Calibrating the model to real-world data, we simulate multiple coalition formation scenarios reflecting alternative behavioral responses by countries. The results show that agricultural trade liberalization can effectively incentivize countries to join a stable climate coalition, yielding significant global greenhouse gas emission reductions and welfare gains. However, these benefits may come with important trade-offs. Agricultural trade incentives directly interact with food consumption patterns and both the intensive and extensive margins of production. Examining the broader climate and socio-economic effects, we find that the resulting coalitions may increase livestock-related emissions, exacerbate food security imbalances, and intensify land-use change emissions, particularly in tropical regions.