Carbon Border Adjustment, Market Responses, and Food-Security Trade-Offs in EU–Türkiye Processed Agri-Food Trade: A Calibrated Stackelberg Analysis

This paper develops a stylized theoretical policy experiment to evaluate the ex ante economic and environmental implications of extending carbon border adjustment to processed agri-food imports from Türkiye to the EU. The model is not a direct simulation of the existing CBAM, but rather a Stackelberg framework in which the EU sets product-specific carbon charges and Türkiye adjusts export quantities. We develop a calibrated Stackelberg framework in which the EU acts as the regulatory leader setting product-specific carbon border charges, while Türkiye adjusts export quantities as the follower. The model integrates consumer surplus, producer surplus, carbon-charge revenue, environmental benefits, and a food-security penalty linked to minimum consumption requirements. Results reveal substantial heterogeneity across products. In the unconstrained benchmark, lamb and beef face the highest optimal charges, at 45 and 42 USD/tCO2e, respectively. Incorporating food-security constraints reduces the charge for lamb to 27.8 USD/tCO2e, while the charge for beef remains unchanged because the minimum consumption constraint is non-binding. Under the baseline food-security scenario, net EU welfare increases by 29.1 million USD/year. The findings suggest that CBAM-type measures in agri-food trade should be product-specific and should account for food-security risks in nutritionally essential products.