I would have to nitpick that artificial fertilizers are not necessarily bad for the environment and have probably saved billions of people from starvation. So that’s good.
Of course it’s theoretically possible a country could make food cheaper by, say, using something that is very polluting. That said
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That doesn’t mean Canada will end up importing it. Countries will end up trading based on comparative advantage, not competitive advantage.
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At the risk of, again, pointing out the crazily obvious, this happens NOW. Canada has stronger labour protections and environmental regulations than the great majority of countries we trade with and yet we are not overwhelmed by foreign stuff - because, again, things being cheaper don’t mean it’s to our comparative advantage to import them. In essence, the Canadian dairy farmer isn’t competing with the New Zealander dairy farmer; he is competing with Canadian machine shops, plastic injection molding factories, and software companies. The dairy industry has successfully used politics to extract money from those industries and take it for themselves, thus increasing their welfare at the expense of everyone else.
This is a really important concept to get.
I’m all for the world coming to agreement on, say, carbon emissions, but if you think Canada’s dairy farmers are insisting on protected status and government handouts to save the world from CO2 emissions, I’ve got a bridge in Brooklyn you can have for a good price. Those are different issues, and politically corrupt protectionism is absolutely not going to help the world avoid externalities like the ones you describe.