International Trade and Environmental Quality: How Important Are the Linkages?

Abstract

This chapter develops a numerical general equilibrium model of the world economy with local and global environmental externalities. The model is then used to investigate the relationship between trade and the environment. Our results suggest that international trade has little impact on environmental quality. Furthermore, the magnitude of the welfare effects of environmental policies is not significantly affected by changes in trade policies. At the same time, the size and distribution of the gains from trade liberalization appear to be little affected by changes in environmental policies. © Canadian Economics Association

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