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Induced Institutional Change in the Trade and Environment Debate

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Author Info
Heinz Jansen ()
Abstract

Because of the assumption of constant emission factors, economy-environment models often show that free trade has negative environmental consequences. However, this pessimistic view ignores the possibility of trade strengthening the demand for regulatory institutions. An `institutional optimism hypothesis’, stating that the net environmental result of trade liberalization is benign, is thus formulated in this paper. The hypothesis is examined with a CGE model that treats institutional change as an endogenous process dependent on income. Application to NAFTA, using a broad range of scenarios, provides some support for the institutional optimism hypothesis. The net pollution effect of trade liberalization is in many cases beneficial or low, even for the country specializing in polluting industries. The implication is that in many cases environmental interests are served better by a focus on institution building in trading partners, than on the process of trade liberalization itself. Copyright Kluwer Academic Publishers 2001

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File URL: http://hdl.handle.net/10.1023/A:1011141425958
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Publisher Info
Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 18 (2001)
Issue (Month): 2 (February)
Pages: 149-172
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Handle: RePEc:kap:enreec:v:18:y:2001:i:2:p:149-172

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Related research
Keywords: CGE models; environment; institutions; NAFTA; trade;

References listed on IDEAS
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  6. John Beghin & David Roland-Holst & Dominique van der Mensbrugghe, 1997. "Trade and Pollution Linkages: Piecemeal Reform and Optimal Intervention," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 442-55, May. [Downloadable!] (restricted)
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  7. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September. [Downloadable!] (restricted)
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  10. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September. [Downloadable!] (restricted)
  11. Copeland, Brian R & Taylor, M Scott, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 755-87, August. [Downloadable!] (restricted)
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  12. Roland-Holst, David & Reinert, Kenneth A. & Shiells, Clinton R., 1994. "NAFTA liberalization and the role of nontariff barriers," The North American Journal of Economics and Finance, Elsevier, vol. 5(2), pages 137-168. [Downloadable!] (restricted)
  13. Harmen Verbruggen & Onno Kuik, 1997. "WTO Ministerial Conference in Singapore: Environmental Diversity Versus Harmonization," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 10(4), pages 405-413, December. [Downloadable!] (restricted)
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  15. Mody, Ashoka & Roy, Subhendu & Wheeler, David & Dasgupta, Susmita, 1995. "Environmental regulation and development : a cross-country empirical analysis," Policy Research Working Paper Series 1448, The World Bank. [Downloadable!]
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  16. Hettige, Hemamala & Martin, Paul & Singh, Manjula & Wheeler,David R., 1995. "The industrial pollution projection system," Policy Research Working Paper Series 1431, The World Bank. [Downloadable!]
  17. Smith, V. Kerry & Espinosa, Andres, 1996. "Environmental and Trade Policies: Some Methodological Lessons," Discussion Papers dp-96-18, Resources For the Future. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Annegrete Bruvoll, Taran Fæhn and Birger Strøm, 2003. "Quantifying Central Hypotheses on Environmental Kuznets Curves for a Rich Economy: A Computable General Equilibrium Study," Discussion Papers 341, Research Department of Statistics Norway. [Downloadable!]
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  2. Annegrete Bruvoll and Taran Fæhn, 2004. "Transboundary environmental policy effects: Markets and emission leakages," Discussion Papers 384, Research Department of Statistics Norway. [Downloadable!]
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