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Free Trade and Global Warming: A Trade Theory View of the Kyoto Protocol

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Author Info
Brian R. Copeland () (University of British Columbia)
M. Scott Taylor () (University of Wisconsin-Madison)

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Abstract

This paper demonstrates how several important results in environmental economics, true under mild conditions in closed economies, are false or need serious amendment in a world with international trade in goods. Since the results we highlight have framed much of the ongoing discussion and research on the Kyoto protocol, our viewpoint from trade theory suggests a re-examination may be in order. Specifically, we demonstrate that in an open trading world, but not in a closed economy setting: (1) unilateral emission reductions by the rich North can create self-interested emission reductions by the unconstrained poor South; (2) simple rules for allocating emission reductions across countries (such as uniform reductions) may well be efficient even if international trade in emission permits is not allowed; and (3) when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions.

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File URL: http://www.eaber.org/intranet/documents/22/179/CUHK_Copeland_01.pdf
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Publisher Info
Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 179.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 51 pages
Date of creation: Sep 2001
Date of revision:
Handle: RePEc:eab:tradew:179

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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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Related research
Keywords: Trade; Kyoto Protocol; emissions; emission permit; global emission;

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Find related papers by JEL classification:
F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounting

References listed on IDEAS
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.:

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    Other versions:
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    Other versions:
  6. 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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  8. Markusen, James R. & Melvin, James R., 1979. "Tariffs, capital mobility, and foreign ownership," Journal of International Economics, Elsevier, vol. 9(3), pages 395-409, August. [Downloadable!] (restricted)
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  11. Michael Hoel, 1991. "Efficient International Agreements for Reducing Emissions of CO2," The Energy Journal, International Association for Energy Economics, vol. 12(2), pages 93-108.
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  13. Brecher, Richard A & Choudhri, Ehsan U, 1982. "Immiserizing Investment from Abroad: The Singer-Prebisch Thesis Reconsidered," The Quarterly Journal of Economics, MIT Press, vol. 97(1), pages 181-90, February. [Downloadable!] (restricted)
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  17. Chander, Parkash & Tulkens, Henry, 1992. "Theoretical foundations of negotiations and cost sharing in transfrontier pollution problems," European Economic Review, Elsevier, vol. 36(2-3), pages 388-399, April. [Downloadable!] (restricted)
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    Other versions:
Full references

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. Wooders, M. & Zissimos, B., 2001. "The Efficiency, Equity and Politics of Emission Permit Trading," The Warwick Economics Research Paper Series (TWERPS) 586, University of Warwick, Department of Economics. [Downloadable!]
  2. McCarney, Geoff & Adamowicz, Vic, 2006. "The Effects of Trade Liberalization of the Environment: An Empirical Study," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25297, International Association of Agricultural Economists. [Downloadable!]
  3. Claudia Kemfert & Wietze Lise & Richard Tol, 2004. "Games of Climate Change with International Trade," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(2), pages 209-232, June. [Downloadable!] (restricted)
    Other versions:
  4. ISHIKAWA Jota & OKUBO Toshihiro, 2009. "Greenhouse-Gas Emission Controls and International Carbon Leakage through Trade Liberalization," Discussion papers 09008, Research Institute of Economy, Trade and Industry (RIETI). [Downloadable!]
    Other versions:
  5. Pancoast, Rochelle & Gaisford, James, 2005. "Will the Kyoto Protocol Be Good for the Environment? Implications for Agriculture," CAFRI: Current Agriculture, Food and Resource Issues, Canadian Agricultural Economics Society, issue 06. [Downloadable!]
  6. Maria, Corrado di & Werf, Edwin van der, 2005. "Carbon leakage revisited: unilateral climate policy with directed technical change," Discussion Paper 68, Tilburg University, Center for Economic Research. [Downloadable!]
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  7. Georg Müller-Fürstenberg & Gunter Stephan, 2002. "Where-to-Abate' And 'Where-to-Invest' Flexibility - An Integrated Assessment Analysis of Climate Change," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(II), pages 191-213, June. [Downloadable!]
  8. Gunter Stephan & Georg Müller-Fürstenberger, 2003. "Does Distribution Matter? When Flexibility, Equity and Efficiency in Greenhouse Gas Abatement," Diskussionsschriften dp0301, Universitaet Bern, Departement Volkswirtschaft. [Downloadable!]
  9. Dirk T.G. Rübbelke & Vivekananda Mukherjee, 2006. "Global Climate Change, Technology Transfer and Trade with Complete Specialization," Working Papers 2006.114, Fondazione Eni Enrico Mattei. [Downloadable!]
  10. M. Taylor, 2005. "Unbundling the Pollution Haven Hypothesis," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 4(2), pages 1408-1408. [Downloadable!] (restricted)
  11. Barrett, Scott & Stavins, Robert, 2002. "Increasing Participation and Compliance in International Climate Change Agreements," Working Paper Series rwp02-031, Harvard University, John F. Kennedy School of Government. [Downloadable!]
    Other versions:
  12. Alan S. Manne & Gunter Stephan, 2003. "Global Climate Change and the Equity-Efficiency Puzzle," Diskussionsschriften dp0306, Universitaet Bern, Departement Volkswirtschaft. [Downloadable!]
  13. Thierry, BRECHET & Marc, GERMAIN & Philippe, MONFORT, 2003. "SpŽcialisation internationale et partage de la charge en matire de rŽduction de la pollution," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003019, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  14. Crespi Francesco & Costantini Valeria, 2007. "Environmental regulation and the export dynamics of energy technologies," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200708, University of Turin. [Downloadable!]
    Other versions:
  15. Gunter Stephan & Georg Müller-Fürstenberger, 2004. "Does Distribution Matter? Efficiency, Equity and Flexibility in Greenhouse Gas Abatement," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 27(1), pages 87-107, January. [Downloadable!] (restricted)
  16. Dirk T.G. Rübbelke & Vivekananda Mukherjee & Tilak Sanyal, 2008. "Technology Transfer in the Non-traded Sector as a Means to Combat Global Warming," Working Papers 2008.78, Fondazione Eni Enrico Mattei. [Downloadable!]
  17. Partha Sen, 2008. "Fdeveloping Economies And The Environment - The Role Of Trade And Capital Flows," Working papers 172, Centre for Development Economics, Delhi School of Economics. [Downloadable!]
  18. Roberto Burguet & Jaume Sempere, 2007. "Trade of Permits for Greenhouse Gas Emissions; Bilateral Trade Need not Be the Answer," UFAE and IAE Working Papers 746.08, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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