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Trade and Environment Linkages: Piecemeal Reform and Optimal Intervention

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Author Info

  • Beghin, John C.
  • Roland-Holst, David
  • Van der Mensbrugghe, Dominique

Abstract

We demonstrate how coordinated trade and environmental policy can achieve efficiency and pollution mitigation gains superior to those obtained without such coordination. We show how trade and environment linkages give rise to complex second-best policy issues and derive optimal interventions and sufficient conditions for welfare-improving piecemeal trade and environmental policy reforms in a small economy. Changing trade and environment distortions in proportion to their optimal levels increases welfare. We decompose the economic and environment effects of policies targeted at trade and pollution in both consumption and production. We also decompose production responses into output adjustments and changes in pollution intensities.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 1478.

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Date of creation: 01 May 1997
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Publication status: Published in Canadian Journal of Economics, May 1997, vol. 30 no. 2, pp. 442-455
Handle: RePEc:isu:genres:1478

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Cited by:
  1. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan, 2012. "Trade Restrictiveness Indices in Presence of Externalities: An Application to Non-Tariff Measures," Working Papers, International Agricultural Trade Research Consortium 142386, International Agricultural Trade Research Consortium.
  2. van der Mensbrugghe, Dominique & Roland-Holst, David & Dessus, Sebastien & Beghin, John, 1998. "The interface between growth, trade, pollution and natural resource use in Chile: evidence from an economywide model," Agricultural Economics, Blackwell, Blackwell, vol. 19(1-2), pages 87-97, September.
  3. Panos Hatzipanayotou & Sajal Lahiri & Michael S. Michael, 2002. "Reforms of Environmental Policies in the Presence of Cross-border Pollution and two Stage Clean Up," University of Cyprus Working Papers in Economics, University of Cyprus Department of Economics 0203, University of Cyprus Department of Economics.
  4. Brian R. Copeland & M. Scott Taylor, 2004. "Trade, Growth, and the Environment," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 7-71, March.
  5. Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(1), pages 147-168, Winter.

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