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Not an easy ride: Economic research priorities for pro-environmental trade regulation

Author

Listed:
  • Schulz, Dario
  • Coenen, Johanna
  • Bastos Lima, Mairon
  • Berning, Laila
  • Börner, Jan
  • Cramm, Mathias
  • Fraccaroli, Cecilia
  • Oliveira, Gustavo Magalhães de
  • Persson, U. Martin
  • Sotirov, Metodi
  • Wunder, Sven

Abstract

Demand-side trade regulation is promoted as a policy tool to reduce negative environmental and socioeconomic footprints associated with global commodity supply chains. We present a theory of change (ToC) that explains how the economics of pro-environmental trade regulation can be expected to work, using the recent EU Regulation on Deforestation-free products (EUDR) as a topical illustration. Along this complex ToC, we review and characterize multiple factors that might either constrain overall policy effectiveness or enhance it. Evidence suggests that, in addition to land-use leakage (the displacement of environmental pressures to unregulated domains), predictably strong market-segregating responses might rearrange sourcing and trading patterns, especially where EU commodity import shares are low. Lacking observable and attributable land-use changes, segregation spillovers are harder to document. We outline an economically informed interdisciplinary research agenda around the potential impact pathways of demand-side trade regulations. However, our ex-ante conceptual policy assessment also cautions of potential functional shortcomings in reaching the desired global forest-protective goals.

Suggested Citation

  • Schulz, Dario & Coenen, Johanna & Bastos Lima, Mairon & Berning, Laila & Börner, Jan & Cramm, Mathias & Fraccaroli, Cecilia & Oliveira, Gustavo Magalhães de & Persson, U. Martin & Sotirov, Metodi & Wu, 2026. "Not an easy ride: Economic research priorities for pro-environmental trade regulation," Forest Policy and Economics, Elsevier, vol. 182(C).
    • Handle: RePEc:eee:forpol:v:182:y:2026:i:c:s1389934125002618
    DOI: 10.1016/j.forpol.2025.103682
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    Keywords

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    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

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