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Trade and Environment Linkages: Piecemeal Reform and Optimal Intervention

Author

Listed:
  • 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.

Suggested Citation

  • Beghin, John C. & Roland-Holst, David & Van der Mensbrugghe, Dominique, 1997. "Trade and Environment Linkages: Piecemeal Reform and Optimal Intervention," Staff General Research Papers Archive 1478, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:1478
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    Citations

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    Cited by:

    1. 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.
    2. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan, 2012. "Trade Restrictiveness Indices in Presence of Externalities: An Application to Non-Tariff Measures," Staff General Research Papers Archive 35578, Iowa State University, Department of Economics.
    3. 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, vol. 19(1-2), pages 87-97, September.
    4. Michael S. Michael & Sajal Lahiri & Panos Hatzipanayotou, 2015. "Piecemeal Reform of Domestic Indirect Taxes toward Uniformity in the Presence of Pollution: with and without a Revenue Constraint," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(2), pages 174-195, April.
    5. Susmita Dasgupta & Benoit Laplante & Hua Wang & David Wheeler, 2002. "Confronting the Environmental Kuznets Curve," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 147-168, Winter.
    6. 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 0203, University of Cyprus Department of Economics.
    7. Beghin, John C. & Disdier, Anne-Celia & Marette, Stephan, 2012. "Trade Restrictiveness Indices in Presence of Externalities: An Application to Non-Tariff Measures," Working Papers 142386, International Agricultural Trade Research Consortium.

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