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Open Access Publications from the University of California

International Trade and the Internalization of Environmental Damages

  • Author(s): Karp, Larry
  • Dumas, Christopher F.
  • Koo, Bonwoo
  • Sacheti, Sandeep
  • et al.

This paper contributes to the growing effort to synthesize the fields of trade policy and environmental policy. We discuss: the question of whether international trade undercuts unilateral internalization policies: the role of income constraints in environmental policy; and the possibility of using trade policy to achieve environmental objectives. We review estimates of environmental damage in agricultural production and processing, and we summarize current policy measures. We use a static empirical model to estimate the effects of several internalization policies. We show how a dynamic model can be used to simulate the effects of policy over time, for both environmental and economic variables.

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