Chapter 13 Trade and the Environment Link to syllabus Is Free Trade Anti-Environment? Is...

Chapter 13 Trade and the Environment

Link to syllabus

Is Free Trade Anti-Environment?

Is globalization anti-environment?

1798 Essay on the Principle of PopulationOverpopulation; economics as “the dismal science”

David Malthus, 1766-1834

Improved living standards (from industrial revolution) will lead to population growth, which will nullify previous increase in income/capita

Why was he wrong? a)Ignored possibility of continuous technological progress; b) New ag lands in western hemispherec) Demographic theory was wrong

“Neo-Malthusians:” limited resources and environmental problems

Club of Rome:“Limits to Growth”

1970’s

Figure 13.1 page 286Environmental problems by income level

Complicates analysis of effect of income on the environment

Smoke particles fromFireplace in a hut

Carbon dioxidefrom cars, urbanwaste

Sulfur dioxideAnd lead

Environmental Pollution

Types of Environmental Degradation Small particles (sandstorms, smoke, small industry) Industrial Pollution (chemicals and smoke) Urban air & water (urban waste, ozone, and auto exhaust) Water (from dams, fertilizer) Deforestation/desertification Global warming, (cities affected by rising seas)

Government policy: Pollution controls (local, national, international - Kyoto accord Investment in infrastructure for sewage, potable water, roads, etc. Location of industries Enforcement

Environmental Indicators, in per capita terms.

United States Lebanon

Qatar Saudi Arabia

10.0 4.0

50.0 5.0

10.0

http://www.footprintnetwork.org

Germany United Kingdom

Russia China

7.0 7.0

7.0 2.5

http://www.footprintnetwork.org

Egypt U.A.E.

Turkey Iran

2.0

10

3.5 3.0

Figure 13.2 page 287Environmental effects of the Uruguay Round

Table seems to say that effect of the Uruguay round was small.

Figure 13.3 page 294Types of Externalities and Product Prescriptions.

Figure 13.4 page 296When domestic production causes domestic pollution

Country can be betteroff taxing domesticproduction, and importing,

because a is less than b,and social cost is assumed(0.30) to be larger than thedifferential to world price.

Figure 13.5 page 299Classic case of international pollution, & the ideal solution

Figure 13.6 page 312Carbon Tax to Stabilize Atmospheric Carbon Dioxide

Source: IMF World Economic Outlook, 2008