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The Geography of Trade and the Environment: The Case of CO2 Emissions

Author

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  • Sami Bensassi
  • Laura Márquez-Ramos
  • Inmaculada Martínez-Zarzoso
  • Habib Zitouna

    (University of Carthage, Tunisia)

Abstract

According to recent theoretical developments, there are three key channels through which trade affects the environment. The first is via its effect on the scale of economic activity, the second is via a composition effect and the third is via a technical effect. This paper argues that, in addition to these traditional factors, the geography of international trade flows does matter. Since, transport activity is also a source of pollution, trading with close countries does not have the same implications as trading with distant ones. However, this geographical distance effect can be offset by a transport sector effect i.e. the use of different modes, techniques and scale of transport. Indeed, when distances increase, it is expected that transport companies use less energy-intensive modes of transport. These two opposite effects are tested for carbon dioxide (CO2) emissions in a set of 149 countries as well as for different economic groups over the period 1986 to 2003. The main findings show a U-shaped relation between distance and CO2 emissions: the distance (transport sector) effect dominates long (short) distance travel. This paper underlines the possible high costs in terms of CO2 emissions of globalized trade as opposed to regionalized trade flows.

Suggested Citation

  • Sami Bensassi & Laura Márquez-Ramos & Inmaculada Martínez-Zarzoso & Habib Zitouna, 2011. "The Geography of Trade and the Environment: The Case of CO2 Emissions," Working Papers 635, Economic Research Forum, revised 10 Jan 2011.
    • Handle: RePEc:erg:wpaper:635
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    References listed on IDEAS

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    1. Managi, Shunsuke & Hibiki, Akira & Tsurumi, Tetsuya, 2009. "Does trade openness improve environmental quality?," Journal of Environmental Economics and Management, Elsevier, vol. 58(3), pages 346-363, November.
    2. Werner Antweiler & Brian R. Copeland & M. Scott Taylor, 2001. "Is Free Trade Good for the Environment?," American Economic Review, American Economic Association, vol. 91(4), pages 877-908, September.
    3. Brian R. Copeland & M. Scott Taylor, 1994. "North-South Trade and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(3), pages 755-787.
    4. World Bank, 2011. "World Development Indicators 2011," World Bank Publications - Books, The World Bank Group, number 2315, December.
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    Cited by:

    1. Baghdadi, Leila & Martinez-Zarzoso, Inmaculada & Zitouna, Habib, 2013. "Are RTA agreements with environmental provisions reducing emissions?," Journal of International Economics, Elsevier, vol. 90(2), pages 378-390.
    2. Yongbum Kwon & Hyeji Lee & Heekwan Lee, 2018. "Implication of the cluster analysis using greenhouse gas emissions of Asian countries to climate change mitigation," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 23(8), pages 1225-1249, December.

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