The effects of resource export and import taxes on resource conservation and welfare outcomes: triple win or loss reconsidered

For an extended period, international economists have focused on trade policies related to natural resources in developing countries. However, prevailing analytical frameworks primarily examine the impact of export and import policies when natural resource stocks are subject to singular or distinct adverse externalities. In contrast, developing nations with less stringent environmental management regulations frequently grapple with open-access and industrial pollution externalities. This research extends the analysis of trade policies on natural resources by incorporating the concurrent presence of within- and inter-industry externalities, thereby significantly altering the autarkic equilibrium’s character. A two-sector general equilibrium model assesses the economic, stock conservation, and welfare implications of implementing export and import taxes on renewable resource commodities. The study reveals that resource-exporting countries’ enforcement of resource export taxes can yield a triple win, contingent on the relative damage inflicted by open-access renewable resources and manufacturing sectors. Conversely, import taxes imposed by resource-importing nations result in a triple loss. Furthermore, the model suggests that import subsidies for resource goods can promote resource conservation and welfare benefits compared to free trade without trade policies, mainly when pollution dominates open-access externality in terms of depleting on the environmental stock.