Does Trade Help or Hinder the Conservation of Natural Resources?

Trade exerts important influences on the exploitation and protection of natural resources. Indeed, recognition of this influence is codified in the General Agreement on Tariffs and Trade, which allows exceptions to treaty obligations for measures "relating to the conservation of exhaustible natural resources," motivates the Convention on International Trade in Endangered Species, and underlies the Convention on Biological Diversity. Trade impacts operate through several channels. Trade liberalization changes relative prices, which affects exploitation incentives. Trade can also have broader effects, such as impacts on labor markets and incomes, which may affect demand for resource-intensive products--or for ecosystem services. Trade interacts with, and can influence, the institutions governing the management of natural resources. Finally, trade can also introduce threats to ecosystems, in the form of invasive species. All of these potential impacts pose special challenges for the conservation of renewable resources, which inherently involves dynamic economic and ecological processes. This article reviews and takes stock of the lessons from the recent economics literature on the links between trade and the conservation of natural resources. Copyright 2010, Oxford University Press.