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Environmental Goods Trade Liberalization: A Quantitative Modelling Study of Trade and Emission Effects

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  • Bacchetta, Marc
  • Bekkers, Eddy
  • Solleder, J.M.
  • Tresa, Enxhi

Abstract

Trade liberalization in environmental goods is expected to mitigate climate change by limiting greenhouse gas emissions. In this paper, quantitative modelling is used to generate projections on the trade, GDP, and emission effects of a potential trade liberalization agreement in energy related environmental goods. Two channels reducing greenhouse gas (GHG) emissions are considered: an increase in energy efficiency through the reduction in import prices of energy related environmental goods (EREGs) and a reduction in the costs of intermediate and capital goods used in electricity production from renewable energy sources. We evaluate four scenarios based on combinations of reductions in tariffs and NTMs of EREGs, and environmentally preferable products (EPPs). Simulations with the WTO Global Trade Model project: (i) an increase in exports of EREGs and EPPs both at the global level and in most regions; (ii) a modest increase in GDP in all regions because of falling tariffs, NTMs, and increased energy efficiency; (iii) a modest reduction in global emissions of about 0.3%.

Suggested Citation

  • Bacchetta, Marc & Bekkers, Eddy & Solleder, J.M. & Tresa, Enxhi, 2022. "Environmental Goods Trade Liberalization: A Quantitative Modelling Study of Trade and Emission Effects," Conference papers 333427, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:333427
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    References listed on IDEAS

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    1. de Melo, Jaime & Solleder, Jean-Marc, 2020. "Barriers to trade in environmental goods: How important they are and what should developing countries expect from their removal," World Development, Elsevier, vol. 130(C).
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    International Relations/Trade; Environmental Economics and Policy;

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