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Working Paper: Comparison of the Environmental Impacts of Trade and Domestic Distortions in the United States

Paper Number: 2005-06

Document Date: 06/2005

Author(s): Jared Creason, Michael Fisher, Isabelle Morin, and Susan F. Stone

Subject Area(s): International Trade; Economic Impacts; Modeling

Keywords: trade; environmental impacts; general equilibrium

Abstract: There is a great deal of concern, both among environmental activists and the general public, about the affects of globalization on the environment. One particularly contentious issue is that of trade liberalization. However, is all the concern being shown for the effect of increased trade on the environment misplaced? Should we instead be focusing our efforts on the distortions created by domestic policies as a greater source of potentially adverse environmental effects? This paper compares the environmental impacts of different types of subsidies/restrictions on the US economy. The paper presents the results of several scenarios surrounding the removal of two types of restrictions: trade and domestic subsidies. The Global Trade Analysis Project (GTAP) model and database will be used to derive economic changes while the environmental effects will be assessed using the Trade and Environment Assessment Model (TEAM). TEAM converts national level economic outcomes into environmental. Aggregate measures of pollution indicate greater increases in the US from trade liberalization, mostly through changes in the agricultural sector.

This paper is part of the Environmental Economics Working Paper Series.

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