The Impact of Environmental Regulations on Exports: Case Study Results from Cyprus, Jordan, Morocco, Syria, Tunisia, and Turkey

Abstract

Concern about the effects of environmental policies on trade competitiveness continues to grow in the non-EU Mediterranean regions (e.g., North Africa, the Middle East, Turkey, Cyprus). While the impact of environmental regulations on exports is widely discussed in the region, there has been little empirical analysis of how more stringent environmental regulations might affect exports of key sectors in the future. This paper summarizes the results of six case studies that estimate the impact of potential changes in environmental regulations on exports from a key sector in each country. These case studies, which are based on a theoretically consistent yet empirically tractable modeling approach, suggest that a range of outcomes is likely and depends on a fairly small set of specific information. For some of the cases, expected regulatory changes would probably have little impact on exports, while in other cases the impacts could be substantially larger. In some countries, the range of potential outcomes is largely due to the magnitude of the policy change, the importance of various inputs in production, and the lack of information on international market conditions.