Trade In Environmental Goods Research Articles

Symphony of sustainability: how technology similarity impacts international trade patterns in environmental goods.

The global consensus on sustainable development and environmental cooperation has prompted the promotion of trade in environmental goods (EGs) for green growth. This study delves into the diversity of EGs trade patterns, using decomposed environmental technology similarity indicators to reveal the technological drivers. Linking innovation indicators to trade performance in EGs provides new insights into the determinants of inequality in environmental governance cooperation. Based on an extended gravity model, we empirically analyze their impact on bilateral EGs trade flows among 176 countries over the period 2002-2019. The study finds that (1) the global EGs trade network presents a "core-periphery" structure, with increased network density and participation of developing countries. (2) Technology similarity contributes significantly to EGs trade. Compared to competition, technology complementarity has a greater impact on EGs trade flows. (3) The influence of technology similarity varies across trade patterns and product complexity explains the mechanisms, with technology complementarity promoting more trade in high-complexity products, mainly concentrated in the trade from Northern countries, while technology competition greatly promotes the export of low-complexity products from the South. (4) Technology similarity helps to overcome information barriers in EGs trade, and its trade-enhancing effects exhibit geographical regionalization. The findings offer empirical evidence on the technological drivers of EGs trade and provide policy implications for fostering inclusive global environmental governance and enhancing the competitive advantages of Southern countries, fostering more opportunities for green growth.

Effects of digitalization on energy security risk: do financial development and environmental trade matter?

Trade in environmental goods and financial development may harness factors such as green investment, technological development, and renewable energy production, which are crucial in reducing energy security risks by diversifying energy sources. However, not many empirics have shed light on the impact of digitalization, environmental trade, and financial development on energy security risks in top energy-consuming countries. To fill this vacuum, this study intends to investigate the influence of digitalization, environmental trade, and financial development on energy security risk in top energy-consuming countries from 2003 to 2021. The study employs the 2SLS and GMM estimates for empirical estimation of top energy-consuming developed and developing economies. The results show that ICT negatively affects energy security risks in developed economies. The findings of the analysis also suggest that environmental trade and financial development cause energy security risks to be reduced in both developed and developing economies. Likewise, the energy security risks in both developed and developing nations are mitigated by ICT, GDP, carbon emissions, and renewable energy production. In contrast, the energy security risks are escalated by the rise in natural resource rents. In order to fully capitalize on the potential advantages of these elements and eventually ensure a more sustainable and secure energy future, governments, businesses, and financial institutions must work together.

Investigating environmental quality among G20 nations: The impacts of environmental goods and low-carbon technologies in mitigating environmental degradation

Environmental goods and low-carbon technologies have long been identified as having the potential to drive long-term economic progress without compromising environmental quality. However, their exact role in mitigating environmental degradation are yet to be unravelled. In addressing this shortfall, the extant literature relied on research funding and patent application as proxies for green technologies. Having established the weaknesses in the use of these variables as proxies for green technologies, this study explored the role of trade in environmental goods and low-carbon technologies in boosting environmental quality among G20 nation using a panel dataset from 1994 to 2018. The study employed the Method of Moment quantile regression for the model estimation and the Ridge regression, Discroll-Kraay standard error, and the Newey-West standard error estimators to test the robustness of our findings. Our findings indicate that whereas environmental goods promote environmental quality, low-carbon technologies decrease same. Also, the study found economic growth to exert an aggravating effect on environmental quality, while foreign direct investments, natural resource rents, human capital development, and renewable energy consumption exert positive influence on environmental quality. Based on the findings of the study, G20 nations are encouraged to improve green market structures to improve the trade in environmental goods and low-carbon technologies. Also the share of renewable energy sources in the overall energy basket must be improved to help improve environmental quality.

How does global trade in environmental goods contribute to the SDGs in developing countries?

AbstractGlobal trade in environmental goods (EGs) has provided a new vision for international cooperation in response to sustainable development goals (SDGs). However, there are ongoing debates over whether developing countries can achieve sustainability during their trade participation. This study proposes a conceptual framework to observe countries' current trade status and potential for benefit from global EG trade. By tracing the changing status of 142 countries in the conceptual framework during 2001–2019, this study finds that global EG trade reduces inequality among developed countries while it increases inequality among developing countries. Some emerging market countries may enhance their status in the global trade network, but their upgrading within the global value chain remains slow. The current poor EG trade state and limited benefit potential of most developing countries will have a non‐significant impact in terms of achieving the SDGs. The study suggests that regional trade will give developing countries a better chance to integrate into trade markets and support them toward achieving the SDGs.

The role of financial development in enhancing trades in environmental goods: International insights from 119 countries

This paper attempts to empirically examine the influences of financial development (FIN) on the trade in environmental goods (TEG). Through the application of diverse econometric techniques to a global sample of 85 developing and 34 developed countries from 2000 to 2019, the estimation results demonstrate that the financialization captured by nine indices from the Financial Development Index database has a light influence on the trade values of environmental goods. The development of both financial institutions and market positively influences the trade activities of environmental goods, but financial institutions' role is more critical. We find robust results by utilizing various econometric techniques and adding more explanatory variables. Furthermore, there is evidence on the long-term cointegration between financial development and TEG, and our results confirm its effects in the long term. Finally, the nexus between the two samples: developing and developed countries, but the importance of both financial institutions is more evident, especially in the developed countries. Finally, the effects of uncertainty or risk on TEG value become less sizable if these economies have a well-developed financial system.

How Does Green Trade Affect the Environment? Evidence from China

<p><big>This study focuses on the impact of trade in environmental goods (green trade) on the environment. We found that green trade can decrease pollution levels by exploiting a panel of 277 Chinese cities from 2004 to 2013 and using the instrumental variable (IV) strategy. However, total trade openness is far less favorable to the environment. We also found that both green imports and exports are conducive to the Chinese environment, while ordinary green trade performs better than green processing trade. Nevertheless, the effects of green trade are restricted by a city's purchasing power and absorptive capacity, as well as the classifications of environmental goods. Furthermore, green trade mainly promotes local green technological progress to benefit the environment.</big></p>

Are Economic Sanctions a Barrier to Trade in Environmental Goods? The International Evidence

The purpose of economic sanctions is to isolate a sanctioned country and harm its economy to force its government to adjust course, policies, and actions. To resist sanctions, a sanctioned country needs to adopt a variety of survivalist and unsustainable policies that undermine the economic challenge of sanctions at the expense of lowering priority to the environmental sector and the production of environmental goods (EGs). Due to the shortage of EGs in the sanctioned nations, we hypothesize that economic sanctions are a potential driver of trade in EGs. To assess the empirical merits of our theoretical claims, we used panel data with 5,297 pairs of 88 countries for the years spanning 1996 to 2019, inclusive. While economic sanctions take various forms, EGs refer to environmental goods and services that are manufactured, consumed, and disposed of without causing unintended environmental impacts. We used the Combined List of Environmental Goods (CLEG) to define the EGs. Our empirical results indicate that imposition of economic sanctions hinders trade in EGs. We also found clear evidence that the effect becomes more pronounced for the use of trade and financial sanctions and when the economic sanction is put on low-income countries.

Import–export nexus and China's emerging trade in environmental goods

AbstractInternational trade in environmental goods (EG) provides a market‐based solution to balance the development–environment relationship. How can developing economies gain new growth opportunities through trade liberalisation in the EGs? This study investigates the structural features of products and firms during the early development of China's EG trade. This study defines the import–export nexus as the product relatedness between imports and exports at the firm level, which may promote the technology spill overs and firm cooperation. This study combines two nationwide data sets and constructs a data panel covering 334 prefectures and 248 EGs during 2001–2012. The conditional logit model with fixed effects is used for coefficient estimation. Empirical results reveal that the import–export nexus promotes new EGs in domestic sectors and export baskets, primarily supported by domestic private firms. The import–export nexus allows state‐owned firms, which only represent a small market share, to enrich export baskets. It also helps foreign firms to develop new EGs in domestic sectors. These findings suggest revisiting the role of state‐owned firms in industrial policy and developing a broad list of EGs to make use of the product relatedness. These will make developing economies like China gain new growth opportunities from the EG trade.

Is religiosity distance a driver of trade in environmental goods?

ABSTRACT This paper investigates the effects of religiosity distance on trade in environmental goods (EGs) using 5,297 pairs of 88 countries during the 1996–2019 period. Religiosity reflects the level of personal trust in God and the values and ideals of his religion. Environmental goods consist of environmental products and services with production, usage, or disposal features that escape from devastating the environment. We use the APEC List of Environmental Goods to define the EGs. We measure religiosity by using a combined index covering three components, including members of a religion, the importance of religion, and religious service attendance. Our empirical results show that countries with religious proximity are more likely to trade EGs. Among three dimensions, only the member of religion and importance of religion play a role while attendance to religion service has no effect on the export of green goods.

The Impact of Environmental Regulations on Trade Flows: A Focus on Environmental Goods Listed in APEC and OECD.

This paper aims to investigate the impact of environmental regulations on trade patterns, in terms of trade in environmental goods listed in Asia-Pacific Economic Cooperation (APEC) and Organization for Economic Co-operation and Development (OECD). Environmental goods are defined here as those that enable sustainable growth and reduce pollution from human activity. For this reason, issues on environmental goods can be put at the forefront to analyze the linkage between environmental regulations and trade flows in the perspective of international institutions. Within the framework of a gravity model, panel data on 112 exporter countries and 53 importer countries is used at a bilateral level over the period of 1989–2013 to gain an understanding of this trade-environmental regulation nexus. This paper proxies the environmental policies by employing the z-score, which includes three comprehensive environmental indicators. The findings indicate that the strict environmental policies impede the trade, and this effect is greater in terms of the environmental goods listed in APEC compared to the ones listed in OECD. Finally, although these stringent environmental regulations reduce the trade flows, they can help to foster the demand for environmentally-friendly products.

International Environmental Agreement and Trade in Environmental Goods: The Case of Kyoto Protocol

International Environmental Agreement and Trade in Environmental Goods: The Case of Kyoto Protocol

Environmental Taxation and Import Demand for Environmental Goods: Theory and Evidence from the European Union

In this paper, we study the impact of environmental taxation on trade in environmental goods (EGs). Using a trade model in which demand for and supply of EGs are endogenous, we show that the relationship between environmental taxation and demand for EGs follows a bell-shaped curve. Above a cutoff tax rate, a higher tax rate can reduce bilateral trade in EGs because there are too many low-productivity EG suppliers. Based on trade data from 1995 to 2012 across the EU-27 countries, our empirical results are in accordance with the predictions of our model when we use the Asia-Pacific Economic Cooperation (APEC) list of EGs. We find that environmental taxation (measured as the ratio of environmental tax revenoe to GDP) has a monotonically positive impact on the number of trading partners. Furthermore, we show that if countries were to apply an environmental tax rate equal to $$3.96\%$$ (e.g., the tax rate maximizing international trade in EGs), then trade in EGs across the EU-27 members would experience an increase of 25.33 percentage points. The results are mixed when we analyse the EGs on the OECD list. While the results for the the number of trading partners are confirmed when we use this list, there is no effect of environmental taxation on import demand.

A Review of Transnational Regulations in Environmental Protection and the Circular Economy

The aim of the paper is to present a review of transnational regulations (global and European) in the field of environmental protection and the circular economy. The paper discusses the regulations proposed in publications and reports of such global organizations and UN Agencies as the United Nations Environmental Program (UNEP), the United Nations Conference for Trade and Development (UNCTAD), the Food and Agriculture Organization (FAO), as well as the World Trade Organization (WTO), and the European Commission as the Executive Body of the European Union. With regard to the WTO, these regulations concern the effects of liberalizing trade in environmental goods and services and environmentally sound technologies. Sustainable development means, above all, protecting the natural environment and reducing excessive dependence on depleting natural resources, including primary raw materials, in the economic sector. This implies the need to implement a new resource‑efficient development model, based on the principles of the circular economy (CE), which has been proposed for several years by transnational organizations. In the CE model, the use of natural resources is minimized, and when a product reaches the end of its useful life, it is reused to create additional new value. This can bring significant economic benefits, contributing to new production methods and new innovative products, growth, and job creation. The topics mentioned above are the main subject of consideration in the presented paper.

Barriers to trade in environmental goods: How important they are and what should developing countries expect from their removal

Abstract Few developing countries have participated in the environmental goods agreement (EGA) negotiations to reduce barriers on trade in Environmental Goods (EGs). Reasons for this reluctance are first reviewed along with a comprehensive description of barriers to trade (tariffs and NTBs) on two lists of EGs used in negotiations: the APEC list comprising mostly industrial products representative of high-income countries that served as point of departure on the negotiations for an Environmental Goods Agreement (EGA) and a list of Environmentally Preferable Products (EPPs) more representative of the perceived interests of developing countries. The paper then revisits and extends the literature on the estimation of barriers to trade in EGs for these lists. These estimates are carried out with a structural gravity model with: (i) new data on bilateral (rather than MFN) tariffs, and a new classification of NTBs; (ii) a measure of regulatory overlap in bilateral trade. Results show that tariffs reduce the intensity of bilateral trade. Regulatory harmonization, as captured by an increase in regulatory overlap is also estimated to be conducive to more intense bilateral trade.

Trade in Environmental Goods and Air Pollution: A Mediation Analysis to Estimate Total, Direct and Indirect Effects

Based on panel data covering 114 countries between 1996 and 2011, this study investigates the impact on pollution of trade in environmental goods (EGs). We check the validity of the implicit consequences assumed by the win–win scenario in the current trade-climate negotiations, arguing that market dynamics should guarantee that EGs’ liberalization is ‘automatically’ in the interest of all countries, regardless their market and institutional capacities. We show that trade in EGs alone fail to address environmental problems effectively. In particular, although we found efficiency gains from trade in EGs (in terms of CO2 and SO2 emissions per 1 US$ of GDP), and more recurrently for net exporters than for net importers, our results often failed to highlight environmental effectiveness (in terms of total CO2 and SO2 emissions). A general conclusion that emerges from our empirical results is that trade [in EGs] cannot effectively replace non-market-based solutions, when it comes to non-trade objectives. However, it seems to complement them efficiently. Our multiple-equation GMM estimations reveal specific direct, indirect and total effects on pollution depending on the countries’ net trade status, leading to several policy recommendations for an increased environmental effectiveness of trade in EGs.

Environment Regulations and Trade in Environment Goods: The Case of India

The paper weaves together three strands of arguments which, favour trade in environment goods for achieving sustainable development and provides an analyses of potential for trade in environment goods in India. Firstly, there are different paths, models, tools for achieving sustainable development and green economy is one of them. United Nations Environment Programme (UNEP) defines a green economy as one that results in “improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities” (UNEP 2010). The report suggests trade in environment goods and service as one of the strategies towards achieving green economy and sustainable development. International trade is an important engine of development and sustained economic growth. Studies have shown that trade does lead to environment degradation, but trade in cleaner technologies and environment goods can play an important role in sustainable development. Trade can become a powerful vehicle for transferring environmental friendly technology between countries, paving way for sustainable development. India stands to benefit both, from importing environment goods to clean up its environment and exporting environment goods to the world, thus contributing to the goal of sustainable development. Secondly, the 2001 Doha Ministerial Declaration urged members to reduce or eliminate tariff and non-tariff barriers on environmental goods and services, paving way for a triple win situation for trade, the environment and development (WTO, 2001). The reduction or elimination of tariff and non tariff barriers would increase trade in environmental goods which, can help mitigate the adverse impact of increased economic activity on environment. The quality of life of citizens would improve due to better access to clean water, air, sanitation, and clean energy. Moreover, the liberalization of trade in environmental goods will enable developing countries to obtain technology, tools for development addressing environment priorities. Thirdly, new environment regulations, trade liberalization, increased privatization, current programmes of rural electrification, investment in infrastructure projects, government investment in research and capacity building initiatives have increased demand for environmental goods in India. India is partner to a number of international agreements on environmental issues. Legal activism and pressure from NGOs have fostered networking between industries and between industries and NGOs for improving the environment. These pressures from above and below are supporting the growth of the environmental market. It is in this context that the paper examines trade in environment in India.
 
 Keywords: OECD and APEC list of Environment goods, exports, imports, Revealed Comparative Advantage
 
 JEL Classification: F10, F18

Dynamic Change in the Export Technology Structure of China’s Environmental Goods and Its International Comparison

Growing natural disaster intensity, ocean warming, air quality alerts, and a desire to emphasize sustainable practice has prompted countries to payincreased attention to the development of environmental industries. This has led to trade in environmental goods (EGs) and a need for export technology research. The purpose of this paper is to measure the evolution of the technological structure of China’s export EGs and its position in the international industrial value chain. Based on the 2012 Asia-Pacific Economic Cooperation (APEC) EGs list and United Nations Comtrade (COMTRADE) data, this study uses the technical complexity index to empirically calculate the technology structure and level changes of China’s EGs exports from 2007 to 2016. The results are then compared with those of the Asia-Pacific region and the world’s major exporters of EGs. Additionally, this study proposes a method called “Equalization Technology Classification” that divides all EGs into five technical levels: high, medium-high, medium, medium-low, and low. The research finds that (1) China’s EGs exports are predominately of medium-low technical complexity, and while the proportion of exported goods with high technical complexity is very low, the export technology structure is constantly being optimized. (2) Compared with Singapore, the United States, and the European Union, the overall technical level of China’s exported EGs is lagging behind. (3) The overall technical level of exported EGs in major exporting countries is rapidly increasing but is especially impressive in South Korea and China, where growth ranks first and second in the world, respectively.

The impact of trade in environmental goods on pollution: what are we learning from the transition economies’ experience?

We investigate the causal effects of trade intensity in environmental goods (EGs) on air and water pollution by treating trade, environmental policy, and income as endogenous. We estimate a system of reduced-form, simultaneous equations on extensive data, from 1995 to 2003, for transition economies that include Central and Eastern Europe and the Commonwealth of Independent States. Our empirical results suggest that, although trade intensity in EGs (pooled list) reduces CO2 emissions mainly through an indirect income effect, it increases water pollution because the income-induced effect does not offset the direct harmful scale-composition effect. No significant effect is found for SO2 emissions with respect to the list of aggregated EGs. In addition to diverging effects across pollutants, we show that results are sensitive to EGs’ classification, e.g., cleaner technologies and products, end-of-pipe products, environmentally preferable products, etc. For instance, a double profit—environmental and economic—is found only for “cleaner technologies and products” in the models explaining emissions of greenhouse gases. Interesting findings are discussed for imports and exports of various classifications of EGs. Overall, we cannot support global and uniform trade liberalisation for EGs from a sustainable development perspective. Either regional or bilateral trade agreements that take into account the states’ priorities could act as building blocks towards a global, sequentially achieved liberalisation of EGs.

Trade in Environmental Goods: Empirical Exploration of Direct and Indirect Effects on Pollution by Country's Trade Status

Based on panel data covering 114 countries in the world, this study investigates the direct, indirect and total effects of trade flows in environmental goods (EG) on total CO2 and SO2 emissions. Our system-GMM estimations reveal positive direct scale – [between-industry] composition effects prevailing on the negative direct technique – [within-industry] composition effects (if any), as well as compensating the significant indirect technique effects channelled by the stringency of environmental regulations and per capita income. If the net importers of EGs (namely from the APEC54 and WTO26 lists) are recurrently found to face increased pollution (in particular CO2 emissions) due to direct scale-composition effects of trade in EGs, the EGs’ net exporters are more likely to see their local pollution to decrease, in particular thanks to income-induced effects. We show that the direct, indirect and total effects of trade in EGs depend on the country’s net trade status, the EGs’ classification and the pollutant considered.

Using Trade for Achieving the SDGs: The Example of the Environmental Goods Agreement

Ensuring that trade contributes to sustainable development is an explicit objective of both the WTO and of the 2030 Agenda for Sustainable Development (including the Sustainable Development Goals or ‘SDGs’). The purpose of this article is to demonstrate how trade and technology together can be mobilized for achieving the SDGs and in particular for addressing climate change. The article first discusses the general linkages between trade, technology, sustainable development, and the SDGs. Then the article explores the contribution that trade in environmental goods and services (EGS) and the Environmental Goods Agreement (EGA) more specifically can make to achieving different SDGs. This assessment is among others based on a recent European Commission Sustainability Impact Assessment (SIA) on the EGA. The article therefore assesses the potential economic, environmental, and social impacts of the EGA. It rounds up by explaining the state-of-play of the EGA negotiations. The assessment was conducted through desk research, econometric and C02 modelling, and stakeholder consultation, including two regional workshops and an open questionnaire.