اثرات بلندمدت اصلاحات زیست محیطی در اقتصاد باز

We compare the short- and long-run effects of environmental reform and harmonization under autarky and free trade. When trade is driven by environmental distortions rather than real relative advantages, harmonization of environmental policies, even if achieved by lowering standards in one country, can improve short-run aggregate welfare. With the possibility of multiple steady states, harmonization can improve long-run welfare, especially when the environment is fragile. Further, long-run considerations favor upward harmonization even when it is equivalent to downward harmonization in the short run. For a country trapped in a low (or bad) steady state, environmental reform may not move it to a high (or good) steady state under autarky. However, under trade, harmonization of policies may enable this country to reach the high steady state. Conversely, reforms that increase the relative differences in distortions may, under trade, cause economies to move to a low steady state.

Environmentalists’ distrust of international trade contributed to the failure of the November 1999 WTO meetings in Seattle, the inability of President Clinton to obtain fast-track negotiating authority, and the difficulty of passing NAFTA. Environmentalists fear that competitive pressures, heightened by trade liberalization, create a danger of a “race to the bottom” in environmental standards. They conclude that the international harmonization of policies is important to prevent this race. Economists recognize that the harmonization of distortions such as tariffs improve welfare under plausible circumstances. However, they tend to oppose pressures for harmonization of environmental policies across nations, arguing that policy differences reflect differences in income, tastes, capital stocks, resource endowments, or a variety of other factors that contribute to inter-industry trade. In this case, harmonization is an attempt to thwart the efficient workings of the market.2 Several recent papers, including Chichilnisky [6] and [7], Copeland and Taylor [8] and [9], Brander and Taylor [3] and [4], and Karp et al. [13], emphasize that differences in environmental regimes (or market failures) can provide an impetus for trade. Property rights may be weaker in some countries, and some countries may have been more successful in dealing with externalities. If this is the correct explanation for different standards, and if these different standards have a significant effect on trade flows, then harmonization may increase welfare. Econometric studies find little evidence of a relation between aggregate trade flows and differing levels of environmental protection, although Mani and Wheller [17] present evidence that trade may create transitory pollution havens. At a commodity-specific level, it is easier to see how differing levels of market failure can influence trade flows. For example, in response to serious deforestation, China restricted logging in 12 provinces in 1998, and in 18 provinces in the year 2000. This logging ban, together with continued economic growth and a reduction in tariffs, has caused China to become one of the world's largest importers of logs. Burma, where logging is controlled by warlords, and where the market failure is probably more severe than in pre-reform China, has become a primary source of supply. The environmentally beneficial policy in China could worsen the regional environmental problems by increasing the pressure on Burmese resources [18]. Aggregate trade statistics, of the sort typically used in econometric studies, might not identify this kind of causal relation. However, this is the type of scenario that concerns environmentalists who oppose liberal trade. Tariffs provide a useful analogy for the effect of harmonization. Welfare is likely to improve whether harmonization is achieved by raising low tariffs or lowering high ones. This equivalence is due to the fact that welfare depends on relative, not on absolute prices [10]. To the extent that trade is driven by relative rather than absolute environmental standards, a similar equivalence is likely to hold. In this case, the environmentalists’ goal of harmonization could be achieved by weakening standards where they are strict (i.e. by “downward” rather than “upward” harmonization). However, absolute environmental standards—unlike prices—have real effects, making it unlikely that upward and downward harmonization are exactly equivalent. The opposing views regarding harmonization of environmental policies is at least partly explained by contradictory views about the reasons for the policy differences. Do they reflect different levels of distortions, or different tastes and endowments? This paper emphasizes the first explanation, so the model is biased in favor of harmonization. We study the differing effects of absolute and relative levels of environmental distortions and environmental reform in both the short and long run. We use a dynamic North–South trade model where a renewable environmental stock affects production costs. The change in the stock depends on production decisions, and these decisions depend on the trade regime (free trade or autarky) and on the absolute and relative levels of the environmental distortions. There may be multiple steady states in this model. Under both trade and autarky the steady state may be unique, in which case it may be either low (“bad”) or high (“good”); alternatively, both types of steady states might simultaneously exist. Environmental reform (and the trade regime) may affect the properties of these steady states—including their existence. Under trade, upward and downward harmonization equally improve aggregate welfare in the short run. However, in the long run the two types of harmonization may have very different effects: upward harmonization increases the likelihood that the economies reach the good steady states. The trade regime influences the effects of environmental reform. In some cases, an autarkic country is trapped by tastes and technology at a low steady state: environmental reform does not enable it to reach a high steady state. However, in the presence of trade, upward or even downward harmonization of policies sometimes enables the country to escape to a high steady state. In other cases, reform against harmonization moves an autarkic economy to a high steady state, but moves a trading economy to a low steady state. Thus, reform can have very different effects under autarky and free trade. In addition to illustrating these (and other) possibilities, the model identifies the factors that determine the various outcomes. For example, under trade, reform in the least distorted economy (a movement away from harmonization) is likely to be beneficial if the initial difference in environmental distortions in the countries is not great, or if the environmental problem is not severe. The same reform is likely to have perverse effects if the natural rate of growth of the environmental stock is small (i.e. if the environment is “fragile”). Our focus on the long run is particularly relevant for trade involving renewable resources and stock pollutants. In these cases, trade and welfare in different time periods are connected, requiring a dynamic model. Over time, some countries seem to have been trapped in vicious cycles of low resource stocks and low standard of living, while others enjoy high stocks and high welfare. Our emphasis on multiple steady states helps to explain this phenomenon and to show the role of trade and harmonization in breaking the vicious cycles. Section 2 explains why multiple steady states arise, and illustrates possible effects of environmental reform in a general setting. Section 3 describes the analytic model and the equilibria under autarky and trade. This section summarizes results derived in Karp, Sacheti and Zhao [13] (hereafter KSZ), which we use in 4 and 5 to analyze the effects of reform in the short and the long run.3 We discuss the generality of our model in Section 6. Section 7 summarizes and concludes.

We studied the differing effects of environmental reform in the short and the long run, under both free trade and autarky. Under autarky there is a single distortion, which causes a real effect only when the stock is low. Environmental reform either increases welfare or has no effect. Under trade, there are two distortions in the two countries, so both the absolute and relative levels of these distortions may be important. In line with the theory of the second best, decreasing a single distortion does not necessarily improve welfare. In the short run, the race to the bottom and the race to the top increase (or have no effect on) aggregate welfare: only relative distortions matter. In the long run, the absolute levels of distortion are also important. Reform in the less distorted economy ameliorates an absolute distortion but worsens the relative distortion, and has ambiguous welfare effects. The net effect of this reform is more likely to be positive if the initial gap between the distortions is not large, if the environment is not important, and if the environment is resilient. Thus, long-run considerations tend to favor upward harmonization, relative to downward harmonization. Under autarky, the environmental distortion has no real effect when stocks are large, but under trade the environmental distortion always has real effects. Consequently, reform always has real effects under trade, but not necessarily under autarky. Trade increases the ability to use environmental reform to improve welfare. However, trade also makes it possible that environmental reform has perverse results.