trade_environment.pptx - Trade and the Environment What...

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Trade and the Environment
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What you’ll hear today The Roots of Environmental Degradation Potential Solutions to Environmental Problems Is trade good or bad for the environment? The Role of WTO in the environment debate Global Warming
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In the last 50 years… The world population has more than doubled from 2.5 billion in 1950 to 7 billion in 2011. The global GDP has increased six fold. International trade has increased 14 fold. The size of economic activity has increased tremendously. Current trends are unsustainable unless tough measures are taken to slow down resource consumption and polluting emissions.
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Broad Questions Is trade good or bad for the environment? Answer: not obvious Will trade affect the environment in the importing nation, exporting nation, or the world? Whose responsibility it is to solve environmental problems associated with trade?
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The Roots of Environmental Degradation 1. “Market failures” occur when the market forces of supply and demand fail to deliver an optimal outcome. (i.e. producers and consumers do not have to bear the full cost of their actions) Local problems Chemical-intensive agriculture: overuse of agro-chemicals due higher demand for food caused by a growing world population. Deforestation: flooding and landslides, losses of biodiversity due to excessive logging and agricultural development in tropical forests. Transnational problems Acid rain: burning of low-quality coal and oil with a high-sulphur content with negative health effects, corrosive damage to infrastructure and buildings, and acidification of the soil. Global problems Global warming: caused by the increasing emissions of carbon dioxide from sources that burn fossil fuel, including energy-intensive processing industries, fossil-fuelled power plants, automobiles, and so on with negative consequences for the global climate.
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Beijing, China Zurich, Switzerland
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Mexico City, Mexico Los Angeles, CA
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The Roots of Environmental Degradation 2. “Tragedy of the commons” caused by undefined property rights over natural resources. Example: overfishing Trends: The aquatic environment is on the decline. 58% of the world’s coral reefs and 34% of all fish species are currently at risk from human activities. 3. “Policy Failures” - subsidies to agriculture, energy, and fishing.
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Solutions to Environmental Problems At the national level , the standard economic policy response is to implement policies that internalize negative externalities: Taxes Permits (cap and trade) Regulations “Polluter Pays Principle” Who implements these policies?
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