SRI LANKAN  JOURNAL OF  AGRICULTURAL ECONOMICS

Volume 16.  Number 1.  2014


Environmental Consequence of Trade Openness for Environmental Goods  :/  J.M.D.D.J. de Alwis *


ABSTRACT

With the increasing concerns on detrimental environmental effects of
world trade, WTO member countries in 2001 called for reduction or
elimination of tariffs and non-tariffs barriers on Environmental Goods and
Services (EGS) claiming that would improve environmental protection and
economic development simultaneously. The study investigated the impact of
opening trade of EGS on environmental quality estimating pollution functions
of Sulphur Dioxide (SO2), Nitrogen Oxides (NOx) and Carbon Dioxides (CO2)
using cross country data for 62 countries. Estimated SO2 pollution function
revealed that elimination of tariff on EGS trade result in falling SO2 emissions
in comparison to increasing SO2 pollution as a result eliminating tariff on non
EGS trade. Findings formally support for the liberalization of EGS. Falling of
SO2 pollution due to elimination of tariff on EGS is due to differences in
countries’ capital-labour endowments. The findings suggests that falling
pollution due to EGS trade liberalization has no relationship with the income
level of the countries, but favour capital abundant countries in reducing the
pollution emissions.



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Author is Senior Lecturer, Department of Agricultural Economics and Business Management,
Faculty of Agriculture, University of Peradeniya, Sri Lanka.

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Herath  2014 , Sri Lankan Journal of Agricultural Economics. Volume 16 (1). Pp. 1 - 33

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