Semester

Spring

Date of Graduation

2002

Document Type

Dissertation

Degree Type

PhD

College

Davis College of Agriculture, Natural Resources and Design

Department

Agricultural and Resource Economics

Committee Chair

Jerald J. Fletcher.

Abstract

This dissertation will focus on the relationship between trade and the environment. We will analyze this from three angles. First, we explore the effect of trade liberalization on a country's environmental regulations at global level. Secondly, we focus on trade and political integration process at the regional level and how it affects block members environmental policies. Thirdly, we analyze whether polluting producers are compensated for environmental policies at the national level.;The analysis will focus on environmental regulations in the agricultural sector. We use spatial econometrics techniques to analyze policy outcomes, which are dependent on trade or political interactions between countries as a response to inter jurisdictional policy spillovers caused by trade liberalization policies.;We find no evidence that trade liberalization process has a negative impact on environmental regulations at global level. Empirical results show that countries with more open trade regimes tend to have also more stringent environmental regulations. This finding, however, is not uniform at the regional level where the integration process is generally deeper, which may shape the strategic interaction among countries. The results indicate that while regional trade integration process induce positive harmonization of environmental regulations among members of Custom Unions and regional trade agreements among high income countries, the impact of regional integration may be less evident or even divergent among the members of Free Trade Agreements and low-income countries. However, empirical results show that free trade may be indeed a powerful force to induce low income developing countries to upgrade their environmental policies towards those of high income countries.;Finally we analyze whether domestic producers get compensated for the costs associated with environmental regulations. We show that the existence of transfers can give counter-intuitive effects of environmental policy on both output and trade flows. In particular, the compensation obtained by producers neutralizes the effect of environmental policy on output, and consequently on trade flows. The empirical results support the hypothesis that environmental regulations and transfers are positively correlated.

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