Trade, Trees, and Contingent Trade Agreements

Bard Harstad

No 9596, CESifo Working Paper Series from CESifo

Abstract: Can trade agreements motivate environmental conservation? I first present a model whereby the government in the South expands its production capacity (e.g., deforest) before trading with the North. After deriving negative relationships between tariff reductions and conservation, I show how all negative results are reversed if countries can negotiate a contingent trade agreement (CTA), where default tariffs vary with changes in the production capacity (or forest cover). A calibration suggests that growth and liberalization can cause Brazil’s agricultural area to expand by 27%, but this expansion can be avoided if the EU and the US offer a CTA.

Keywords: international trade; trade agreements; deforestation; environmental conservation (search for similar items in EconPapers)
JEL-codes: F13 F18 Q37 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-agr, nep-env and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9596

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