Environmental Funds, Terms of Trade, and Welfare

Takumi Haibara

No 15, GSICS Working Paper Series from Graduate School of International Cooperation Studies, Kobe University

Abstract: We investigate the economic consequences of international environmental liabilities, for which environmental funds are used to provide compensation for pollution damage. We assume two large open economies that consist of a polluter and a pollutee, and the polluter country confers international transfers, which are financed by pollution tax revenue, as a means of compensation for pollution damage inflicted upon the pollutee. Within this framework, we develop the condition that an increase in the pollution tax enriches (impoverishes) the pollutee (polluter) through a change in the terms of trade, the amount of the transfers, and the amount of pollution.

Keywords: Environmental funds; Pollution taxes; Terms of trade; Welfare (search for similar items in EconPapers)
JEL-codes: F18 H23 Q58 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2007-05
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Persistent link: https://EconPapers.repec.org/RePEc:kcs:wpaper:15

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