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GTAP Resource #6571

"The impact of trade on emissions through diffusion of ideas"
by Eddy Bekkers, Jeanne Metivier and Enxhi Tresa

In this paper we explore the impact of trade on carbon emissions. We compare the emissions in a business-as-usual scenario until 2050 with emissions in a scenario where trade would shut down, a scenario of trade liberalization, and a scenario of decarbonization. We use the energy version of the WTO Global Trade Model, a recursive dynamic computable general equilibrium model, expanded with diffusion of ideas. A baseline projection until 2050 for the global economy is generated with and without decarbonization policies. We show that trade has an impact on CO2 emissions along three different channels in the model: the expansion of economic activity, which can result in a positive or negative effect on emissions, corresponding with a scale effect; a change in the production mix which can be negative or positive depending on whether a country has a comparative advantage in emission-intensive sectors (the composition effect) and finally; trade can reduce emissions through the diffusion of green technologies as well as through its impact on environmental awareness among consumers and higher regulatory stringency (the technique effect). We explore how these channels are affected by trade policies and by climate change (decarbonization) policies, thus identifying the effect on emissions of possible interactions between trade and climate change policies.

Resource Details (Export Citation) GTAP Keywords
Category: 2022 Conference Paper
Status: Not published
By/In: Presented during the 25th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2022
Created: Tresa, E. (4/14/2022)
Updated: Tresa, E. (6/10/2022)
Visits: 634
- Trade and the environment
- Domestic policy analysis

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