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Abstract:
We demonstrate that a key empirical finding in environmental economics - The Environmental Kuznets Curve - and the core model of modern macroeconomics - the Solow model - are intimately related. Once we amend the Solow model to incorporate technological progress in abatement, the EKC is a necessary by product of convergence to a sustainable growth path. Our amended model, which we dub the 'Green Solow', generates an EKC relationship between both the flow of pollution emissions and income per capita, and the stock of environmental quality and income per capita. The resulting EKC may be humped shaped or strictly declining. We explain why current methods for estimating an EKC are likely to fail whenever they fail to account for cross-country heterogeneity in either initial conditions or deep parameters. We then develop an alternative empirical method closely related to tests of income convergence employed in the macro literature. Preliminary tests of the model's predictions are investigated using data from OECD countries.

Abstract:
We demonstrate that a key empirical finding in environmental economics - The Environmental Kuznets Curve - and the core model of modern macroeconomics - the Solow model - are intimately related. Once we amend the Solow model to incorporate technological progress in abatement, the EKC is a necessary by product of convergence to a sustainable growth path. Our amended model, which we dub the "Green Solow", generates an EKC relationship between both the flow of pollution emissions and income per capita, and the stock of environmental quality and income per capita. The resulting EKC may be humped shaped or strictly declining. We explain why current methods for estimating an EKC are likely to fail whenever they fail to account for cross-country heterogeneity in either initial conditions or deep parameters. We then develop an alternative empirical method closely related to tests of income convergence employed in the macro literature. Preliminary tests of the model's predictions are investigated using data from OECD countries.

environment, growth, pollution, EKC, sustainability, abatement, Solow

Abstract:
This paper sets out a theory of how openness to international goods markets affects pollution concentrations. We develop a theoretical model to divide trade's impact on pollution into scale, technique, and composition effects and then examine this theory using data on sulfur dioxide concentrations when it alters the composition, and hence the pollution intensity, of national output. Our estimates of the associated technique and scale efforts created by trade imply a net reduction in pollution from these sources. Combining our estimates of scale, composition, and technique efforts yields a somewhat surprising conclusion: freer trade appears to be good for the environment.

Abstract:
This paper reviews both theory and empirical work on economic growth and the environment. We develop four simple growth models to help us identify key features generating sustainable growth. We show how some combination of technological progress in abatement, intensified abatement, shifts in the composition of national output and induced innovation are necessary for sustainable growth, and then demonstrate how growth models employing any one of these mechanisms generate other potentially refutable predictions on abatement costs, pollution levels, or emission intensities.

Abstract:
For the last ten years environmentalists and the trade policy community have engaged in a heated debate over the environmental consequences of liberalized trade. The debate was originally fueled by negotiations over the North American Free Trade Agreement and the Uruguay round of GATT negotiations, both of which occurred at a time when concerns over global warming, species extinction and industrial pollution were rising. Recently it has been intensified by the creation of the World Trade Organization (WTO) and proposals for future rounds of trade negotiations. The debate has often been unproductive. It has been hampered by the lack of a common language and also suffered from little recourse to economic theory and empirical evidence. The purpose of this essay is set out what we currently know about the environmental consequences of economic growth and international trade. We critically review both theory and empirical work to answer three basic questions. What do we know about the relationship between international trade, economic growth and the environment? How can this evidence help us evaluate ongoing policy debates? Where do we go from here?

Abstract:
This paper sets out a general equilibrium pollution and trade model to provide a framework for examination of the trade and environment debate. The model contains as special cases a canonical pollution haven model as well as the standard Heckscher-Ohlin-Samuelson factor endowments model. We draw quite heavily from trade theory, but develop a simple pollution demand and supply system featuring marginal abatement cost and marginal damage schedules familiar to environmental economists. We have intentionally kept the model simple to facilitate extensions examining the environmental consequences of growth, the impact of trade liberalization, and strategic interaction between countries.

Abstract:
This paper uses both theory and empirical work to examine the effect of environmental regulations on trade flows. We develop a simple economic model to demonstrate how unobserved heterogeneity, endogeneity and aggregation issues bias measurements of the relationship between regulatory costs and trade. We apply an estimating equation derived from the model to data on U.S. regulations and net trade flows among the U.S., Canada, and Mexico, for 130 manufacturing industries from 1977 to 1986. Our results indicate that industries whose abatement costs increased most experienced the largest increases in net imports. For the 20 industries hardest hit by regulation, the change in net imports we ascribe to the increase in regulatory costs amounts to more than half of the total increase in trade volume over the period.

Abstract:
This paper demonstrates how three important results in environmental economics, true under mild conditions in closed economies, are false or need serious amendment in a world with international trade in goods. Since the three results we highlight have framed much of the ongoing discussion and research on the Kyoto protocol our viewpoint from trade theory suggests a re-examination may be in order. Specifically, we demonstrate that in an open trading world, but not in a closed economy setting: (1) unilateral emission reductions by the rich North can create self-interested emission reductions by the unconstrained poor South; (2) simple rules for allocating emission reductions across countries (such as uniform reductions) may well be efficient even if international trade in emission permits is not allowed; and (3) when international emission permit trade does occur it may make both participants in the trade worse off and increase global emissions.

Abstract:
We develop a theory of resource management where the degree to which countries escape the tragedy of the commons is endogenously determined and explicitly linked to changes in world prices and other possible effects of market integration. We show how changes in world prices can move some countries from de facto open access situations to ones where management replicates that of an unconstrained social planner. Not all countries can follow this path of institutional reform and we identify key country characteristics (mortality rates, resource growth rates, technology) to divide the world's set of resource rich countries into Hardin, Ostrom and Clark economies. Hardin economies are not able to manage their renewable resources at any world price, have zero rents and suffer from the tragedy of the commons. Ostrom economies exhibit de facto open access and zero rents for low resource prices, but can maintain a limited form of resource management at higher prices. Clark economies can implement fully efficient management and do so when resource prices are sufficiently high. The model shows heterogeneity in the success of resource management is to be expected, and neutral technological progress works to undermine the efficacy of property rights institutions.

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Abstract:
In the 16th century, North America contained 25-30 million buffalo; by the late 19th century less than 100 remained. While removing the buffalo east of the Mississippi took settlers over 100 years, the remaining 10 to 15 million buffalo on the Great Plains were killed in a punctuated slaughter in a little more than 10 years. I employ theory, data from international trade statistics, and first person accounts to argue that the slaughter on the plains was initiated by a foreign-made innovation and fueled by a foreign demand for industrial leather. Ironically, the ultimate cause of this sad chapter in American environmental history was of European, and not American, origin.

Abstract:
This paper examines the interaction between relative factor abundance and income-induced policy differences in determining the pattern of trade and the effect of trade liberalization on pollution. If a rich and capital abundant North trades with a poor and labor abundant South, then free trade lowers world pollution. Trade shifts the production of pollution intensive industries to the capital abundant North despite its stricter pollution regulations. Pollution levels rise in the North while those in the South fall. These results can be reversed however if the North-South income gap is "too large," in this case, the pattern of trade is driven by income-induced pollution policy differences across countries. Capital mobility may raise or lower world pollution depending on the pattern of trade.

Abstract:
We consider trade between a consumer' country with an open access renewable resource and a conservationist' country that regulates resource harvesting to maximize domestic steady-state utility. In what we call the mild overuse' case, the consumer country exports the resource good and suffers steady-state losses from trade, as suggested by the conventional wisdom' that weak resource management standards confer a competitive advantage on domestic firms in the resource sector but cause welfare losses. Strikingly, however, when the resource stock is most in jeopardy, the conservationist country exports the resource good in steady state and both countries experience gains from trade.

Abstract:
The relationship between economic growth and the environment is not well understood: We have only limited understanding of the basic science involved and very limited data. Because of these difficulties it is especially important to develop a series of relatively simple theoretical models that generate stark predictions. This paper presents one such model where societies implement 'the Kindergarten rule of sustainable growth.' Following the Kindergarten rule means implementing zero emission technologies in either finite time or asymptotically. The underlying simplicity of the model allows us to provide new predictions linking the path of environmental quality to pollutant characteristics (stocks vs. flows; toxics vs. irritants) and primitives of the economic system. It also provides a novel Environmental Catch-up Hypothesis.

Abstract:
This paper develops a two-sector general equilibrium model of an economy with an open access renewable resource. We characterize the autarkic steady state, showing that autarky prices (and 'comparative advantage') are determined by the ratio of intrinsic resource growth to labor. Under free trade, steady state trade and production patterns for a small open economy are determined by whether the resource good's world price exceeds its autarky price. Strikingly, if the small country exports the resource good while remaining diversified, then steady-state utility is lower than in autarky, and increases in the world price of exports are welfare-reducing.

Abstract:
This paper develops a two-good, two-country model with national open access renewable resources. We derive an appropriate analog of `factor proportions' for the renewable resource case and link it to trade patterns and to the likelihood of diversified production. The resource importer gains from trade. However, a diversified resource exporting country necessarily suffers a decline in steady state utility resulting from trade, and may lose along the entire transition path. Thus the basic 'gains from trade' presumption is substantially undermined by open access resources. Tariffs imposed by the resource importing country always benefit the resource exporter, and may be pareto-improving.

Abstract:
We develop a simple two-sector dynamic model to examine the effects of international trade in the presence of pollution-created cross- sectoral production externalities. We assume that the production of 'Smokestack' manufactures generates pollution, which lowers the productivity of an environmentally sensitive sector ('Farming'). As a result, the long run production set is non-convex. Pollution provides a motive for trade, since trade can spatially separate incompatible industries. Two identical, unregulated countries will gain from trade if the share of world income spent on Smokestack is high. In contrast, when the share of world income spent on the dirty good is low, trade can usher in a negatively reinforcing process of environmental degradation and real income loss for the exporter of Smokestack.

Abstract:
We examine the effect of trade on a small open economy with an open access renewable resource. Within a novel two-sector equilibrium model we first chracterize the autarkic steady state, and then show trade reduces steady state utility for a diversified resource exporting small country. Instantaneous utility rises as trade first opens, but these gains are eroded by ongoing resource depletion. The present value of utility falls for sufficiently small discount rates, and improvements in the world price of exports may be welfare-reducing. We also show that autarky prices, the pattern of trade, and the possibility of diversified production are all linked to a simple ratio of the biological resource growth rate to labor supply.

Abstract:
We present a simple general equilibrium model of renewable resource and population dynamics that might explain the rise and fall of Easter Island's civilization. The model generates a system similar to the Lotka-Volterra predator-prey model. In our formulation man is the predator and the resource base is the prey, leading to the possibility of feast and famine cycles of rising and falling population and resource stocks. Such cycles tend to arise when fertility is high and the resource base grows slowly. We speculate that such cycles may often cause violent conflict and describe other civilizations that may have declined because of population overshooting and endogenous resource degradation.

Abstract:
This paper examines the interaction between relative factor abundance and income-induced policy differences in determining the pattern of trade and the effect of trade liberalization on pollution. If a rich and capital abundant North trades with a poor and labour abundant South, then free trade lowers world pollution. Trade shifts the production of pollution intensive goods to the capital abundant North despite its stricter pollution regulations. Pollution levels rise in the North while those in the South fall. These results can be reversed however if the North- South income gap is "too large" for in this case, the pattern of trade is driven by income-induced pollution policy differences across countries. Capital mobility may raise or lower world pollution depending on the pattern of trade.