Trade and the Political Economy of Renewable Resource Management

CIES Working Paper No. 0046

33 Pages Posted: 8 Dec 2000

See all articles by Richard Damania

Richard Damania

World Bank; University of Adelaide - School of Economics

Date Written: November 2000

Abstract

A growing body of literature suggests that political factors are one of the major causes of environmental damage in developing countries endowed with a relative abundance of renewable resources. This has prompted calls for the use of trade sanctions to encourage sustainable resource management practices in these countries. This paper develops a model to assess the interaction between political lobbying, trade and the incentives to extract a renewable resource. It is demonstrated that in a political equilibrium trade sanctions may have effects that have not been previously identified in the literature. It is shown that if the government is predisposed to the demands of special interest lobby groups, then trade sanctions may fail to induce better resource management practices. There are circumstances where sanctions lead to greater harvesting of the renewable resource and worsen environmental outcomes.

Keywords: trade sanctions, environment, renewable resources, political economy

JEL Classification: Q23, Q28, D78, F19

Suggested Citation

Damania, Richard, Trade and the Political Economy of Renewable Resource Management (November 2000). CIES Working Paper No. 0046. Available at SSRN: https://ssrn.com/abstract=253326 or http://dx.doi.org/10.2139/ssrn.253326

Richard Damania (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

University of Adelaide - School of Economics ( email )

Adelaide SA, 5005
Australia
+61 8 8303 4933 (Phone)
+61 8 8223 1460 (Fax)

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