An assessment of China-Japan-Korea Free Trade Agreement’s economic and environmental impacts on China

Recently, China, Japan, and the Republic of Korea (Korea) are conducting a government-commissioned feasibility study on the Free Trade Agreement among the three countries (CJKFTA) to form a regional free trade zone in East Asia. Considering that freer trade can cause unexpected impact on domestic environment, there is a need to evaluate the environmental impact of such a trade policy. This move should be made to help negotiators understand and pay more attention to environmental issues during CJKFTA negotiations, and to help lobby with the government to carry out appropriate policy instruments for adaptation or mitigation. Following the Chain Reaction Assessment Method that integrates and links the elements of trade, production, and environment, the present research aims to quantitatively assess CJKFTA’s possible impact on China’s environment. This is done by estimating the variations of China’s major conventional pollutants and greenhouse gases (GHGs) emission in two policy scenarios to represent CJKFTA’s scale and composition effects on China’s environment. Estimating the variations is based on a static Computable General Equilibrium model, working with Global Trade Analysis Project (GTAP) 7 database and China’s energy-environment statistics. Based on these assessments, CJKFTA is predicted to lead to notable environmental impact, including increased emissions of agricultural total nitrogen, agricultural total phosphorus, chemical oxygen demand, and GHGs. On the other hand, decreased emissions of industrial SO₂ and dust are also expected to happen. Suitable policies need to be made to combat negative effects and amplify positive ones, while aiming at a more sustainable regional freer trade system.     

Does trade openness improve environmental quality?

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO₂) and carbon dioxide (CO₂) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.     

Does trade openness improve environmental quality?

The literature on trade openness, economic development, and the environment is largely inconclusive about the environmental consequences of trade. This study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique. We find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country. Trade is found to benefit the environment in OECD countries. It has detrimental effects, however, on sulfur dioxide (SO₂) and carbon dioxide (CO₂) emissions in non-OECD countries, although it does lower biochemical oxygen demand (BOD) emissions in these countries. We also find the impact is large in the long term, after the dynamic adjustment process, although it is small in the short term.     

‘Optimal’ pollution abatement—whose benefits matter, and how much?

We examine the determinants of environmental regulatory activity (inspections and enforcement actions) and levels of air and water pollution for 409 US pulp and paper mills, using data for 1985–1997. We focus on the benefits to the surrounding population from pollution abatement. Plants with larger benefits emit less pollution, as do those with more kids and elders nearby. Plants in poor areas emit more pollution, though (surprisingly) we find less pollution in minority areas. Out-of-state neighbors seem to count less than in-state ones, although this effect diminishes if the bordering state's Congressional delegation is strongly pro-environment. We use ‘spatially lagged’ instrumental variables to control for the potential endogeneity of which individuals choose to locate near the plant. The results for regulatory activity are noticeably less significant than the emissions results.     

Personality and economic choices

There is substantial variation in individual preferences for public goods, yet much of that variation remains poorly understood. However, simple measures of personality can help to explain economic values and choices in a systematic way. In this paper, we examine the effects of personality on individual economic choices over public environmental goods. Based on three datasets from three separate stated preference studies, we use a hybrid choice econometric framework to examine the effects of personality on preferences for the status quo, changes in environmental quality, and costs of investing in environmental improvements. We find effects that are consistent across all datasets. Personality, a stable feature of an individual's character that is simple to measure, enriches explanations of why the demand for environmental goods varies across people, provides an indication of how different people are likely to react to the introduction of environmental policies, and explains substantial differences in Willingness to Pay.     

Testing the Environmental Kuznets Curve Hypothesis with Bird Populations as Habitat-Specific Environmental Indicators: Evidence from Canada

Abstract:  The traditional environmental Kuznets curve (EKC) hypothesis postulates that environmental degradation follows an inverted U-shaped relationship with gross domestic product (GDP) per capita. We tested the EKC hypothesis with bird populations in 5 different habitats as environmental quality indicators. Because birds are considered environmental goods, for them the EKC hypothesis would instead be associated with a U-shaped relationship between bird populations and GDP per capita. In keeping with the literature, we included other variables in the analysis—namely, human population density and time index variables (the latter variable captured the impact of persistent and exogenous climate and/or policy changes on bird populations over time). Using data from 9 Canadian provinces gathered over 37 years, we used a generalized least-squares regression for each bird habitat type, which accounted for the panel structure of the data, the cross-sectional dependence across provinces in the residuals, heteroskedasticity, and fixed- or random-effect specifications of the models. We found evidence that supports the EKC hypothesis for 3 of the 5 bird population habitat types. In addition, the relationship between human population density and the different bird populations varied, which emphasizes the complex nature of the impact that human populations have on the environment. The relationship between the time-index variable and the different bird populations also varied, which indicates there are other persistent and significant influences on bird populations over time. Overall our EKC results were consistent with those found for threatened bird species, indicating that economic prosperity does indeed act to benefit some bird populations.     

Improving Environmental and Social Targeting through Adaptive Management in Mexico's Payments for Hydrological Services Program

Natural resource managers are often expected to achieve both environmental protection and economic development even when there are fundamental trade‐offs between these goals. Adaptive management provides a theoretical structure for program administrators to balance social priorities in the presence of trade‐offs and to improve conservation targeting. We used the case of Mexico's federal Payments for Hydrological Services program (PSAH) to illustrate the importance of adaptive management for improving program targeting. We documented adaptive elements of PSAH and corresponding changes in program eligibility and selection criteria. To evaluate whether these changes resulted in enrollment of lands of high environmental and social priority, we compared the environmental and social characteristics of the areas enrolled in the program with the characteristics of all forested areas in Mexico, all areas eligible for the program, and all areas submitted for application to the program. The program successfully enrolled areas of both high ecological and social priority, and over time, adaptive changes in the program's criteria for eligibility and selection led to increased enrollment of land scoring high on both dimensions. Three factors facilitated adaptive management in Mexico and are likely to be generally important for conservation managers: a supportive political environment, including financial backing and encouragement to experiment from the federal government; availability of relatively good social and environmental data; and active participation in the review process by stakeholders and outside evaluators. Mejorando los Objetivos Ambiental y Social Mediante el Manejo Adaptativo en el Programa de Pagos por Servicios Hidrológicos en México     

Trading rules and the environment: Does equal treatment lead to a cleaner world?

In this paper, we consider a three-stage game in the context of a competing exporters model to compare and contrast the effects of discriminatory and uniform (Most Favored Nation, MFN) tariffs on countries’ choice over environmental standards for varying degrees of pollution spillovers. Because of the presence of punishment effects and stronger own and cross-tariff effects, we find that discrimination yields higher standards than MFN (and free trade) independently of the extent of pollution spillovers. When pollution is local and incentives to free ride on other countries’ abatement efforts are weak, we show, however, that welfare is larger under MFN than under discrimination. In a dynamic setting, we consider the impact of symmetric and asymmetric treatments on the sustainability of an international environmental agreement (IEA) and obtain that multilateral cooperation is easier to sustain under discrimination than under MFN (or free trade).     

Die Rolle von Kommunikation in der Umweltbewertung

Goal and Scope

Planning projects concerning the environment often provoke problems due to a lack of transparency of the applied scales and the appropriate evaluation methods. This paper therefore examines the general structure of all valuation processes before describing the character of the economic evaluation method in detail. From this point of view, requirements on planning processes are coming out which are to be achieved if their duty — the provision of public goods — is to be carried out efficiently.

Features

It will be shown that from an economist’s perspective a planning procedure acts as a surrogate of the market in coordinating individual’s preferences. The reasons for the inefficient level of the provision of environmental goods by private producers are their main characteristics: non-rivality and non-excludability; therefore public goods do not possess prices. Thus environmental goods have to be produced by cooperation and planning processes have to guarantee this. The main character of planning procedures is be seen in communication processes which is documented by a narrative study.

Results and Conclusions

Planning projects concerning the environment are strongly contingent on communication processes. Thus, they are also controllable by communication. The interdisciplinary research in communications shows that cooperative behaviour which is required for planning projects that should provide public goods can be benefited by applicative communication technologies. In this juncture (social) norms more and more emerge to act an important part in conveying cooperative behaviour. Especially so called ‘Sozialtechniken’ seem to be able to activate such norms.

Outlook

From the economist’s point of view planning projects concerning the environment mostly desiderate two things: Firstly, the procedures and methods which are applied to evaluate the regarding environmental goods in many cases suffer from transparency. Secondly, individual’s preferences predominant by the local population and accordingly by the directly involved parties are mostly not acquired adequately to achieve an efficient allocation of environmental goods. Applying more communication technologies to solve these two problems in the future both an increase of efficiency and an increase of the acceptability of such planning projects can be expected.     

The costs of avoiding environmental impacts from shale‐gas surface infrastructure

Growing energy demand has increased the need to manage conflicts between energy production and the environment. As an example, shale‐gas extraction requires substantial surface infrastructure, which fragments habitats, erodes soils, degrades freshwater systems, and displaces rare species. Strategic planning of shale‐gas infrastructure can reduce trade‐offs between economic and environmental objectives, but the specific nature of these trade‐offs is not known. We estimated the cost of avoiding impacts from land‐use change on forests, wetlands, rare species, and streams from shale‐energy development within leaseholds. We created software for optimally siting shale‐gas surface infrastructure to minimize its environmental impacts at reasonable construction cost. We visually assessed sites before infrastructure optimization to test whether such inspection could be used to predict whether impacts could be avoided at the site. On average, up to 38% of aggregate environmental impacts of infrastructure could be avoided for 20% greater development costs by spatially optimizing infrastructure. However, we found trade‐offs between environmental impacts and costs among sites. In visual inspections, we often distinguished between sites that could be developed to avoid impacts at relatively low cost (29%) and those that could not (20%). Reductions in a metric of aggregate environmental impact could be largely attributed to potential displacement of rare species, sedimentation, and forest fragmentation. Planners and regulators can estimate and use heterogeneous trade‐offs among development sites to create industry‐wide improvements in environmental performance and do so at reasonable costs by, for example, leveraging low‐cost avoidance of impacts at some sites to offset others. This could require substantial effort, but the results and software we provide can facilitate the process.     

The perils of flawed science in wildlife trade literature

Despite broad scientific consensus that sustainable use of wildlife can enhance conservation efforts, ethical concerns have led some community groups to oppose use of wild animals. Voicing those concerns is legitimate, but underlying philosophical bias should not influence science-based analysis and interpretation. We argue that philosophical biases are common in the scientific literature on trade in wildlife. The critically important case of bias surrounding the use of reptile leathers for luxury fashion illustrates the problem. Based on analysis of official seizures of fashion products made from wildlife, a recent study inferred that criminal activity (as inferred by noncompliance with regulations) was common and increasing and, hence, that authorities needed to adopt more stringent restrictions on the trade. In fact, the conclusions of that study are artifacts of pseudoreplication (e.g., multiple counts of single violations) and biased sampling (e.g., focus on companies with high rates of error) and run directly opposite to actual patterns in the data. As a proportion of overall trade, rates of noncompliance are exceptionally low (<0.4%), are declining, and result primarily from paper-work errors rather than criminal intent (e.g., such errors are more frequent for goods shipped by government authorities than by the commercial fashion industry). The recommendation by the study authors to prohibit the international trade in wildlife-based fashion products is imperiling a sustainable trade that can benefit biodiversity and people's livelihoods by providing financial incentives for conservation of species and habitats. This example offers a warning of the dangers of basing research on the wildlife trade on ethical or philosophical positions rather than objective evaluations of evidence.     

Spatial,socio‐economic,and ecological implications of incorporating minimum size constraints in marine protected area network design

Marine protected areas (MPAs) are the cornerstone of most marine conservation strategies, but the effectiveness of each one partly depends on its size and distance to other MPAs in a network. Despite this, current recommendations on ideal MPA size and spacing vary widely, and data are lacking on how these constraints might influence the overall spatial characteristics, socio‐economic impacts, and connectivity of the resultant MPA networks. To address this problem, we tested the impact of applying different MPA size constraints in English waters. We used the Marxan spatial prioritization software to identify a network of MPAs that met conservation feature targets, whilst minimizing impacts on fisheries; modified the Marxan outputs with the MinPatch software to ensure each MPA met a minimum size; and used existing data on the dispersal distances of a range of species found in English waters to investigate the likely impacts of such spatial constraints on the region's biodiversity. Increasing MPA size had little effect on total network area or the location of priority areas, but as MPA size increased, fishing opportunity cost to stakeholders increased. In addition, as MPA size increased, the number of closely connected sets of MPAs in networks and the average distance between neighboring MPAs decreased, which consequently increased the proportion of the planning region that was isolated from all MPAs. These results suggest networks containing large MPAs would be more viable for the majority of the region's species that have small dispersal distances, but dispersal between MPA sets and spill‐over of individuals into unprotected areas would be reduced. These findings highlight the importance of testing the impact of applying different MPA size constraints because there are clear trade‐offs that result from the interaction of size, number, and distribution of MPAs in a network.     

Income inequality and willingness to pay for environmental public goods

We study how the distribution of income among members of society, and income inequality in particular, affects social willingness to pay (WTP) for environmental public goods. We find that social WTP for environmental goods decreases (increases) with income inequality if and only if environmental goods and manufactured goods are substitutes (complements). We derive adjustment factors for benefit transfer to control for differences in income distributions between a study site and a policy site. For illustration, we quantify how social WTP for environmental public goods depends on the respective income distributions for empirical case studies in Sweden and the World at large. We find that the adjustment for income inequality can be substantial.     

EU air pollution regulation: A breath of fresh air for Eastern European polluting industries?

Does air quality regulation in the European Union (EU) foster polluting activity in emerging and developing countries? In this paper, we propose an original variable that evaluates regulation stringency, based on the EU Air Quality Framework Directive. Focusing on the underlying mechanism and controlling for endogeneity in the relation between regulation and trade, we provide robust evidence that EU countries implementing more stringent air pollution regulations import relatively more in pollution-intensive sectors from developing and emerging countries in Europe and Central Asia.     

Is Chinese trade policy motivated by environmental concerns?

This paper analyses whether China's export VAT rebates and export taxes are driven by environmental concerns. Since China struggles to enforce environmental regulation, trade policy can be used as a second-best environmental policy. In a general equilibrium model it is possible to show that the second-best export tax increases in a product's pollution intensity. The empirical analysis investigates whether the export tax equivalent of partial VAT rebates and export taxes are higher for products which are more pollution intensive along several dimensions. The results indicate that the VAT rebate rates are set in a way that discourages exports of water pollution intensive, SO₂ intensive and energy intensive products from 2007 on. Moreover, the conservation of natural resources such as minerals, metals, wood products and precious stones seems to be a key determinant of China's export VAT rebate rates. There is little evidence that export taxes are motivated by environmental concerns.     

An overview of the impacts of changes in common property resources management in the context of globalisation: A case study of India

Socio-economic development of mankind and well-being depend on the environment and the way in which development influences the environment. Thus, environment and development are interdependent. In fact, economic development is closely linked with the development of resources. These resources can be classified into three categories: public goods, semi-public goods (also known as common property resources) and private goods. In poor countries common property resources make a valuable contribution to the sustainable livelihoods of rural populations. The impact of globalisation on the commons shows various patterns of ownership, control, use and misuse. The commons were subjected to degradation as well as conservation in the process of centralized management in India. After the reform period, the administration of natural resources was given significant attention by specialized departments such as the Forest Department and the Revenue Department. All the land, apart from private land, was regarded as state property and controlled by the state. This paper highlights the need to examine the common property resources sector in the context of wider economic policy reform processes in the Indian economy.     

Fiscal spending and the environment: Theory and empirics

During economic crises, governments often increase fiscal spending to stimulate the economy. While the fiscal spending surge may be temporary, spending composition is often altered in favor of expenditures on social programs and other public goods which may persist over time. We model and measure the impact of fiscal spending patterns on the environment. The model predicts that a reallocation of government spending composition towards social and public goods reduces pollution. However, increasing total government spending without altering its composition does not reduce pollution. We empirically test these predictions for air and water pollutants showing that they are fully supported.     

Assessing sustainability: An assessment framework to evaluate Agenda 21 actions at the local level

In Switzerland, communities are encouraged to define and to report on local Agenda 21. This paper presents an analysis framework to help local communities set sustainable development priorities and to follow through with appropriate actions. Four Swiss communities, from the French-speaking part of Switzerland, actively follow the project: Lausanne (114 304 citizens), Vevey (15 364 citizens), Mannens-Grandsivaz (505 citizens) and Essertines/Yverdon (666 citizens). The analysis framework developed is constituted of four interdependent fields: the societal characteristics, the individual or collective behaviours, the end objectives or sustainability impacts and the inhabitant's perception of these three fields. The link between society and behaviour can be studied through sociological analyses. The link between behaviour and environmental impact can be established thanks to Life Cycle analysis and Input/Output analyses. At each level, sustainable development indicators can be defined. As an application of the framework, the citizen energy consumption has been studied and expressed in energy slaves (= 3150 MJ/Year). A Swiss citizen needs altogether 69 slaves, 20 for his private consumption of goods and services, 19 for housing, 11 for transport, I1 for food and 8 for his consumption of public goods. If one fifth of the inhabitants of Lausanne, wanting to live closer to nature, actually moved out of town, the region would need 10 436 more slaves for 3500 persons happily living in the countryside.     

Measuring the impact of the pet trade on Indonesian birds

The trade in wild animals involves one‐third of the world's bird species and thousands of other vertebrate species. Although a few species are imperiled as a result of the wildlife trade, the lack of field studies makes it difficult to gauge how serious a threat it is to biodiversity. We used data on changes in bird abundances across space and time and information from trapper interviews to evaluate the effects of trapping wild birds for the pet trade in Sumatra, Indonesia. To analyze changes in bird abundance over time, we used data gathered over 14 years of repeated bird surveys in a 900‐ha forest in southern Sumatra. In northern Sumatra, we surveyed birds along a gradient of trapping accessibility, from the edge of roads to 5 km into the forest interior. We interviewed 49 bird trappers in northern Sumatra to learn which species they targeted and how far they went into the forest to trap. We used prices from Sumatran bird markets as a proxy for demand and, therefore, trapping pressure. Market price was a significant predictor of species declines over time in southern Sumatra (e.g., given a market price increase of approximately $50, the log change in abundance per year decreased by 0.06 on average). This result indicates a link between the market‐based pet trade and community‐wide species declines. In northern Sumatra, price and change in abundance were not related to remoteness (distance from the nearest road). However, based on our field surveys, high‐value species were rare or absent across this region. The median maximum distance trappers went into the forest each day was 5.0 km. This suggests that trapping has depleted bird populations across our remoteness gradient. We found that less than half of Sumatra's remaining forests are >5 km from a major road. Our results suggest that trapping for the pet trade threatens birds in Sumatra. Given the popularity of pet birds across Southeast Asia, additional studies are urgently needed to determine the extent and magnitude of the threat posed by the pet trade.     

A dynamic simulation model to support reduction in illegal trade within legal wildlife markets

Sustainable wildlife trade is critical for biodiversity conservation, livelihoods, and food security. Regulatory frameworks are needed to secure these diverse benefits of sustainable wildlife trade. However, regulations limiting trade can backfire, sparking illegal trade if demand is not met by legal trade alone. Assessing how regulations affect wildlife market participants’ incentives is key to controlling illegal trade. Although much research has assessed how incentives at both the harvester and consumer ends of markets are affected by regulations, little has been done to understand the incentives of traders (i.e., intermediaries). We built a dynamic simulation model to support reduction in illegal wildlife trade within legal markets by focusing on incentives traders face to trade legal or illegal products. We used an Approximate Bayesian Computation approach to infer illegal trading dynamics and parameters that might be unknown (e.g., price of illegal products). We showcased the utility of the approach with a small-scale fishery case study in Chile, where we disentangled within-year dynamics of legal and illegal trading and found that the majority (∼77%) of traded fish is illegal. We utilized the model to assess the effect of policy interventions to improve the fishery's sustainability and explore the trade-offs between ecological, economic, and social goals. Scenario simulations showed that even significant increases (over 200%) in parameters proxying for policy interventions enabled only moderate improvements in ecological and social sustainability of the fishery at substantial economic cost. These results expose how unbalanced trader incentives are toward trading illegal over legal products in this fishery. Our model provides a novel tool for promoting sustainable wildlife trade in data-limited settings, which explicitly considers traders as critical players in wildlife markets. Sustainable wildlife trade requires incentivizing legal over illegal wildlife trade and consideration of the social, ecological, and economic impacts of interventions.