Globalization and the Environment

Abstract

How should international economic policy address climate change? Does trade cause deforestation and endangered species depletion? How does globalization affect air and water pollution? Do trade and investment create a race to the bottom in environmental policy? How important are environmental impacts of transporting goods? We review theory and empirical work linking international trade and the environment with a focus on recent work and methods. We discuss the literature linking trade to local and global pollutants, the impact of emissions from transportation, the effect of trade on the sustainability of renewable resources, and the interaction between trade and climate policy. To shape our review, we present nine new stylized facts that, together with our review of past work, highlight questions for future research.