Another good "Globalisation and the environment" paper. Apologies for the academic nature of these posts but it is useful to get an idea of what economists are actually doing sometimes ;-).
The results from this paper seem entirely plausible. Another paper to read.
Renewable Resources, Pollution and Trade in a Small Open Economy
Date: 2006-11
By: Horatiu A. Rus (University of British Columbia)
URL: http://d.repec.org/n?u=RePEc:fem:femwpa:2006.140&r=env
Industrial pollution can have damaging effects on resource-based productive sectors. International trade creates opportunities for overexploitation of the open-access renewable resources but also for separating the sectors spatially. The paper shows that, depending on the relative damage inflicted by the two industries on the environment, it is possible that the production externality will persist and that specialization in the dirty good may not be the obvious choice from a welfare perspective. Also, the resource exporter does not necessarily have to lose from trade even when specializing incompletely, due to the partially offsetting external effects.
Keywords: Renewable Resources, Pollution, Production Externalities, Environment, International Trade
JEL: Q27 Q22 Q53
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