The Uruguay Round and air pollution: estimating the composition,scale and technique effects of trade liberalization

This paper develops a methodology to estimate the environmental impact of the Uruguay Round trade agreement. The impact is estimated in terms of five air pollutants for both developed and developing countries/regions. The methodology estimates environmental Kuznets curves and uses these in conjunction with FranÇois et al.'s (1995) estimates of Uruguay Round income gains and sectoral production changes, together with sectoral pollution intensities from Hettige et al. (1994). In this manner, composition, scale and technique effects of the Uruguay Round on air pollution are estimated. The monetary cost/benefit associated with the pollution changes is also estimated. Results indicate that emissions of all five pollutants are predicted to increase in developing and transition regions as a result of the Uruguay Round, whilst in developed regions emissions of three pollutants decrease and two increase. The results also suggest that the environmental impact will be considerably greater if the Uruguay Round affects the rate of economic growth.