This paper reviews recent work on the implications of endogenous policy for the effects of trade on the environment and the sustainability of renewable resource stocks. A recognition that pollution policy is endogenous has had a major impact on the trade and environment literature and has reversed some of the previously established empirical findings. Work on pollution has proceeded faster than work on renewable resources. I suggest some directions for future work in this area.

We focus on rice policy reform required for Taiwan's admission to the WTO, and examine the effects, theoretically and empirically, of the re-instrumentation of domestic policy needed to achieve environmental objectives when both positive and negative environmental externalities exist. Policies that treat non-commodity attributes in agriculture as secondary to existing aims, such as income support, are unlikely to result in the desired supplies of environmental goods. Those supplies can be achieved at lower government and social costs using policy instruments to achieve environmental goals directly. Results are relatively insensitive to the social values assigned to environmental goods.

Global attempts to limit greenhouse gas (GHG) emissions may impact on agricultural trade and producer returns, particularly in countries such as New Zealand, where a relatively large proportion of GHG emissions originate from the agricultural sector. This study uses an extended partial equilibrium agricultural trade model to analyze the effects of trade policy liberalization on agricultural production and trade, as well as on GHG emissions. Further analysis combines trade liberalization with GHG mitigation policy in the New Zealand and European dairy sectors, and the effects on producer returns and GHG emissions are predicted. As expected, full trade liberalization in the OECD (Organization for Economic Cooperation and Development) countries enhances producer returns in New Zealand's dairy sector, but reduces returns in the European Union's dairy sector.

This paper examines the elimination of all agricultural policy distortions in all trading countries and agricultural production decisions in the United States, as well as subsequent environmental quality in the presence and absence of nondegradation environmental standards. The results suggest that trade liberalization has the potential to increase domestic production and boost agricultural returns by as much as 8.5 percent. Consumer surplus would likely fall, and the discharge of nutrients, sediment, and pesticides would likely increase. However, environmental policies can limit these adverse environmental impacts and mute the potential decrease in consumer surplus, while leaving increased returns to agricultural production.

It has been hypothesized that differentially applied environmental regulations create pollution havens, as firms will choose to invest in countries with lax environmental standards. Using a theoretical model of pest control adoption and an empirical spatial equilibrium model, we examine one such environmental regulation, a U.S. ban on methyl bromide, to determine if an agricultural pollution haven will be created in Mexico. Alterations in agricultural production location, trade patterns, and methyl bromide use are determined. We find that, under the assumptions held, Mexico will not dramatically increase its use of methyl bromide following the ban. Sensitivity analysis to this result is conducted.

Ballast water from commercial ships engaged in international trade has been implicated as the primary invasion pathway in over 60 percent of new introductions of invasive alien species (IAS) in the Great Lakes since 1960. Recent policies have recognized that IAS are a form of biological pollution and have become focused on preventing new introductions. Given that emissions-based incentives are infeasible for the case of biological emissions, we investigate the cost-effectiveness of various performance proxy-based and technology-based economic incentives to reduce the threat of new invasions of Ponto-Caspian species in the Great Lakes.

A highly disaggregated emissions factor model is presented. The model generates changes in emissions and resource use by state and 6-digit NAICS sector. Removal of all U.S. import restrictions is examined. Results for agriculture show that composition effects explain highly varied regional patterns of emission changes. Scale effects are also important for expanding sectors. Quantitative assessments such as this may prove useful in conducting full environmental reviews of U.S. trade agreements consistent with Executive Order 13141 and the Free Trade Act of 2002.

The effects of the Free Trade Area of the Americas (FTAA) agreement on the forest sectors and resources of member countries are investigated. A model of wood supply within the spatial partial-equilibrium Global Forest Products Model is developed to link international trade and deforestation. The direct effects of tariff changes and the indirect effects of income changes induced by trade liberalization are considered. The FTAA has a small positive impact on the region's forest resources. Higher harvests of industrial roundwood in most countries are offset by increased afforestation due to the income effect of trade liberalization (captured by the environmental Kuznets curve).