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Environment and Trade : Should we be worried or happy about globalization ?

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Direct economic effects of globalisation are beneficial, but what about its side effects such as pollution and emission of greenhouse gases? Should we be concerned about increasing amounts of goods transported via international trade flows or can the opening of countries to international trade actually bring an improvement to their environment?

Globalization destroys our environment

Lyse Mauvais | 2015. May 07. 08:00

Environmental destruction started long before globalization; the Western world had hunted wolves and cut down forests – and planted some too, for military purposes- centuries before our age. Yet all experts agree that the industrial revolution and the development of capitalism led to an increased embedment of the environment within the economic system.

New technological progress called for environmental “resources” to be put to better uses, and our ecosystems became factors of productions like any other, to be used, overused, and discarded.

*Pretending that markets can save us

Today’s trend in environmental economics is to value the effects of the rise in citizen welfare promoted by global trade, and to point to the economy’s potential to actually preserve, rather than destroy, our natural “resources”, which have become so scarce. In other terms, we would now like to pretend that the main catalyst for environmental degradation is the tool that could allow us to stop it today. We would like to convince ourselves that the destruction we witness today was caused in the long past by some faraway, foreign, and long-forgotten causes, and that modern markets could be the panacea for our earth.

*Third-world populations bearing the toll of globalization

In reality, most global economic activity today still has a devastating impact on our environment. The globalization and intensification of international investments has fostered large-scale transnational economic endeavors, such as massive mining operations, or the exploitation of the Amazon forest, on an unprecedented scale. Growing international inequalities in a context of intense economic demand has encouraged third-world nations to sell their basic resources: from native lands (in the Brazilian forest, for example), to subsistence food (in Burkina Faso or Kenya, with the replacement of subsistence farming with cash crops), thus spinning into motion a vicious cycle of foreign aid dependency and environmental degradation.
Yes, globalization has fostered a global rise, in economic terms, of “well-being” throughout the globe. Western nations especially have benefitted from this increase. But we are now realizing the extent of the destruction that was left behind. Global indicators, however, must not mask the fact that this “global rise” has not significantly positively impacted the rural and low-classes of the third world; they may possess more “wealth” today, but they are more dependent than ever on the fluctuating dynamics of markets in order to survive – as Wangari Maathai, a Nobel prize winner and recognized environmental activist, thoughtfully expressed in her works.
The marketization of environmental “goods” means they are valued only once they have become scarce, and that is why we cannot count on global trade to save our planet. Economists today claim that periods of rapid industrialization are necessarily accompanied by environmental destruction, but that these are only temporary cycles, leading to a general rise in productivity and growing concerns, and care, for our planet. We’d like to agree with them; but what has been destroyed cannot be replaced. In terms of biodiversity, what has been lost cannot be recovered. The problem of international trade is that its scale and unsustainability at the local level lead to massive disruptions of traditional balances between local communities and their environment, and foster degradation at the local level.

*If you can’t start a revolution, keep your eyes open

In conclusion, there is a logical flaw in arguing that international trade is “good” for the environment; international trade destroys the environment more than it preserves it. Yet it is a fact of the modern world, and we are not arguing for a complete transformation of economic model – at least not in this article. Nevertheless we must be aware of the costs of our capitalist model, and of its terrible externalities and implications. Only awareness, and concrete steps towards improving the situation, will allow us to map out a more sustainable model for international trade. If we cannot have the positive effects of globalization without all its negative tolls, if we cannot go back anymore on the processes which shaped globalization, then we must at least work towards the limitation of negative externalities. We should aim to develope more responsible mechanisms of exchange between industries and local communities, first and third world markets, consumer demands and the scarcity of the environment – a “resource” more valuable than any other.

Positive environmental impact of international trade in the long run

Radek Jan | 2015. May 07. 08:00

Increase in international trade improves the welfare of participant states. Also, openness to trade encourages innovation, which leads states to invest more in the development of cleaner technologies and in cleaning and mitigation of existing pollution. Yet the economic growth at early stages of industrialisation in developing countries goes hand in hand with environmental degradation.

Analysis of cross-country data suggests that trade has low environmental impact. There is, however, one important exception : the emissions of CO2, the reduction of which will require further multilateral agreements.

*Low negative impact of transportation

By definition, international trade is  based on the transportation of goods between countries. Such transportation requires energy and generates pollution. But a better look at data shows that transportation of goods is responsible for a very low fraction of pollution produced by mankind. According to the WTO, 95 % of the enrgy used for transportation in the world is supplied by petroleum, which makes trade an important source of greenhouse gas emissions. But on the other hand, the International Energy Agency (IEA) states that while maritime transportation is responsible for only as low as 8.6% of CO2 emissions from fuel combustion of the transport sector, it actually covers 99% of the volume of globally traded merchandises. On the other hand, the road sector is responsible for he majority of CO2 emissions, but the volume of merchandises transported in this way is very low when compared to maritime transport. This comparision shows that international trade is not the major source of emissions, and that other parts of the transport sectors have worse environmental impacts.

*Opening to international trade to improve welfare

Most importantly, trade effects the welfare of trading states via income channels as it raises income of the participant countries. Even though economic growth can have negative effects to the environment at first, this is only true at the initial stages of industrialisation. Once a country reaches a tipping point corresponding to a certain level of development, its future economic growth actually contributes to the lowering of environmental degradation levels caused by the country. This relation is expressed by the “Environmental Kuznets curve” which shows the evolution of a relationship between the economic growth of a country and its environmental quality. The main idea behind this theory is that after reaching a critical point of highest environmental degradation, the economy of a country switches to less polluting sectors and once this happens, any further income generated by the effects of trade contribute to push down even further the environmental degradation in a given country.

*Higher environmental standards and citizens' concern in richer countries

Another important effect of economic growth allowed by opening-up to the international trade is the improvement of citizens' welfare. As countries become richer, their citizens tend to be more concerned about the quality of the environment they live in. This tendency leads to higher concerns for environmental regulations and protection of nature, as has happened already in most developed countries. Further welfare improvement brought by international trade can lead to similar political and social development in currently developing countries.

This article convinced me.

This article deliberately presents only one of the many existing points of views of this contorversial subject. Its content is not necessarily representative of its author's personal opinion. Please have a look at Duel Amical's philosophy.

This article convinced me.

This article deliberately presents only one of the many existing points of views of this contorversial subject. Its content is not necessarily representative of its author's personal opinion. Please have a look at Duel Amical's philosophy.

The state of votes

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Globalization destroys our environment

Lyse Mauvais

Positive environmental impact of international trade in the long run

Radek Jan

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