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                                             Technical Handbook
                                          Trade and 
                        Environment Issues
                                                Paula Cordero,
                                              Sergio Sepulveda
                                          and Adrian Rodriguez
                                               Inter-American Institute
                                           for Cooperation on Agriculture
                    Trade and
               Environment issues
          Rural Development Technical Handbook No. 25
                    Paula Cordero,
                   Sergio Sepulveda and
                    Adrian Rodriguez
                   San Jose, Costa Rica,
                      July, 2004
         © Inter-American Institute for Cooperation on Agriculture (IICA). 2008
         IICA encourages the fair use of this document.
         Proper citation is requested.
         This publication is also available in electronic (PDF) format
         from IICAs Web site at www.iica.int.
         Editorial coordination: Sergio Sepulveda, Adrian Rodriguez
         Translation: Christina Feeny
         Layout: Ana Catalina Lizano
         Cover design: Ana Catalina Lizano
         Printed:  IICA Headquarters
             Cordero-Salas, Paula 
                  Trade and environment topics / Paula Cordero-Salas, Sergio 
             Sepulveda, Adrian Rodriguez. -- San Jose, C.R.: IICA, 2008.
             108 p. ; 24 cm. (Rural Development Technical Manuals/ IICA; no. 
             25) 
             ISBN13: 978-92-9039-911-7
             Published also in Spanish
             1. International trade  2. Environment  3. Sustainability  I. Sepulveda, 
             Sergio II. Rodriguez, Adrián  III. IICA  IV. Title  V. Series
             AGRIS     DEWEY
             E71      382.1
                        San Jose, Costa Rica
                            2008
                 Table of Contents
              INTRODUCTION                                                       7
              1. The Effects of Trade on the Environment                        11
                 1.1 Combination effects                                        13
                 1.2 Effects of scale                                           14
                 1.3 Effects of negative externalities                          14
                 1.4 Technological effects                                      15
                 1.5 Policy effects                                             15
                 1.6 The Environmental Kuznets Curve                            16
                      1.6.1   Bases of the Environmental Kuznets 
                        Curve hypothesis                                        16
                      1.6.2   Empirical evidence for the 
                              Environmental Kuznets Curve                       18
                      1.6.3   The Environmental Kuznets Curve 
                              and the Pollution Haven Hypothesis                19
                      1.6.4   The Environmental Kuznets Curve and 
                              measures to reduce environmental degradation      20
              2.  The Environment in International Trade Models  23
                 2.1  Traditional theory of international trade                 25
                      2.1.1   Environment as a factor of production             26
                      2.1.2   Changes in assumptions of the model               26
                 2.2  New theories of international trade                       29
              3.  Environmental Policy                                          33
                 3.1  Environmental policy approaches and instruments           35
                      3.1.1 Direct regulation                                   35
                      3.1.2 Market regulation                                   36
                      3.1.3 Legal approach      39
                      3.1.4 Voluntary agreements     42
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