Linkages between trade, environment, and climate change
Achieving trade-supported inclusive economic growth and at the same time meeting climate and environmental objectives is a complex task. While trade can have positive effects on economic growth, poverty reduction, climate change adaptation and mitigation and biodiversity restoration, trade can also contribute directly to global warming and ecosystem degradation.
Trade can boost green exports and support a green transformation
Trade can drive climate change mitigation, adaptation, and broader environmental sustainability objectives through cleaner production, the spread of green technologies, and assistance in the recovery from disasters, such as extreme weather events. International trade agreements with environmental provisions can, for example, reduce the risk of environmentally destructive trade, including harmful subsidies, boost green exports from developing countries, and encourage a green transformation. Environmental rules in trade agreements also support climate goals and can ban hazardous chemicals or products. Trade can also promote circularity by supporting national and cross-border supply chains, end-of-life value chains, and services like repair and waste collection, which are needed for a sustainable development.
Trade expansion can lead to degraded and depleted natural resources and increased GHG emissions
Increased production, resulting from trade expansion, and trade with raw materials such as timber, minerals, fossil fuels and hazardous chemicals and products, can lead to a degradation or depletion of natural resources and increased pollution and GHG emissions. The World Trade Organization (WTO) estimates that 20-30% of total carbon emissions are connected to trade-related activities such as production and transportation. Trade can also facilitate the movement of invasive species, pests, and diseases across borders, potentially threatening local ecosystems and biodiversity.
