Evaluating the Impact of Specific Environmental Regulations on Exports

There is clear concern in developing and transition economies that new and proposed changes in environmental policies and regulations will reduce exports. The existing 'trade and environment' literature, however, provides little empirical guidance for policy makers to evaluate sector-specific trade impacts of environmental regulatory changes. To assist with such analysis, this paper develops a microeconomic framework that can be used to evaluate the impact of changed environmental regulations on exports. The results provide clear empirical guidance to understand when the impact of such changes are likely to be relatively small and when the impacts are larger.