Environmental Priorities and Trade Policy for Environmental Goods: A Reality Check
By Veena Jha, Maguru Consultants and University of Warwick, UK

ICTSD Programme on Trade and Environment, September 2008

 The growing importance of environmental issues has generated a parallel interest in evaluating the opportunity for trade in environmental goods and services (EGS). Sustainable development strategies worldwide further contribute to the overall growth of the global environment industry which is currently estimated at over USD 650 billion. Trade in EGS is estimated to amount to a tenth of that amount.

Liberalising trade in EGS may in theory, assist developing economies to build their economies along more environmentally sustainable lines. Continued growth in the EGS sectors in a way that provides economic benefits to the trading partners, both developed and developing countries, depends on the existence not only of policy conditions that allow freer trade in these goods and services, but also on a viable domestic consumer market for such goods and services. This paper shows that while environmental problems arise in almost all developing countries, trade in EGS is restricted to only a handful of countries. Thus not all environmental hotspots are serviced by trade in environmental goods (EGs). The main reason for lack of trade is the absence of a viable market.

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