Trade liberalization and pollution: a general equilibrium analysis of carbon dioxide emissions in Taiwan

This paper examines the environmental effects associated with Taiwan's application for membership at the World Trade Organization. The objective is to provide quantitative assessment of carbon dioxide emissions from changes in the level and structure of production activity in Taiwan following a liberalization of trade. The estimates are derived from a five-household, 18-sector computable general equilibrium model calibrated to a 1996 social accounting matrix. Our empirical results show that total carbon dioxide emissions increase as a result of trade liberalization, there is also a shift in the structure of production towards these sectors that are the most carbon-intensive. (C) 2001 Elsevier Science B.V. All rights reserved.