International Trade and Biodiversity

The effects of international trade on biodiversity are hotly debated topics. On the positive side, international trade accelerates the transfer of ideas, environmental awareness, efficient and environmentally friendly production technologies, and breakthroughs in biotechnology and medicines worldwide. International trade and globalization has increased public awareness of the existence of biodiversity "hot spots" of intact ecosystems rich in biodiversity in remote corners of the world that are threatened by the destructive effects of uncontrolled economic development. This international public awareness may ultimately strengthen national and international laws to protect regional and global biodiversity, and increase international support for stricter environmental standards to maintain strong trade relations.

On the negative side, international markets may have the perverse effect of bidding up prices of critical habitat and endangered species, thereby accelerating their demise. The growing international demand for old growth timber from equatorial rain forests, for bushmeat, and for exotic species are examples. The opportunity for negative social and environmental consequences as by-products of trade also increases with international movement of goods and services, because consumers are generally unaware of the distant environmental and socioeconomic impacts of their market choices. More liberalized trade policies have also resulted in relaxed customs and quarantine rules that allow increased intercontinental migration of alien species. When introduced in countries lacking natural predators, the imported species may quickly multiply and crowd out native species, resulting in extinctions and biodiversity loss.

Economic policies promoting international trade are based largely on the principle of comparative advantage, which says that countries should specialize in producing those products that they can produce most efficiently. In theory, if all countries do this, more total economic output can be produced and all countries will be better off. International trade is promoted as beneficial to all trading partners as well as the environment, because, in theory, it creates economic growth, brings lower prices to consumers in industrialized countries (as manufacturing relocates to lower-cost countries), and creates jobs and export earnings in cash-strapped developing countries, thereby enhancing their ability to safeguard environmental resources. There is considerable controversy, however, among economists about the assumptions necessary to support that position. Specialization based on comparative advantage has a shaky foundation that can be quickly reversed when currencies are devalued or revalued, when prices change dramatically, or when international demand for a product changes. Specialization also makes countries more vulnerable to international price fluctuations, which may force the adoption of least-cost production methods, regardless of the environmental consequences.

Liberalized trade between countries promoted by the World Trade Organization may accelerate habitat destruction and biodiversity loss, by taking away national sovereignty. WTO rules restrict the ability of member countries to impose national environmental standards on imported goods. In order to compete against imports, countries have the choice of relaxing national environmental regulations that make domestic goods more expensive to produce, or losing that domestic industry. Prices established in international markets are more likely to underesti mate the marginal value of resource stocks and biodiversity preservation because they are set based upon international supply and demand, and do not take into account declining resource stocks and relative scarcity, which may be apparent only at the national or regional level.

—Marsha Walton

See also: Economics; Industrial Revolution/Industrialization; Sustainable Development; Valuing Biodiversity


Ekins, P., C. Folke, and R. Costanza. 1994. "Trade, Environment, and Development: The Issues in Perspective." Ecological Economics 9:1-12; Bhagwati, J. 1993. "The Case for Free Trade." Scientific American 269:42-49; Daly, H. E. 1993. "The Perils of Free Trade." Scientific American 269:50-57.

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