ADAPTATION TO C LIMATE C HANGE
in rural areas (made worse by climate change) exacerbates the liquidity constraints to movement. As such, it is increasingly important to understand how climate change may affect agricultural trade flows and how low-income countries can address the impacts of climate change on them. Access to environmental goods and services will be essential in the transition to a low-carbon global economy. Environmental goods and services can cover a range of areas, including air pollution control, renewable energy, water and waste management, environmental monitoring, assessment, and analysis, environmental consulting, remediation and clean-up services, cleaner technologies, and carbon capture and storage. As discussed in previous chapters, emerging emitters will be important drivers of higher emissions in the coming years, and the use of low-carbon technologies in low- and middle-income countries could reduce emissions by about 600 million tons of carbon dioxide (CO2) by 2040, close to 10 percent of these countries’ total emissions by that time. Few countries, if any, have the resources, technology, and expertise needed to convert to a low-carbon economy. Trade will thus play a vital role in the global diffusion of low-carbon technologies by giving countries access to a wider range of lower-cost environmental goods and services. This access will, in turn, create new business and job opportunities in areas that use, distribute, and maintain these new technologies.
Trade in environmental goods Environmental goods are, simply put, those whose main function is to address or contribute to solving an environmental issue or challenge. Nearly 20 years ago, the World Trade Organization (WTO) launched negotiations on liberalizing trade in environmental goods and services under the Doha Round. The idea was to lower the costs of acquiring and using environmental technologies to combat a range of environmental problems, including climate change. Low- and middle-income countries could gain better access to markets for green goods and acquire green technology more easily and cheaply. These negotiations were held to liberalize trade, promote development, and better preserve the environment, leading some to label the Doha Round as a potential triple win (de Melo and Solleder 2020b, among others). A fourth possible win would be to avoid a clash between two global legal systems—the WTO rules and the emerging global rules for environmental protection, including the Sustainable Development Agenda of the United Nations, established in 2015, and the Paris Agreement, signed in 2016. The stalemate of the Doha Round has prevented a global agreement on trade and the environment. A group of mainly high-income WTO members have instead negotiated a plurilateral agreement,3 the Environmental Goods Agreement (EGA). The EGA is linked to the WTO framework because, as a plurilateral agreement, the liberalization of trade measures—through tariff cuts and other means—would be extended to all WTO members if a “critical mass” (say 85–90 percent of world trade in the concerned goods) is reached. The parties had hoped to finalize negotiations during the last negotiating round, which took place on December 3–4, 2016, with a view to wrapping up the talks in 2017. However, they failed to reach agreement on what constitutes a green good. Since then, plurilateral negotiations have not resumed.4 Nevertheless, green liberalization is likely to resurface in a new round of plurilateral negotiations and in regional and bilateral trade agreements. Could low- and middle-income countries, including poor countries, benefit from some form of green-trade liberalization?
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