1.1 Links between Climate Change and Trade

FIGURE 1.1 links between Climate Change and trade

Climate Policies

• International, regional, and national climate regulations, for example • Emission targets • Food waste prevention

Intersection of Climate and Trade Policy

• Environmental border tax adjustments • Fossil fuel subsidy reforms • Renewable energy trade • Technology transfer Trade Policies

• Tariffs and nontariff barriers • Services regulatory restrictions • Standards and certification • Green government procurement

Mitigation

• Switch to clean energy, thus efficiencies • Emission capture and storage • Afforestation

Source: World Bank. Trade

• Production and consumption • Movement of goods, services, people, and capital

Adaptation

• Migration • New trade routes • New types of trade jobs under harsh climate • Direct emissions • Deforestation and land-use change: emissions and sinks • Land and water pollution • Comparative advantages and productivity • Disruption of value chains • Degrading of trade-related infrastructure • Climate-smart agriculture practices • Change in structure and location of production

Impacts Impacts

Climate Change

• Rising average temperatures • Increasing sea levels • Changes in rainfall patterns • Permafrost collapse • Increase in extreme weather events Adaptation Mitigation

• Switch to green production and consumption by liberalizing measures to facilitate trade in environmental goods and services

transition. Indeed, there are good reasons to believe that greening trade will contribute more to better growth, poverty reduction, and human development outcomes than current development trajectories.

The report is organized as follows. Chapter 2 explains the rationale for paying attention to the important role of low- and middle-income countries in mitigating and adapting to climate change. It presents new analyses pointing to the increasing annual growth rate of emissions in the poorest countries and provides solutions that center on trade policy. Noting the importance of agriculture for low- and middle-income countries, this chapter also examines emissions related to land-use change and options for sustainable agricultural land management through trade policy. Chapter 3 delves into the evolving comparative advantages and discusses the impacts of extreme weather events. It uses a stylized model to illustrate the importance of refraining from the use of trade restrictions during climate disasters that are coupled with other global disasters, such as the COVID-19 pandemic. Chapter 4 presents the necessity of adaptation policies and the role of trade policy in facilitating the exchange of green goods and services and in promoting access to low-carbon technologies. It also discusses the implications of adaptation for trade. Chapter 5 examines the various types of environmental policies (at the government and firm levels) and their intersection with trade, especially regarding their effects on exports from the poorest countries. It also discusses the