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Effect of a Differentially Applied Environmental Regulation on Agricultural Trade Patterns and Production Location: The Case of Methyl Bromide

Published online by Cambridge University Press:  15 September 2016

Lori Lynch ,
Scott Malcolm  and
David Zilberman
Lori Lynch
Affiliation:
Department of Agricultural and Resource Economics at the University of Maryland, College Park
Scott Malcolm
Affiliation:
Department of Food and Resource Economics at the University of Delaware, Newark
David Zilberman
Affiliation:
Department of Agricultural and Resource Economics at the University of California, Berkeley
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Abstract

It has been hypothesized that differentially applied environmental regulations create pollution havens, as firms will choose to invest in countries with lax environmental standards. Using a theoretical model of pest control adoption and an empirical spatial equilibrium model, we examine one such environmental regulation, a U.S. ban on methyl bromide, to determine if an agricultural pollution haven will be created in Mexico. Alterations in agricultural production location, trade patterns, and methyl bromide use are determined. We find that, under the assumptions held, Mexico will not dramatically increase its use of methyl bromide following the ban. Sensitivity analysis to this result is conducted.

Keywords

tradeenvironmental regulationsmethyl bromideproduction locationspatial equilibrium modelpesticide adoption
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 34 , Issue 1 , April 2005 , pp. 54 - 74
Copyright
Copyright © 2005 Northeastern Agricultural and Resource Economics Association 

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