The causal effect of trade liberalization on the environment

This study investigated the effect of trade liberalization on carbon dioxide (CO₂), methane (CH₄), and nitrous oxide (N₂O) emissions. The exogenous reduction in trade restrictions due to countries' accession to the World Trade Organization is used as a measure of trade liberalization. Using the difference-in-difference method, the study estimated a large effect of accession on environmental quality. The results passed several robustness checks and did not appear to be influenced by coincidental shocks or the political conditions of accession. These results directly challenge the use of a single environmental quality indicator when assessing the relationship between trade liberalization and the environment.