Trade boosts forest conservation by increasing taxes on industry, study finds.
International trade can impact forest conservation and welfare. When countries trade with biased policymakers and competing firms, the taxes imposed on industries increase, leading to lower production levels and higher conservation levels. The more biased the policymakers are towards the industry, the greater the positive effects on taxes, conservation, and welfare gains from trade. Even though biased governments harm the environment in isolation, trade can still improve welfare without increasing environmental costs.