Tariff Escalation and Invasive Species Risk

1. Introduction

International trade can be an important driver of environmental change, although often
indirectly through specialization and expansion of dirty activities. In a few cases trade is the
direct vector of the environmental issue as emphasized in recent literature. The latter has been
focusing on accidental introductions of exotic or invasive species (IS) like pests, weeds, and
viruses, by way of international transport of commodities, which is an important aspect of this
complex nexus (Perrings, Williamson and Dalmazzone; Mumford). The trade and environment
interface is inherent to the economics of IS since trade is a major vector of propagation of these
species, although not the only one. The current economic literature is mostly focused on the
“right” criteria to use or the optimal environmental policy response to the hazard of IS (Binder;
Sumner). A related debate evolves around quarantine as a legitimate policy response to phyto-
sanitary risk (Anderson, McRae, and Wilson; Cook and Frazer; and Kim and Lewandrowski)

Agricultural and forestry imports have always been an important conduit for biological
invasions. The agricultural tariff structure, because of its strong influence on trade flows, is
therefore an important issue to understand the hazards of IS introductions. The literature is still
limited. Using a HOS approach, Costello and McAusland show that lowering agricultural tariffs
could potentially lower the damage from exotic species, even though the volume of trade rises.
An increase in imports results in a reduced domestic agricultural output. Thus the quantity of
crops available for IS damage is reduced and so is the amount of land disturbed and thereby
aiding the propagation of exotic species. Tu and Beghin extend this analysis to two-way trade
and multilateral trade liberalization and trade integration, and show that the ambiguity of the
Costello-McAusland results is much reduced in the latter context. Subsequently, McAusland and

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