EU Enlargement and Environmental Policy^*

Andreas Loschel^{a, b} and Marian Mraz ^b

^a Centre for European Economic Research (ZEW)

P.O. Box 10 34 43

D-68034 Mannheim, Germany

^b University of Mannheim

LS Conrad, A5, 68131 Mannheim, Germany

e-mail: [email protected], [email protected]

Abstract:

The Eastern European Associates (EEA) have committed to reduce greenhouse
gas emissions according to their targets set in the Kyoto Protocol. Furthermore since 1993
trade liberalization has taken place between all associated countries and the EU. There is
meanwhile a large quantitative literature on the economic effects of full integration of the
associated countries into the EU as well as on the Kyoto Protocol. However, there is a lack of
quantitative research on the linkage of trade and the environment in the context of the EU
enlargement. In this paper we analyze the interactions of different environmental policies
under the Kyoto Protocol and trade liberalization in the process of eastern enlargement using
a computable general equilibrium model. We find that trade liberalization provides large
gains for EEAs while it holds only modest gains for EU member states. Integration does not
show a significant impact on carbon abatement policies, but mitigates associated welfare
losses.

JEL classification: D58, F15, F18, P20, Q25

Keywords: EU enlargement, Kyoto Protocol, computable general equilibrium modeling

Acknowledgement: Financial support from the European Commission under the project
Climate Change Policy and Global Trade (CCGT) is gratefully acknowledged.

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