The limits of cross-border environmental policies: Trade diversion as leakage
Year: 2026
Type: article
Abstract: Global environmental externalities are one of the most pressing policy challenges of the modern era. Unilateral policy options to address global externalities are limited, however, by sovereignty and a general difficulty in achieving environmental objectives across national borders. We study an emerging trade policy tool used in cross-border environmental policies-environmental standards for imports-using a European Union program aimed at mitigating illegal timber harvest in tropical timber exporting countries. Through bilateral agreements with partner countries, the program established de facto import restrictions through supply chain transparency and certification requirements on forest-products. We find that the policy led to a diversion of partner country exports away from the EU towards other markets, particularly in Asia, and had no discernible reductions on forest loss. Our findings highlight the role that trade diversion can play as a leakage mechanism in such cross-border environmental policies.
Authors: Ryan Abman, Hattie Jenkins, Clark Lundberg
Institutions: San Diego State University, University of California, Davis
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,620
OpenAlex ID: W7125770344