International Trade with Price Supports and Environmental Constraints: The Canadian Hog Industry

Abstract

The national resource endowments specific to individual countries have long been thought of as one of the sources of comparative advantage in trade. As production processes have had more serious ecological impacts, and as wealthier consumers have demanded improved environmental quality, the ability of a country’s ecological system to absorb pollutants has become more important as a source of comparative advantage. This phenomenon is especially important for agriculture and agricultural trade. For instance, groundwater nitrification has become a very important issue in dense livestock production areas of the European Union (E.U.) and North America. The environmental costs and abatement costs associated with livestock manure have become a significant economic factor in these regions.