Reducing trade barriers in environmental goods and services (EGS) makes adoption of environmental technologies cost effective for different industries. The Asia-Pacific Economic Cooperation's (APEC) contribution to foster trade in EGS is to put forward its own list of 54 environmental goods (EGs) slated for sectoral liberalization. This Policy Note explores how APEC can liberalize trade in EGs based on the most-favored-nation (MFN) principle. Liberalization of these EGs on an MFN basis, however, generates free-rider problems. Using the predominant supplier approach could address free riding and provide the stimulus needed to foster free trade in EGS. The results show that APEC has a dominant supplier role in renewable energy and clean technology production. These are followed by waste water management and potable water treatment, management of solid and hazardous waste and recycling systems, and natural risk management.
Liberalizing Trade of Environmental Goods and Services: How to Address the Free-rider Problem
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