INTERNATIONAL TRADE, ENERGY CONSUMPTION AND ENVIRONMENT: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS FOR INDIA

The objective of the present paper is to understand general equilibrium implications of international trade and globalization on energy consumption and environmental emission. We applied Computable General Equilibrium (CGE) modeling as our relevant methodology following Shoven and Whalley (1984). Constructing an Energy/Environmental Social Accounting Matrix (SAM), the present study attempts to purport the effects of liberalized trade upon different macroeconomic aspects, energy consumption and Green House Gas (GHG) emission through an Environmental CGE model logically based on SAM. Assuming Electricity, Coal, Natural gas & oil, and Biomass as the relevant sources of energy, attempts have been made to simulate various trade related policies like import liberalization, foreign capital inflow and use of energy saving technologies for examining the impact over macroeconomic variables and domestic physical environment. Constructing an index known as Pollution Terms of Trade (PTOT) our research finds that trade and globalization in most of the cases aggravated the problem of GHG emission and has made India “Pollution Haven” by intensifying dirty industry migration.