International trade, corruption, and environmental management

This dissertation comprises three essays that attempt to derive rules for global optimal use of environmental resources in the presence of habitat destruction, and institutional failures like corruption.; The first essay deals with the management of human-wildlife conflicts resulting from population pressure and consequent habitat loss. A simple real options framework is proposed to analyze wildlife management policies that account for ecological uncertainty and the risk of extinction. An application of this framework to the management of wolves in the Western United states highlights the importance of existence value. An extended sensitivity analysis shows that the optimal management policy is more dependent on the growth rate, the volatility, and the minimum viable density of the wolf population, than on the exact value of damages, existence value (provided it is large), and the discount rate for the parameters considered.; The second essay develops a theoretical model to show how corruption in the management of environmental resources can give rise to a comparative advantage in environment-intensive industries. It shows further that international trade is not necessarily welfare improving in this setting. Its analysis of the welfare implications of particular trade policies shows that import tariffs have the potential of improving the welfare of both the exporter and the importer of the environment-intensive good in the presence of corruption while an export tax, increases world welfare and the welfare of the exporting country, but necessarily reduces the welfare of the importing country.; The third essay empirically examines if trade in natural resource products occurs according to the prediction of the Heckscher-Ohlin-Vanek (HOV) model of trade theory (“countries should be net exporters of the services of their abundant factors”), in the presence of administrative corruption. The results show that corruption is a significant determinant of trade in natural resource products in generating comparative advantages and in determining the direction of trade. In particular it is found that for developing countries, corruption creates an artificial comparative advantage in resources through its interaction with resource endowments while for developed countries, higher transparency reinforces real comparative advantages through better resource management.