| The conflicts of the environment and trade are a long-standing problem. Along with the development of economic globalization, the conflict between the two is paid close attention to more and more people. The theoretical research of environmental economics indicates that trade is not a basic reason of causing the environmental question. The conflicting thoroughly of the two is lain in that, trade has not reflected environmental cost in the market price of the goods and service properly, such as natural utilization of resources, prevention and cure of the environmental pollution etc. Thus it leads to "prices twist", and impel the environment to be utilized improperly. If trade is occurring at this moment, it will increase " market failure " emergence .The social loss that trade brings will be greater than social welfare it brings , which aggravated the conflicts of the environment and trade. With the proper means including the environmental cost in the market price of the goods and service, and dispelling "price twisting", it will lead the environments to be utilized properly and trade that develop at this moment will realize resource to be optimally disposed . The basic way of solving the conflict is to include the environmental cost in the production cost, and embody the rareness of environmental resources, and dispel its exteriority, which is also named the internalization of environmental cost . The main purpose of the paper lies in explaining the theory of the internalization of environmental cost systematically, the approach of it, and the impact on international trade. And with the constantly development of the theory, it will solve the new conflicts of the environment and trade, and realize the coordinated development of the environment and trade finally.The paper divides into three chapters altogether.Chapter one is the theoretical research on the internalization of environmental cost. In this chapter, it explains several concepts of environmental cost, the natural endowment of environmental key element, and the internalization of environmental cost at first. Then based on the exteriority of the environment, non-competitiveness of the environment and non-exclusiveness of the environment, it conclude that the exteriority of environmental assets is not economic. And then it discusses the relation of the environmental problem and "market failure". At last it proposes the development and current situation of the theory of the internalization of environmental cost. During the discussion of this chapter, we find the appearance of the environmental question is mainly owe to the exteriority of environment assets. It is necessary to take and dispel their economic exteriority inside environmental costs. Realize this question and propose first that theory method is Pigou, then Pigou's way appeared. Afterwards, because" right theory of property" of Coase is accepted extensively by common people, Coase's way appeared. In 1990s when the concepts of "ecological peoples" is introduced in the market subject, the new environmental economic means such as implementing environment mark system , popularizing ISO 14000 appeared .Chapter two discusses four ways of implementing the internalization of environmental cost: Collect environmental taxes, implement scheme of "Tradable Pollution Permits", implement environment system of marking, popularizing ISO 14000 . The environmental tax includes emission tax, the environmental density tax , product tax, and it is a kind of typical" Pigou's way " to collect the environmental tax . " Tradable Pollution Permits "is mainly to designed and come out according to Coase's" property right theory" ,which is still adopt by many countries in the western developed country at present. The environment marks system is a kind of embodiment form of the environmental policy. It does not depend on administrative decree compulsory execution, but guide the mechanism with the free market competition to be embodied on the basis of the information. Its essence is that n...
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