A basic part of research often taken for granted is the simple definition of a term. There is a global understanding of what is measured by GDP, for example. However, there are many terms for which there is no internationally accepted definition -- "environmental goods and services" is one of these because environmental impacts are highly context-specific. This poses difficulty and adds contextual nuance when undertaking a study such as ours on the linkages between trade and the environment.
The distinction between production and/or consumption poses particular difficulties with such research projects. For example, a bicycle manufacturer may spew noxious gases and deplete non-renewable minerals in the production process. However, the use of bicycles may reduce fossil fuel use by end-users as they bike rather than drive to work. These are just a few of the complexities that organizations like the WTO, the World Bank, the OECD, and others are trying to resolve so that trade statistics can inform more sustainable trade policies.
Another major hurdle for the integration of environmental concerns into trade policy is the accounting of the environmental impact embodied in trade in the modern global economy. One of the best-known examples on the world stage is the carbon content of trade: how much carbon dioxide is emitted in the manufacturing of a product that is consumed abroad? And is it fair only to include that in the accounting of the country in which it was manufactured? Several research institutions are working to develop comprehensive input-output tables that account for environmental impacts and resource use; however, none are yet sufficiently adequate accounting tools.
While there is neither a clear definition of environmental goods and services nor a sufficient accounting tool for environmental trade impacts, empirical analysis, such as that in our "Exploring Trade and the Environment" report, offers some insight into the complexities of the relationship between trade and the environment.