Environmental impacts and mitigation costs associated with cloth and leather exports from Pakistan

We have drawn two propositions, critical from a developing country viewpoin t, from the trade and environment literature and assessed them for cloth an d leather production in Pakistan. The first is that trade liberalization wi ll result in export by developing countries of their environmental capital. The second is that the costs of mitigating these damaging environmental ef fects in the South are very high. We find that, given the state of implemen tation of environmental laws in Pakistan, exports induced by trade liberali zation can indeed have major negative environmental impacts. However, we do not find support for the proposition that the costs of mitigation are very high. We also find that the social benefits far exceed the costs of mitiga tion.