The Effects of North America Free Trade Agreement on Mexican Environmental Policy (1994-2004)

Abstract

The scope of this study was to analyze the implementation of the environmental policy and the way Mexico has integrated the environmental aspects into a North America Free Trade Agreement (NAFTA). We are aware of the fact that many environmental costs do not necessarily reflect the environmental damage. Environmental costs are often defined by determining either the willingness of the users to pay for the damages or for admittance of claims for damage. Since everyone has the right to a clean and thriving natural environment it is the policy maker who determines the basis of admittance of the most correct means to determine environmental costs in order to reduce the damages. Methodologically, we analyzed the existence and implementation of environmental policy. Instead of looking at the tradeoff between trade related incentives and environmental considerations, we analyzed how trade-offs changes under free trade effects the policy issues. When compared the countries environmental policy and the NAFTA stipulations we found that Mexico has a well-defined environmental policy but less integrated in the free trade agreement. The decision makers have increased the concessions of consumption of fixed capital as a means to increase gains from trade. This has lead to increased environmental damage, natural resource depletion and environmental costs.