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Abstract
An input-output framework with environmental accounting module was used to investigate
the implications of liberalising agricultural trade on the environment in South Africa. The
results showed that trade liberalisation in the case of agricultural commodities will lead to
environmental improvement. The empirical multi-sector model results were consistent with
theoretical results obtained from comparative-statics partial-equilibrium trade models for the
case of goods the production of which is associated with environmental externality and their
domestic prices above world prices. The study suggested a general equilibrium approach,
allowing for more flexible structure of substitution in demand and supply, output composition
response, income effects and improved measures of environmental impact parameters for proper
assessment of welfare changes associated with environmental externalities.