ABSTRACT
Despite the limitations of eco-labelling programmes, they appear to be increasing in popularity. As suggested above, this may be due to the political expedience of eco-labelling policies. In particular, when an environmental problem is international in scope, the usual policy tools for internalising external costs don’t exist. A country is limited to imposing trade measures aimed at minimising environmental damage, or to international cooperation, through multilateral environmental agreements. The first avenue is likely to violate WTO rules and the second is likely to be very costly with a highly uncertain outcome. Thus the introduction of eco-labelling regimes that apply to internationally traded goods, may simply be a policy of last resort, that avoids WTO conflict and makes some concessions to the environmental lobby.
