Environmental economics as a discipline is of great importance and helps to address problems facing the environment through possible means. However, trade, investments and the environment make a fundamental linkage. Much environmental damage is due to the increased scale of global economic activities that are forever taking place. This is because the environment acts as a basis for the provision of resources that contribute greatly in the economic sector as a whole. Therefore, this essay attempts to discuss the assertion that links between trade, investment and the environment are multiple, complex and important. The essay will commence by defining key concepts namely trade, investment and environment.

According to Beghin (2000) Trade is defined as the involvement of a commercial transaction in the transmission of the ownership of goods or services from an entity or to a person to another in exchange for other goods or services.  Trade is so vital to the success of civilization. The term environment refers to the sum total of water, air, and land interrelationships among themselves and also with the human being, other living organisms and property. Mutoka (1998) also defines the environment as a set of interlocking systems natural or biophysical and man-made or social within which all living things interact.  According to Jansson et al (1994) defines investment as the means of production of capital goods which are not consumed but instead used in the future production.

Trade, investment and the environment play a significant role at local, national, regional and global levels hence, influencing different economic activities that are forever taking place. At most basic level, the environment and trade are linked, because all the economic activities are based on the environment. Therefore, most of the economic activities that are and have been taking place since time in memorial pose a threat to the wellbeing of human welfare and are so negatively damaging the environment hence, leading to the birth of environmental economics as a discipline (UNEP, 2000).

Additionally, the links between trade, investment and the environment are multiple, complex and important in the sense that, for any economic activity to take place, the factors named above should play a crucial role. This is to mean that they are highly dependent on each other. However, for the named concepts to make the best link ever, there has to be the existence of markets where the exchange of goods and services (commodities) is done so as to raise capital making trade a possibility and investment be made as the end result in any kind of transaction and at all appropriate levels. Moreover, people may have goods obtained from the environment such as timber, metals and minerals, fruits and honey only to mention a few. In the absence of markets in this case, trade maybe so challenging for the people involved in it because not all will have an idea to locate where the market place is (Niemeyer, 2001)

Furthermore, trade generates the capital that could be used to escalate human well-being. However, wealth generated by trade can be used for enhancement of the environment as a whole, since the efficiency gains obtained from trade can mean that if the amount of resources used is minimal then the amount of waste generated is also minimal. Therefore trade can enhance access to efficient and environmentally friendly technologies while in the same sense investment that involves the purchase of an asset obtained from the environment to cite an example timber, with hopes that there will be generation of income in the fore coming future occurs. This is because in a sense of economics, investment refers to the buying of commodities that do not undergo consumption on the present day but are utilities in the future to generate capital     (Emerson et al, 2010).

However, the environment, trade and investments are essentially interconnected. The environment being a major player supports greatly in the provision of a wide range of basic contributions of economic activity that include metals, forests, fisheries, and also the energy that is to process those resources. Therefore, trade and investment on the other side of the coin receive effects by concerns of the environment as producers and investors must act in accordance with environmental regulations and markets must address the demands of the consumer for greener goods. Moreover, the environment experiences a phenomenon environmental degradation as an effect resulting from trading activities that are at the same time influencing the destruction of the natural environment (Anderson, 1992).

Additionally, as the part of international investment and trade develops to be more significant, the examination of the investment, trade and the environment also becomes even more interconnected. Investment and trade relate with each other and influence the environment in similar ways, all this occurs because of their existing features. The connections are multi-dimensional and very complex. Therefore, trade can have helpful influence on the environment, but at the same time trade can result to the degradation of the environment. Nevertheless, the difference therefore depends on how good established the governance rules are around trade. With escalating globalization, investment and trade will frequently extend over and interact as cause and effect. Trade-oriented investments are strictly linked to the resources obtained from the environment that are aimed at and market plans of a host country. While investment in a coal-mining operation to cite an example can be combined with the maximum regard for social and environmental conditions, the actual commodity, when traded will transfer pollution (CCICED, 2011).

The examination of the link between investment, trade and environment is just commencing though it is easy to draw out an understanding that international Investment and trade are linked at the multiple phases in the industrial and consumption value chains. Moreover, to cite examples they relate with resource supply, production efficiency, emissions levels, market share, consumptions options and related emissions levels. They are critical to the energy security and to improvement and are therefore very effective in describing their position and importance. In addition, the influence of international investment and international trade on the environment and society as a whole can be quite related. According to David and Collier (2001), the large –scale international trade has encouraged the transnational transfer of industries thereby making a new context for international investment. This on the other side of the coin, opens up a country’s overseas resources and market capacity supports local economic development.

Both economists and environmentalists play a key role in the discipline of environmental economics. However, the named two groups have different viewpoints on both the economy and the environment. To start with, the economist view that trade is so very important. This is because it contributes greatly in the process of wealth generation that can be used to attend to the needs of human beings and therefore improve their welfare in turn. On the other hand, environmentalist are of a different view, both the economic and social systems of present date pose a threat to the interaction that take place to the living organisms with each other and with their abiotic components. Besides, further trading activities mean that even more economic activities will occur. This means that the environment will be used as a basis for materials that make trading activities possible and the end result in most circumstances is environmental degradation. The environmentalists continue to pass their argument that the generated wealth may not necessarily result in improving the environment (Jonathan, 2004).

According to Eddy (2005: 1) loosely defined trade liberalisation as “a move towards freer trade through the reduction of tariffs and other barriers, is generally perceived as the major driving force behind globalization”. Therefore, the promptly growing flows of goods and services through national borders have been the best evident feature of the developing integration of the global economy in recent decades. On the other hand, critics of trade liberalisation have extended a blame on it for a host of ills, such as increasing the levels of wage inequality and unemployment in the progressive countries like the United States of America (USA). Strong supporters of trade liberalisation have prolonged this to the proposition that the earlier and more extensively trade is liberalised the greater the benefits will be (McCulloch et al, 2001)

Furthermore, as trade liberalisation involves the removing of barriers to trade between different countries and encouraging free trade. Trade liberalisation also includes reducing or eliminating quotas. One advantage of trade liberalisation is that, the getting rid of tariff barriers can result to lesser prices for people who buy goods and services for personal use. Therefore, trade liberalisation has also resulted in the globalization of both developed countries like USA and developing countries like Zambia. As a result, this would be particularly an advantage for the countries that do the importing of goods from other countries such as food (tinned fish and beef). On the other hand, trade liberalisation may have an effect on the economies that are in the process of growing who cannot enter the competition field against free trade. Because of a set of reasons given, some argue that trade liberalisation frequently profits developed nations than developing nations (Shafaeddin, 2005).

There has been some controversies surrounding trade and most debates have been passed. Controversy in simple terms is a prolonged public disagreement or heated debate. Economists and environmentalists both have debated on the controversies surrounding trade. Bearing in mind that no economic activity can take place in the absence of the environment is so essential. Therefore, economists with their own perspective pass a strong argument that the policies and rules that undergo implementation actually erode the base of trade (Grossman and Kruger, 1995).

On the other hand environmentalists as a group with a different perspective also stand on firm grounds by passing their strong argument adding that, it’s actually trade that erodes the base of the environment which acts as a source for the resources involved in the trading activities. The explained arguments above branch their origin from the statement that both the environment and the economy have been finding it a challenge to possess equilibrium at any specified time hence on no occasion can it be at perfect balance. However, it is due to the point that the economy places its reliance on the environment for resources that are used in the trading activities hence investment taking its role as well. As the economic activities occur on the other hand, they result in the generation of waste which the environment must use up (Wright, 2002).

In conclusion, the link between trade, investment and the environment play a key role in the economic sector. Nevertheless, these named concepts above strongly influence the development of the economy in different countries across the whole globe due to the kind of commodities they possess. Therefore, both economists and environmentalists are very vital parties in the discipline of environmental economics. Much emphasis however, should be put on observing the planetary boundaries such that the economic activities should not result to environmental degradation. This is to mean that, if the environment is degraded, useful resources that play a crucial role may undergo extinction or depletion bearing that some are very finite. Moreover, trade liberalisation can offer substantial economic paybacks.

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