All human and economic activities have an impact on the environment. Trade is no different.

The production, movement, and consumption of goods and services—within and across borders—is the foundation of modern society. This process brings us the energy that powers our homes and gets us to work each day. It delivers the food we need, the appliances we have come to depend on, and the medical supplies that help make us safer. Yet each stage of the process entails a fresh contribution to greenhouse gas emissions: trade undeniably exacerbates climate change. It is equally true that trade is disrupted by climate change. Extreme weather events often devastate transport and logistics infrastructure. These events erode capital stock, debilitate export capac-ity, damage agriculture, and disrupt food security—all with adverse consequences for long-term development outcomes. 

Trade, in short, is a critical node to mobilize if the world is to achieve green, resilient, and inclusive development in the coming years. As this report demonstrates, it is a central element of the solution to climate change—because it has the potential to enhance mitiga-tion as well as adaptation efforts. First, trade can help shift production to areas with cleaner production techniques: as the world makes the transition to a low-carbon econ-omy, export comparative advantages will change, compelling countries to adapt and seize new opportunities. Second, trade promotes the spread of critical environmental goods and services that can help reduce emissions and improve environmental management—today, global trade in environmental goods is estimated at more than US$1 trillion annu-ally and is rising. Third, imports are critical to immediate recovery from a natural disaster, when essential items such as food and medicines are in short supply. In a world increas-ingly shaped by climate change, trade will be a crucial mechanism to address food inse-curity, support adaptation, and enable recovery from natural disasters.

In the last decade, some developing countries have emerged as fast-growing emit-ters of greenhouse gases. The poorest countries, however, remain the smallest con-tributors to emissions. Yet they often suffer the most from climate change. Natural disasters disproportionately affect the most vulnerable people and the smallest firms. All developing countries therefore have an important stake in adapting to climate change—especially in agriculture, which is central to food security, employment, and trade and is also the most sensitive to climate change. Tourism, the mainstay of the economy of many small island developing states, is also particularly sensitive to climate change. Diversifying away from sectors that are the most vulnerable to climate shocks will allow these economies to become more resilient over the long term.