Understanding Undervaluation: A Law and Psychology Analysis of the WTO Environmental Goods Agreement

Abstract

Recent research in environmental law and psychology has revealed a pernicious problem: psychological phenomena often lead people to underperceive and undervalue environmental harms. These insights have yet to be applied to the transnational realm. This article employs a psychological approach to explore the evaluation of environmental concerns in the context of the World Trade Organization’s Environmental Goods Agreement (“EGA”). Although the EGA purports to be a “win-win” agreement that simultaneously promotes economic development and environmental protection, it has failed to reach meaningful agreement. The present research argues that a psychological perspective on environmental law may supplementally explain the failure in EGA negotiation by demonstrating how states inadvertently undervalue the transboundary environmental impacts of environmental goods. This insight also fills the void left by rational choice theory in regard to the valuation process.