The new and more comprehensive agri-environmental programmes discussed in Chapter 4 raise questions about the possible negative effects on trade, including arable crop imports and exports. It is theoretically sound and permissible under current trade rules to pursue such agri-environmental policy interventions (Anderson, 1992; Ervin, 1999). Indeed, correcting for missing environmental markets (i.e. positive and negative externalities and public goods) or reducing government policy distortions improves social welfare. However, the choice of approach adopted for making the corrections and reducing the distortions is critical. Agri-environmental programmes, if not designed and implemented in cost-effective ways, may lead to losses in national and/or global welfare. Hence, an examination of their effects on production and trade, and of ways to improve their efficacy is warranted...