Throughout the book, we focus on two key channels through which trade can affect the environment. The first is through its effects on the level, or scale, of economic activity. If trade encourages economic activity, then the pure income-generating effects of trade may be harmful to the environment. The second channel is through a composition effect--a change in the mix of economic activity in countries, caused by trade. Many environmentalists are concerned that trade may lead to a shifting of polluting industry from rich to poor countries, and this global composition effect may also raise world pollution