Our world has seen fundamental and pervasive change in the last 50 years. National economies are increasingly integrated in a global economic structure where all the elements needed to produce a final good or service—production of inputs, design, assembly, management, marketing, savings for investment—may be sourced from around the globe in a system held together by powerful communications and information technologies. The trend toward globalization has been driven in part by these new technologies, and in part by reduced barriers to international trade and investment flows. The result has been a steady increase in the importance of international trade in the global economy: in the last 50 years, while the global economy quintupled, world trade grew by a factor of 14.

Another important trend is increasing inequity; the benefits of growth have been unevenly spread. Although average global income now exceeds $5,000 US per person a year, 1.3 billion people still survive on incomes of less than a dollar a day. The world's three richest people have a combined wealth greater than the GDPs of the 48 least developed countries. And the growing inequality between and within nations shows no signs of abating.

In the last 50 years, the world has also seen enormous environmental change. Global carbon dioxide emissions have quadrupled, and the steady increase in nitrogen releases from cars and fertilizers is creating deserts of lifelessness in our oceans and lakes. One-quarter of the world's fish stocks are depleted, and another 44 per cent are being fished at their biological limits. In 30 years, if current trends continue, two-thirds of the world will live with "water stress"—having less than 1,000 litres of water per person a year. Daily, 25,000 people die because of diseases caused by poor water management. A quarter of the world's mammal species are at significant risk of extinction. Such environmental damage has been driven at least in part by our increasing numbers—population has increased about 2 ½ times since 1950, to over 6 billion in 1999.

The institutions for addressing such problems have also evolved. In the last 15 years alone 11 major multilateral environmental agreements have entered into force, dealing with such issues as ozone depletion, transport of hazardous waste, and migratory species. At the regional or bilateral level roughly a thousand more have entered into force, constituting an enormous and complex body of environmental law. At the national level, regulators have moved from blanket "command and control" solutions to a mixed bag of tools that includes market-based incentives such as pollution charges and taxes. For select problems the result has been marked by environmental improvement, but for many more the discouraging trends continue.

1.2 Environment and trade linkages