Trade barriers may improve welfare if property rights with respect to renewable natural resources are lacking. Previous studies focus on the role of overharvesting, but we argue that trade-induced habitat destruction should also be taken into account. Habitat is one of the key factors determining the long-run viability of many natural resources, and economic activity oftentimes goes at the expense of habitat. While open access gives rise to within-industry externalities, habitat destruction creates across-industry externalities. We identify under what circumstances trade liberalization is welfare-enhancing as well as contributing to nature conservation, and analyze the consequences of trade policy. © 2004 Elsevier Inc. All rights reserved.