Global environmental problems, such as climate change and deforestation, are often referred to as "global public bads." In this paper, we investigate an international transfer of factor of production how international transfers of production factors either create or reduce public bads. We also study how welfare levels are affected when each government in the transfers adopts a non-cooperative policy to improve environmental quality. There are various ways to mitigate the negative externalities arising from public bads. Our study considers two types of policy instruments: environmental conservation and pollution abatement. In the former, the government restricts the use of resources employed during production. In the latter, the government produces the goods and services necessary to mitigate the negative effects induced by public bads. We show that the effects of transfers on welfare levels and on the amount of global public bads depend on the environmental policy that the government adopts. The second neutrality theorem by Shibata (2003) is particularly valid under the environmental conservation policy, while the possibility of the transfer paradox is not excluded under the pollution abatement policy
