FEEM working papers "Note di lavoro" series
2011 .075

Unravelling the Worldwide Pollution Haven Effect


Authors: Jean-Marie Grether, Nicole A. Mathys, Jaime de Melo
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Trade and The Environment, Pollution Haven Effect, Factor Endowment Effect
JEL n.: F18, Q56
JEL: Journal of International Trade and Economic Development
Pages: Vol. 21(1), pp.131-162

Abstract

This paper tackles the “pollution haven” argument by estimating the pollution content of imports (PCI). The PCI is then decomposed into three components: (i) a “deep” component (i.e. traditional variables unrelated to the environmental debate); (ii) a factor endowment component and (iii) a “pollution haven” component reflecting the impact of differences in environmental policies. The estimation is carried out for 1987 for an extensive data set covering 10 pollutants, 48 countries and 79 ISIC 4-digit sectors. Decompositions based on cross-section econometric estimates suggest a significant pollution haven effect which increases the PCI of the North because of stricter environmental regulations in the North. At the same time, the factor endowment effect lowers the PCI of the North, as the North is relatively well-endowed in capital and pollution-intensive activities are capital intensive. On a global scale, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the “deep” determinants of the worldwide PCI. In sum, differences in factor endowments and environmental policies have only marginally affected the PCI of world trade at the end of the eighties.

***

Suggested citation: Jean-Marie Grether, Nicole A. Mathys, Jaime de Melo, Unravelling the World-Wide Pollution Haven Effect, Journal of International Trade and Economic Development, Vol. 21(1), pp.131-162, 2012

Download file
Download PDF file

FEEM Update

Subscribe to stay connected.

Your personal data will be processed by Fondazione Eni Enrico Mattei. – data Controller – with the aim of emailing the FEEM newsletter. The use of Your email address is necessary for the implementation of the newsletter service. You are invited to read the Privacy Policy in order to obtain additional information about the protection of Your rights.

This Website uses technical cookies and cookie analytics, as well as “third party” profiling cookies.
If you close this banner or you decide to continue navigating on this Website, you express consent to the use of cookies. If you need additional information or you wish to express selective choices on the use of cookies, please refer to the   Cookie PolicyI agree