Unraveling the Worldwide Pollution Haven Effect

24 Pages Posted: 20 Apr 2016

See all articles by Jean-Marie Grether

Jean-Marie Grether

University of Neuchatel - Institute for Economic and Regional Research (IRER)

Nicole A. Mathys

University of Neuchatel - Faculty of Economics and Social Sciences; Federal Office for Spatial Development

Jaime de Melo

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR); World Bank

Date Written: November 1, 2006

Abstract

This paper contributes to the debate on the existence of pollution haven effects by systematically measuring the pollution content of trade (measured by the pollution content of imports, PCI) and decomposing it into three components - a deep component (unrelated to the environmental debate but including variables traditionally present in the gravity model) and two components (factor endowments and environmental policies) that occupy center stage in the debate on trade and the environment. The decomposition is carried out for 1986-88 for an extensive data set covering 10 pollutants, 48 countries, and 79 ISIC 4-digit sectors. Illustrative decompositions presented for three of the 10 pollutants in the data set indicate 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 decreases the PCI of the North as the North is relatively well-endowed in capital and pollution-intensive activities are also capital-intensive. On a global scale, because the bulk of trade is intraregional with a high North-North share, these effects are small relative to the deep determinants of the worldwide pollution content of trade. In sum, although the impact has been stronger on vertical (North-South) trade flows, differences in factor endowments and environmental policies have only marginally affected the pollution content of world trade during the 1986-88 period.

Keywords: Environmental Economics & Policies, Water and Industry, Brown Issues and Health, Transport Economics Policy & Planning, Water Resources Assessment

Suggested Citation

Grether, Jean-Marie and Mathys, Nicole Andréa and de Melo, Jaime, Unraveling the Worldwide Pollution Haven Effect (November 1, 2006). World Bank Policy Research Working Paper No. 4047. Available at SSRN: https://ssrn.com/abstract=940513

Jean-Marie Grether (Contact Author)

University of Neuchatel - Institute for Economic and Regional Research (IRER) ( email )

Pierre-a-Mazel 7
Neuchatel, CH-2000
Switzerland
+41 32 718 13 56 (Phone)
+41 32 718 14 01 (Fax)

Nicole Andréa Mathys

University of Neuchatel - Faculty of Economics and Social Sciences ( email )

Neuchatel, 2000
Switzerland

Federal Office for Spatial Development ( email )

Jaime De Melo

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 705 8273 (Phone)
+41 22 705 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/demelo/Jaime.html

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
116
Abstract Views
1,262
rank
244,201
PlumX Metrics