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Unraveling the worldwide pollution haven effect

Jean-Marie Grether, Nicole Mathys and Jaime de Melo ()

No 4047, Policy Research Working Paper Series from The World Bank

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 (search for similar items in EconPapers)
Date: 2006-11-01
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Related works:
Chapter: Unravelling the Worldwide Pollution Haven Effect (2015) Downloads
Journal Article: Unravelling the worldwide pollution haven effect (2012) Downloads
Working Paper: Unravelling the Worldwide Pollution Haven Effect (2012) Downloads
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Working Paper: Unraveling the World-Wide Pollution Haven Effect (2006) Downloads
Working Paper: Unraveling the World-Wide Pollution Haven Effect (2006) Downloads
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