Conditionally Accepted, Economic Inquiry
Abstract: I quantify how comparative advantage and the pollution haven effect (PHE) shape international waste flows and infer the associated externality costs by constructing a Ricardian model with generation, trade, and use as a production input of waste. Combining waste flow, tariff, and environmental regulation data with a meteorological pollution dispersion instrument, I estimate that a 1% increase in trade costs reduces various waste flows by 7–29.3%. Stricter environmental regulation in origin relative to the destination lowers trade costs for certain waste by 7-77.7%. Per-unit externality costs increase but gains from waste trade decrease with income, with PHE contributing substantially.
Abstract: The Basel Convention regulates waste trade between its members and imposes stringent restrictions on waste trade between members and non-members. The trade club feature is quantitatively important and serves as an important accelerator of the Convention's effect on global waste trade: Its impact in the mid-1990's, when approximately half the countries are members, is equivalent to at least 35% of the treaty's entire effect in that year, and at least one fourth of the treaty's entire effect when membership becomes nearly universal by the end of 2010's. Under some specifications, we cannot reject the possibility that the entire trade effect of Basel is driven by these exclusionary restrictions. We also find substantial heterogeneity in the effects on inter-regional trade, with the largest effects on OECD to Non-OECD trade and intra Non-OECD trade. Our findings have implications for the efficacy of trade clubs in facilitating the formation of international environmental agreements.
Abstract: We provide first causal evidence of the effect of foreign Technical Barriers to Trade (TBTs) on the local environment in a developed country. We combine data on TBT adoption by US' export destinations, bilateral US exports, and local industrial composition in a shift-share design to estimate the effect of exposure to foreign TBTs on regional pollution emissions in the US. We estimate that a 1 standard deviation (s.d.) increase in TBT treatment leads to 0.14, 0.05, and 0.13 s.d. increase in SO2, PM10, and VOC emissions growth, respectively. These effects are stronger when the foreign TBTs are unharmonized with US standards, mandate considerable production adjustments, and are subject to observable compliance. Unlike TBTs, exposure to foreign tariffs reduces local emissions growth by directly restricting trade flows. Our findings highlight the environmental consequences of non-traditional trade policy instruments for policymakers seeking to balance openness, standardization, and sustainability.
