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Consumer waste, backhauling, and pollution havens

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Abstract

Pollution havens have received a great deal of attention in the past 15 years. However, the literature has focused almost exclusively on production side externalities and whether dirty industry migrates to countries with lax environmental laws. More recently, concerns have been raised about the rapid explosion of consumption side pollution such as e-waste and its trade in international markets. Between 1996 and 2007, US exports of waste plastics and ferrous waste along the USA-Asia trade route increased by 917% and 482%, respectively. Over the same time period the average freight rate on commercial liners along the USAAsia trade route fell by 46%, while average freight rates along the Asia-USA trade route increased by 2.9%. This paper develops a two country trade model with endogenous asymmetric transport costs as well as externalities associated with harmful waste generated from consumption. It shows that even when both governments set optimal Pigouvian taxes on the consumption of the dirty good, endogenous asymmetric transport costs can lower the backhaul rate from North to South. This creates an environmental arbitrage condition by which it is cheaper for the North to export its waste to the South rather than dispose of it at home. The model yields a number of clear predictions regarding the relationship between country characteristics, the international terms of trade, the backhaul shipping rate, and the Norths export supply function of waste.

Suggested Citation

  • Derek Kellenberg, 2010. "Consumer waste, backhauling, and pollution havens," Journal of Applied Economics, Universidad del CEMA, vol. 13, pages 283-304, November.
  • Handle: RePEc:cem:jaecon:v:13:y:2010:n:2:p:283-304
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    Cited by:

    1. Prudence Dato, 2015. "Economic analysis of e-waste market under imperfect information," Working Papers halshs-01172148, HAL.
    2. repec:spr:ieaple:v:17:y:2017:i:6:d:10.1007_s10784-017-9350-4 is not listed on IDEAS
    3. Keisaku Higashida, 2012. "Trade in Secondhand Goods, Monitoring of Illegal Trade, and Import Quotas on Legal Trade," Discussion Paper Series 90, School of Economics, Kwansei Gakuin University, revised Jun 2012.

    More about this item

    Keywords

    pollution havens; trade; environment; asymmetric trade costs; e-waste; backhauling;

    JEL classification:

    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • F18 - International Economics - - Trade - - - Trade and Environment

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