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North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling

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  • Verhoogen, Eric
  • Tanaka, Shinsuke
  • Teshima, Kensuke

Abstract

This study examines the effect of a tightening of the U.S. air-quality standard for lead in 2009 on the relocation of battery recycling to Mexico and on infant health in Mexico. In the U.S., airborne lead dropped sharply near affected plants, most of which were battery-recycling plants. Exports of used batteries to Mexico rose markedly. In Mexico, production increased at battery-recycling plants, relative to comparable industries, and birth outcomes deteriorated within two miles of those plants, relative to areas slightly farther away. The case provides a salient example of a pollution-haven effect between a developed and a developing country.

Suggested Citation

  • Verhoogen, Eric & Tanaka, Shinsuke & Teshima, Kensuke, 2021. "North-South Displacement Effects of Environmental Regulation: The Case of Battery Recycling," CEPR Discussion Papers 16463, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:16463
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    2. Lugovskyy, Volodymyr & Skiba, Alexandre & Terner, David, 2025. "Unintended consequences of environmental regulation of maritime shipping: Carbon leakage to air shipping," Journal of International Economics, Elsevier, vol. 155(C).
    3. Jevan M. Cherniwchan & M. Scott Taylor, 2022. "International Trade and the Environment: Three Remaining Empirical Challenges," NBER Working Papers 30020, National Bureau of Economic Research, Inc.
    4. Unfried, Kerstin & Wang, Feicheng, 2024. "Importing air pollution? Evidence from China’s plastic waste imports," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    5. Choi, Jaerim & Hyun, Jay & Kim, Gueyon & Park, Ziho, 2025. "The cleanup of US manufacturing through pollution offshoring," Journal of International Economics, Elsevier, vol. 154(C).
    6. Cheng, Haitao, 2024. "Domestic versus international emissions trading with capital mobility," Resource and Energy Economics, Elsevier, vol. 77(C).
    7. Dhingra, Swati & Kondirolli, Fjolla & Machin, Stephen, 2025. "Citizen Training and the Urban Waste Footprint," IZA Discussion Papers 18124, Institute of Labor Economics (IZA).
    8. Higney, Anthony & Hanley, Nick & Moro, Mirko, 2022. "The lead-crime hypothesis: A meta-analysis," Regional Science and Urban Economics, Elsevier, vol. 97(C).
    9. Iida, Takeshi & Mukherjee, Arijit, 2025. "Environmental taxes, offshoring and welfare: The effects of environmental damage and pollution intensity," Journal of Environmental Economics and Management, Elsevier, vol. 130(C).
    10. Don Fullerton, 2024. "The Circular Economy," NBER Working Papers 32419, National Bureau of Economic Research, Inc.
    11. Naumann, Fabrice & Bolz, Simon Johannes & Richter, Philipp Moritz, 2022. "Offshoring and Environmental Policy: Firm Selection and Distributional Effects," VfS Annual Conference 2022 (Basel): Big Data in Economics 264086, Verein für Socialpolitik / German Economic Association.
    12. Haas, Levi & Schenk-Hoppé, Klaus R., 2019. "International Trade: Smarten up to talk the talk," MPRA Paper 99096, University Library of Munich, Germany.
    13. Marco Compagnoni & Marco Grazzi & Fabio Pieri & Chiara Tomasi, 2025. "Extended Producer Responsibility and Trade Flows in Waste: The Case of Batteries," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(1), pages 43-76, January.
    14. Fourné, Marius, 2025. "Cross-border transmission of climate policies through global production networks," IWH Discussion Papers 19/2025, Halle Institute for Economic Research (IWH).
    15. Konstantin Sommer, 2024. "The Chinese waste import ban and the emergence of waste havens within Europe," Tinbergen Institute Discussion Papers 24-053/VI, Tinbergen Institute.
    16. Juan Huang & Ziyi Wu, 2022. "Impact of Environmental Regulations on Export Trade—Empirical Analysis Based on Zhejiang Province," IJERPH, MDPI, vol. 19(19), pages 1-14, October.
    17. André, F.J. & Ranocchia, C. & Rubio, S.J., 2025. "Porter Hypothesis vs. Pollution Haven Hypothesis: Can an environmental policy generate a win–win solution?," Energy Economics, Elsevier, vol. 146(C).
    18. Tanaka, Shinsuke, 2024. "Blowin’ in the wind: Long-term downwind exposure to air pollution from power plants and adult mortality," Journal of Environmental Economics and Management, Elsevier, vol. 128(C).
    19. Qian Zhao & Chi-Wei Su, 2023. "The Nexus Between Air Pollution and Outward Foreign Direct Investment," SAGE Open, , vol. 13(1), pages 21582440221, January.

    More about this item

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • 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
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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