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Unraveling the World-Wide Pollution Haven Effect

  • Jean-Marie Grether

    (University of Neuchâtel)

  • Nicole A. Mathys

    (University of Lausanne)

  • Jaime de Melo

    (University of Geneva and CEPR)

This paper contributes to the debate on the existence of pollution haven effects by systematically measuring the pollution content of trade (measured by the polluction content of imports (PCI)) and decomposing it into three components: a ‘deep’ (i.e. unrelated to the environmental debate) component and two components (factor endowments and environmental policies) that occupy centerstage 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 3 of the 10 pollutants in the data set indicate a significant pollution haven effect and highlight the role of factor endowments in each region’s PCI. However, because the bulk of trade is intra-regional with a high North-North share, these effects are small relative to the ‘deep’ determinants of the worldwide pollution content of trade.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2006.122.

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Date of creation: Oct 2006
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Handle: RePEc:fem:femwpa:2006.122
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