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Pollution and International Trade in Services

Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data - presumably those services that are traded internationally - are less polluting than services for which trade data do not exist - presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.

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Paper provided by Georgetown University, Department of Economics in its series Working Papers with number gueconwpa~09-09-04.

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Date of creation: 09 Jul 2009
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Handle: RePEc:geo:guwopa:gueconwpa~09-09-04
Contact details of provider: Postal: Georgetown University Department of Economics Washington, DC 20057-1036
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Web page: http://econ.georgetown.edu/
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Order Information: Postal: Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036
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  1. Arik Levinson, 2007. "Technology, International Trade, and Pollution from U.S. Manufacturing," Working Papers gueconwpa~07-07-05, Georgetown University, Department of Economics.
  2. Josh Ederington, 2005. "Trade Liberalization And Pollution Havens," Working Papers id:51, eSocialSciences.
  3. Gamper-Rabindran, Shanti, 2006. "NAFTA and the Environment: What Can the Data Tell Us?," Economic Development and Cultural Change, University of Chicago Press, vol. 54(3), pages 605-33, April.
  4. Kahn, Matthew E., 2003. "The geography of US pollution intensive trade: evidence from 1958 to 1994," Regional Science and Urban Economics, Elsevier, vol. 33(4), pages 383-400, July.
  5. Hettige, Hemamala & Martin, Paul & Singh, Manjula & Wheeler,David R., 1995. "The industrial pollution projection system," Policy Research Working Paper Series 1431, The World Bank.
  6. Runge, C. Ford, 1993. "Trade, Pollution And Environmental Protection," Staff Papers 14025, University of Minnesota, Department of Applied Economics.
  7. Cole, Matthew A., 2004. "US environmental load displacement: examining consumption, regulations and the role of NAFTA," Ecological Economics, Elsevier, vol. 48(4), pages 439-450, April.
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