Waste haven effect: unwrapping the impact of environmental regulation

A new branch of the literature on international trade and environment suggests that developing countries are becoming waste havens for their developed counterparts, due to environmental regulation differences with trade partners. This paper analyses the effectiveness of the Basel Convention formalisation in the European Union (EU-WSR), by studying the impact of the EU-WSR on hazardous waste trade, first on the less developed EU countries, and then on regions of developing countries. It does so, by means of a gravity model framework applied to a panel data-set. Results show that there is no enough evidence to call for waste haven effect in the less developed EU countries, with both aggregated and disaggregated measures of environmental regulations, but increasing institution efficiency differences could lead to increasing imports of waste. In the regional analysis, there is no evidence of the efficacy of the EU-WSR. These findings provide insights into the efficacy of European engagements on waste trade, indicating that there is no simple answer as to its effect.