Pollution havens and the trade in toxic chemicals: Evidence from US trade flows
John P Tang
ECOLOGICAL ECONOMICS | ELSEVIER SCIENCE BV | Published : 2015
National registries of toxic chemical emissions and facilities are increasingly used to raise public awareness of potential health hazards in local areas, but an unintended consequence may be the offshoring of production to less regulated countries. Using disaggregated U.S. trade data, this study examines the impact of registry listing on subsequent bilateral trade flows. Estimates from a difference-in-differences model indicate a significant shift toward imports from poorer countries following registry listing. Assuming that environmental protection is a normal good, this result suggests the emergence of pollution havens due to more stringent U.S. environmental regulation.
The author would like to thank Randy Becker, Ann Carlos, Barry Eichengreen, James Fenske, Joan Hamory, Daniel Hicks, Ian Keay, James Markusen, Gary Richardson, and two anonymous referees for helpful suggestions. The author would also like to thank Robert Feenstra for providing data access and assistance, as well as to the U.S. Census Bureau Center for Economic Studies for the support in the earlier versions of this paper.