Pollution Haven Hypothesis of Global CO2, SO2, NOx—Evidence from 43 Economies and 56 Sectors

Abstract

With the development of trade liberalization, the pollutants emissions embodied in global trade are increasing. The pollution haven hypothesis caused by trade has aroused wide attention. The fragmentation of international production has reshaped trade patterns. The proportion of intermediate product trade in global trade is increasing. However, little has been done to study the pollution haven of different pollutants under different trade patterns. In this paper, major environmental pollutants CO₂ (carbon dioxide), SO₂ (sulfur dioxide), and NO_x (nitrogen oxides) are selected as the research objects. This study investigated the global pollution haven phenomenon in 43 countries and 56 major industries from 2000 to 2014. Based on the MRIO model, the trade mode is divided into three specific patterns: final product trade, intermediate product trade in the last stage of production, and the trade related to the global value chain. The results show that trade liberalization could reduce global CO₂, SO₂, and NOx emissions, and intermediate product trade has a more significant emission reduction effect than final product trade. Trade’s impacts on each country are various, and the main drivers are also different. For example, the European Union avoids becoming a pollution haven mainly through the trade related to the global value chain. The suppressed emissions under this trade pattern are 71.8 Mt CO₂, 2.2 Mt SO₂, 2.2 Mt NO_x. India avoids most pollutants emissions through intermediate product trade. China has become the most serious pollution haven through final product trade. The trade pattern could increase China 829.4 Mt CO₂, 4.5 Mt SO₂, 2.6 Mt NO_x emissions in 2014.