Recycling, International Trade and the Environment: An Empirical Analysis
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Lists What are lists? Login to add to list. Be the first to add this to a list. Comments and reviews What are comments? Add a comment. University of Technology Sydney. In order to control for this, we employ a Wooldridge test for serial correlation in panel-data models Wooldridge, , p. In sum, we test for heteroskedasticity and autocorrelation and can confirm the presence of both conditions in all of the specifications. Therefore, we use robust standard errors in both fixed and random effects estimation. The RE specification uses robust standard errors see, for example, Cameron and Trivedi, , p.
Estimations over the full sample could mask different effects between countries, since the estimated trade coefficient only shows the average change in the pollution level over all countries, and it is not possible to derive implications for the PHH or FEH. The PHH would predict that trade increases pollution for low income countries and decreases it for high income countries.
TRADE AND THE ENVIRONMENT
Hence, the trade coefficient should be positive for low income countries and negative for rich countries. In contrast, the opposite should be true for the FEH under the assumption that poor countries are capital scarce and rich countries are capital abundant, and that pollution-intensive goods are also capital intensive in their production. The World Bank country classification uses GNI per capita to classify every economy into four income groups low income, lower middle income, upper middle income and high income World Bank, We follow this approach, but we divide the sample into three different income groups low, middle and high income , merging the two middle income groups into one middle income group.
Studies as Abdulai and Ramcke only use two income groups, low and high income groups.
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In our opinion such a separation is questionable. Recall that in terms of the PHH we expect to find differences between poor and rich countries. Rich countries tend to have strict environmental regulations, and therefore export their dirty good production to low income countries with lax environmental policy. The division into low and high income countries means that middle income countries such as Mexico, Turkey, Brazil or Venezuela, which are often indicated as potential pollution havens in public debates, are incorporated into the high income group.
If these countries are in fact pollution havens, separate regressions over low and high income samples are likely to show no support for the PHH, as the potential effects for the pollution havens are probably offset by the rich developed countries in the high income group. For the PHH to be true we expect the trade coefficient to be negative for the high income group and positive for low and middle income groups particularly for the latter countries as they are often indicated to be pollution havens.
The sample includes 95 developed and developing countries and covers the period Data availability is the criterion used to select the countries; those with no data on specific variables or too many missing values are not considered. Our study uses the following variables: one dependent variable, environmental degradation; two direct measures of air pollution, CO 2 and SO 2 emissions; and one indirect measure of pollution, the energy consumption.
During the last century international trade has become indispensable for and environmental effects by carrying out case studies on waste paper imports in. Recycling, International Trade and the Environment: An Empirical Analysis. Book · January with 30 Reads. DOI: /
All of them are measured in per capita terms to control for pollution generated by population growth. SO 2 dissolves in water vapor to form acid, and interacts with other gases and particles in the air to form sulfates and other components that can be harmful to people and their environment. SO 2 contributes to the formation of acid rain and is linked with increased respiratory symptoms and disease, difficulty in breathing and premature death EPA, Sulfur dioxide data was obtained from Stern and are measured in kg per capita.
Carbon dioxide, or CO 2 , emissions are those stemming from the burning of fossil fuels and the manufacture of cement.
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They incorporate carbon dioxide produced during consumption of solid, liquid as well gas fuels, and gas flaring. Carbon dioxide is one of the major greenhouse gases and CO 2 emissions play a central role in the global climate change debate. Note that CO 2 is purely a global externality, whereas SO 2 is a local air pollutant. Data on energy consumption was also taken from WDI and is measured in kg of oil equivalent per capita. It is an indirect source of pollution, in particular air pollution. The consumption of energy and especially the burning of fossil fuels are the major causes of most air pollutants.
Therefore it is a useful approach to examine the effect of trade on energy consumption Cole, WDI additionally provided data on income, trade and population. The income measure is given by gross domestic product GDP per capita in purchasing power parity PPP terms in constant international dollars. Total population was used to calculate emissions per capita. All the variables are in natural logarithms in order to make the variables less sensitive to outliers.
1. Introduction
The results for the full sample are presented in Table 6. We estimate equation 1 for SO 2 emissions by applying a FE regression with Driscoll-Kraay standard errors and a RE regression with robust standard errors due to the presence of heteroskedasticity and autocorrelation. Following the result of the Hausman test, we cannot reject the null hypothesis that the RE estimates are consistent.
The coefficients are only slightly different in magnitude in both specifications. The income terms show the expected EKC relationship. In the RE model, both terms are highly significant. This would imply that further liberalized trade would cause an increase in per capita SO 2 emissions on average.
As mentioned, no implications for the PHH are possible. A regression over the full sample requires the effect of TRADE to be uniform across all countries, but the signs and magnitudes of the overall effects may mask important differences between countries. If one wants to test the pollution haven hypothesis, one approach to do so is to divide the sample into income groups. The estimates change in the income group regressions see Table 7.
The Hausman test indicates that RE is consistent. This is not the case for low income countries. There the signs are reversed. Surprisingly, the coefficients on trade are not as expected.
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Only for high income countries do we find a positive relationship between trade and SO 2 emissions per capita, which is contrary to our expectations. This indicates that further trade liberalization increases SO 2 emissions for rich countries. However, no clear implications are possible as the results for middle and low income countries are insignificant. The results for CO 2 , which are presented in Table 8 , are similar to those of SO 2 for the whole sample.
Again, we estimate equation 1 for CO 2 emissions by applying a FE regression with Driscoll-Kraay standard errors and a RE regression with robust standard errors.
Empirical Evidence on Recycling and Trade of Paper and Lead in Developed and Developing Countries
The FE estimates are preferred due to the result of the Hausman test. The estimates of FE and RE specifications are nevertheless similar. TRADE is again positive and highly statistically significant, although small in magnitude, indicating that increased TRADE causes rising emissions on average ceteris paribus.
Estimation results for the full sample. Standard errors in parentheses. All the variables are in natural logarithms. Concerning income groups, for low and high income countries the Hausman test indicates that RE are consistent. Again, we find a statistically significant EKC relationship for middle and high income countries, but not for low income countries.
For poor countries the GDP term is negative and insignificant, and its square term is positive and significant.
Towards the Circular Economy. China is a major importing country of scraps and is also widely recognized as a country that severely pollutes the environment by recycling scraps Basel Action Network and Silicon Valley Toxics Coalition, Schnellmann, and H. Self-sufficiency for raw materials — [4] 0 Indirect CE 2. However, there is a rising concerns of some authors about the 'commoditization' of the ecosystem services in a market, which can lead to over-exploitation and evictions of the traditional ecosystem users to make the services available to those who can afford paying for the ecological services Lohmann
On the other hand, we do find statistically significant evidence for pollution haven consistent behavior. For low and middle income countries further trade liberalization will increase CO 2 emissions per capita, while it will decrease for high income countries. Following the predictions of the PHH this is exactly as expected. Estimation results for SO2 income groups.