Unravelling the Worldwide Pollution Haven Effect

This paper offers a fresh look at the pollution haven hypothesis (PHH) in the context of the waste management industry. Unlike previous research examining trade in waste products, the present study distinguishes between waste destined for final disposal and waste destined for recovery. Furthermore, it combines very disaggregated data with the highly flexible mixed logit model and a reliable measure of environmental policy stringency. Including all those elements in one analysis allowed for the uncovering of the dramatic differences in the reactions of waste generators to the environmental policy stringency of the destination country, depending on the treatment option their waste is slated for. Although there is no evidence confirming the PHH, a significant pollution haven effect has been found. This effect is apparent in the case of waste destined for final disposal. In contrast, facilities exporting waste for recovery are often attracted by the stringency of environmental policy.

Download Full-text

Unraveling the World-Wide Pollution Haven Effect

SSRN Electronic Journal ◽

10.2139/ssrn.936907 ◽

2006 ◽

Cited By ~ 35

Author(s):

Jean-Marie Grether ◽

Nicole A. Mathys ◽

Jaime de Melo

Keyword(s):

World Wide ◽

Pollution Haven ◽

The World ◽

Pollution Haven Effect

Download Full-text

Environmental Regulation and Foreign Direct Investment: Evidence from China’s Eleventh and Twelfth Five-Year Plans

Sustainability ◽

10.3390/su12062528 ◽

2020 ◽

Vol 12 (6) ◽

pp. 2528 ◽

Cited By ~ 3

Author(s):

Yuqing Ge ◽

Yucai Hu ◽

Shenggang Ren

Keyword(s):

Foreign Direct Investment ◽

Environmental Policy ◽

Environmental Regulation ◽

Direct Investment ◽

So2 Emissions ◽

Negative Effects ◽

Environmental Enforcement ◽

Fdi Inflows ◽

Pollution Haven ◽

Pollution Haven Effect

This paper investigates environmental regulation and its impact on inward foreign direct investment (FDI) in developing countries. Based on the Chinese province-industry-level panel data in the period 2001 to 2015, we use a difference-in-difference-in-differences (DDD) model to evaluate pollution haven behavior in the context of China’s 11th and 12th Five-Year Plans SO2 emissions reduction policy. The results show that the policy leads to fewer FDI inflows to its highly-polluting industries in provinces with tougher pollution reduction targets. In addition, the environmental policy has significantly inhibited FDI inflows in provinces with stricter environmental enforcement, while investment in provinces with worse environmental enforcement is insensitive to environmental policy. These findings are consistent with pollution haven behavior. In contrast, FDI in industries with high levels of technology is not significantly influenced by the policy, whereas the FDI in industries with low levels of technology shows a negative response to environmental policy. This is overall evidence confirming a pollution haven effect (PHE), although technology differences could alleviate the negative effects of environmental regulation on inward FDI.

Download Full-text