Environmental Engineering Reference
In-Depth Information
have increased their production from heavy industry to meet the import
demand of developed countries. Heavy industry tends to require a high input
of labour, natural resources and energy and is, therefore, costly. Reduced
resource costs are often cited as one of the reasons why there is a shift in heavy
industry from developed to developing countries (Mani & Wheeler
1998
).
Another possible explanation is the 'Pollution Haven Hypothesis', which states
that differences in the stringency of environmental regulation between
developed and developing countries will provide the latter with a comparative
advantage in pollution-intensive production and hence the relocation of heavy
industry, and consequent transfer of pollution, from developed to developing
countries (Cole
2004
). For these and other reasons, a hump-backed relationship
between national wealth (per capita income) and environmental degradation,
known as the environmental Kuznets curve, has been proposed (Grossman &
Krueger
1995
). It has been hypothesised that, initially, there is a positive
relationship between economic development and environmental degrad-
ation/pollution, but that as development progresses a point is reached beyond
which environmental degradation reduces with increasing wealth generation.
The Pollution Haven Hypothesis and the environmental Kuznets curve have
received a considerable amount of attention recently, although the evidence
for both is equivocal. Cave and Blomquist (
2008
), for example, investigated
whether environmental policy in the European Union was resulting in pollu-
tion havens. They found evidence to support the Pollution Haven Hypothesis
for energy-intensive trade but not for toxic-intensive trade, although the toxic
index used focused on carcinogens rather than environmental pollutants in
general. Cole (
2004
) investigated the relationship between trade in 'dirty goods'
(i.e., those from pollution-intensive industries) between developed and develop-
ing countries on air and water quality. There was evidence of a relationship
between per capita income and most environmental quality indicators that
was consistent with the environmental Kuznets curve. Further analysis indi-
cated that there was a positive relationship between the share of 'dirty' exports
and environmental quality indicators, but this was less strong when imports
were considered. Cole (
2004
) concluded that the 'share of manufacturing
output in gross domestic product generally has a positive statistically signifi-
cant relationship with pollution' and that the 'downturn in emissions experi-
enced at higher income levels appears to be a result of the increased demand
for environmental regulations and increased investment in abatement tech-
nologies, trade openness, structural change in the form of declining share of
manufacturing output, and increased imports of pollution intensive output'.
Whereas increased investment in abatement technologies and reduced produc-
tion could result in an overall decrease in pollution, increased reliance on
imports simply displaces the pollution and may increase global pollution levels
if overseas industries are less efficient and have less stringent pollution controls.
