Economic and political drivers of environmental impact shifting between countries

There is mounting evidence that major improvements in environmental quality in high-income countries over the past decades may have been achieved to a large degree through relocation of environmental impacts of con-sumption to other, usually poorer countries. While political and academic debates on appropriate policy in-terventions to address this challenge are gaining ground, we still know rather little about the drivers of international environmental impact shifting, other than international trade flows per se. We address this issue by focusing on the effects of economic inequality and political factors. We argue that income inequality between and within countries as well as variation in political institutions, environmental clauses in preferential trade agreements (PTAs), and participation in international environmental treaties could be important drivers or mitigators of environmental impact shifting between countries. We use novel panel data on five types of envi-ronmental impact flows between country dyads (187 countries, 1990-2015) to assess these arguments. We find that richer countries and countries with higher domestic economic equality tend to be the outsourcers, and poorer, domestically more unequal countries the insourcers of environmental impacts. Discrepancies in de-mocracy levels aggravate the outsourcing from more equal to more unequal societies. In turn, environmental clauses in PTAs have a mitigating effect on environmental impact shifting, but participation in international environmental agreements has no such effect. Our findings highlight the need for green economy policies that reduce environmental footprints of consumption not only within high-income democracies, but also make their global supply chains more sustainable.

Automated summary

Mounting evidence suggests that improvements in environmental quality in high-income countries may be achieved through shifting environmental impacts to poorer countries. This study analyzes the drivers of international environmental impact shifting, finding that income inequality, political institutions, and preferential trade agreements with environmental clauses play important roles. Richer countries and those with higher domestic economic equality tend to outsource environmental impacts, while poorer and more unequal countries become insourcers. Democracy levels exacerbate the outsourcing, and participation in international environmental agreements has no significant effect on impact shifting.