Pollution and International Trade in Services
Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data -- presumably those services that are traded internationally -- are less polluting than services for which trade data do not exist -- presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.
This work was done in part for the Commission for Environmental Cooperation, Fourth North American Symposium on Assessing the Environmental Effects of Trade, Phoenix, AZ, April 23, 2008. I am grateful to the National Center for Environmental Economics (NCEE) and to Resources for the Future for hosting me during parts of this research, to Mun Ho, Carl Pasurka, Jared Creason, Irene Henriques, and Chantal Line Carpentier for helpful conversations and suggestions. Roy Huntley and Rhonda Thompson at the EPA provided invaluable help interpreting the National Emissions Inventory. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Arik Levinson, 2010. "Pollution and international trade in services," International Environmental Agreements: Politics, Law and Economics, vol 10(2), pages 93-105. citation courtesy of