Week 10 seminar Flashcards
Trade Policy as a Tool for Climate Action video: -How does the palm oil industry contribute to climate change?
- Palm oil is one of the largest contributors to carbon emissions
- It accounts for 5% of global carbon emissions
- When forests are cleared for palm oil plantations they release large amounts of CO2
Trade Policy as a Tool for Climate Action video: What role can trade policy play in tackling negative environmental externalities?
Import tariff on palm oil can lead to a decrease in demand of palm oil which decrease firms prices.
Trade Policy as a Tool for Climate Action video: What are the barriers to enforcing domestic environmental regulations?
- Palm oil is a major source of export and has helped millions to escape poverty
- Palm oil is a big employer in these countries
Trade Policy as a Tool for Climate Action video: What are the barriers to an effective trade policy?
- Coordination is difficult to achieve some countries will not prioritise looking after the environment (free rider countries)
- Tariffs have no immediate impact on future production
- If suppliers think tariffs will be short term they will not reduce their supply
Trade Policy as a Tool for Climate Action video: Can you give examples of other industries where climate action is needed?
- Petrol
- Air fuel
- Farming livestock
How US Lead Regulations Hurt Mexican Babies podcast: What are the effects of lead on health?
- It is has extremely toxic effects on the nervous system and on development of the brain
- Lead is especially bad for children’s health and for fetuses
- It has been linked to learning difficulties
How US Lead Regulations Hurt Mexican Babies podcast: What are the options available to US firms in order to comply with the new Lead regulations?
- Either install new technology to purify the air to reduce emissions (the most popular technology is something called a baghouse system)
- Shut down the plant
- Reduce the amount of batteries you are recycling
- Reduce your emissions
- Firms must make a trade off between the cost of investing in technology (air filters) and the profit losses from reducing their output.
- Invest in alternatives that are more sustainable
How US Lead Regulations Hurt Mexican Babies podcast: How did the interaction of trade policy and environmental policy impact Mexico?
- After the US regulations changed in 2009 used battery exports to mexico increased, recycled battery production in Mexico increased and the health outcomes in Mexico were a low birth rate in mothers need these battery plants. They chose to monitor birth rate as long term health impacts would require my time and data.
- high levels of lead pollution and poisoning in Mexico
- The trade policy that allowed free trade between mexico and the US meant that it was cheaper for the US to move its battery factories to Mexico which has less strict environmental regulations
- Trade policy can have negative repercussions instead of pushing the US to reducing its carbon emissions they pushed them to rellocate to Mexico
How US Lead Regulations Hurt Mexican Babies podcast: What do the findings of the study tell us about the Pollution Haven hypothesis?
- When countries open up to trade, the ability to trade creates new incentives for dirty, polluting industries to leave countries with high environmental standards and tough regulations and move to another country with weaker environmental regulations
- Less inticing to do this in Europe as all countries in the EU have the same environmental regulations
- Mexico now want to proposea standard that is higher
Summary of podcast: How US Lead Regulations Hurt Mexican Babies
- US Lead Regulations and Compliance:
- In 2009, the US tightened lead emission standards, requiring factories (especially battery recycling plants) to comply by either adopting costly abatement technologies (e.g., baghouse systems) or reducing production.
- Many plants shut down or scaled back operations, leading to a significant reduction in US lead emissions by 40% and improved health outcomes.
- Displacement of Lead Recycling to Mexico:
- The shutdown of US plants caused a surge in exports of used lead-acid batteries to Mexico, where environmental regulations were less stringent and enforcement was weak.
- Mexico’s lead recycling industry expanded rapidly, but outdated standards led to increased lead emissions, creating a “pollution haven” effect.
- Health Impacts in Mexico:
- Proximity to lead recycling plants was linked to higher rates of low birth weight among babies, particularly affecting poorer communities.
- Environmental hazards disproportionately impacted disadvantaged populations with limited political power.
- Policy Implications:
- The study highlights the need for integrated trade and environmental policies between the US and Mexico to prevent cross-border environmental displacement.
- It calls for stricter enforcement and shared regulatory frameworks to balance economic growth with environmental protection.
General Flashcard: Role of trade policy in tackling negative environmental externalities
Definition:
- Negative environmental externalities occur when production or consumption imposes environmental costs (e.g., pollution) that are not reflected in market prices. Trade policy can help internalize these external costs.
Roles of Trade Policy:
1. Promoting Cleaner Production:
- Tariffs on Polluting Goods: Imposing higher tariffs on environmentally harmful products discourages their trade and production.
- Subsidies for Green Goods: Supporting exports of environmentally friendly goods (e.g., renewable energy technologies).
2. Border Carbon Adjustments (BCAs):
- Carbon pricing mechanisms like the EU’s Carbon Border Adjustment Mechanism (CBAM) impose tariffs on imports based on their carbon footprint.
- Ensures a level playing field for domestic producers subject to strict environmental regulations.
3. Trade Agreements and Standards:
- Embedding environmental clauses in trade agreements to enforce compliance with sustainable practices (e.g., restrictions on deforestation).
4. Eliminating Fossil Fuel Subsidies:
- Reducing trade policies that indirectly encourage fossil fuel production and consumption.
Key Takeaway:
Trade policy can address negative externalities by encouraging sustainable production, penalizing polluters, and fostering international cooperation to tackle global environmental challenges.
