China and intra-country environmental outsourcing

Do firms move location to take advantage of lower environmental regulations?  It is a question that many of tried to answer including myself for numerous countries, time periods and regulatory regimes.

A recent guardian newspaper article looks at what is happening within China.  When it comes to the impact of the environment on an economy China is the place to do the research. 

The question the Guardian asks is whether the rich coastal provinces are "outsourcing" their production of greenhouse gases elsewhere in China.

This links to a recent paper of mine called "Environmental Outsourcing" (we look at Japan outsourcing its pollution to China funnily enough).  The paper can be seen HERE.

So what does the Guardian paper report on:

China's rich provinces outsource emissions to less developed areas [Guardian]

Rich coastal provinces of China are outsourcing their greenhouse gas emissions by importing goods from less developed provinces, according to scientists. The practice makes it far less likely that China – the world's biggest emitter – will reach its climate goals, the study published in the Proceedings of the National Academy of Sciences said.

"Recent studies have shown that the high standard of living enjoyed by people in the richest countries often come at the expense of CO2 emissions produced with technologies of low-efficiency in less affluent, developing countries," the study said. "Less apparent is that this relationship between developed and developing can exist within a single country's borders."

It is worth reading the academic paper.  It is interesting that they decided to publish in PNAS.

Abstract

Recent studies have shown that the high standard of living enjoyed by people in the richest countries often comes at the expense of CO₂ emissions produced with technologies of low efficiency in less affluent, developing countries. Less apparent is that this relationship between developed and developing can exist within a single country’s borders, with rich regions consuming and exporting high-value goods and services that depend upon production of low-cost and emission-intensive goods and services from poorer regions in the same country. As the world’s largest emitter of CO₂, China is a prominent and important example, struggling to balance rapid economic growth and environmental sustainability across provinces that are in very different stages of development. In this study, we track CO₂ emissions embodied in products traded among Chinese provinces and internationally. We find that 57% of China’s emissions are related to goods that are consumed outside of the province where they are produced. For instance, up to 80% of the emissions related to goods consumed in the highly developed coastal provinces are imported from less developed provinces in central and western China where many low–value-added but high–carbon-intensive goods are produced. Without policy attention to this sort of interprovincial carbon leakage, the less developed provinces will struggle to meet their emissions intensity targets, whereas the more developed provinces might achieve their own targets by further outsourcing. Consumption-based accounting of emissions can thus inform effective and equitable climate policy within China.

I have many comments on this paper but will not go into detail here.

As an aside, academic economists need to take a close look at how their journals work compared to those in the Physical sciences.  Economists have a lot to learn.