Does the EU ETS cause carbon leakage in European manufacturing?

Carbon leakage is of interest in both academic and policy debates about the effectiveness of unilateral climate policy, especially in Europe, where the EU Emissions Trading System (EU ETS) affects many traded sectors. We review how the literature identifies leakage and the pollution haven effect. We then evaluate whether EU ETS emission costs caused carbon leakage in European manufacturing, using trade flows in embodied carbon and value from the Global Trade Analysis Project (GTAP). We find no evidence that the EU ETS caused carbon leakage.     

Intra-industry trade in intermediate products, pollution and internationally increasing returns

This paper examines the relationship between intra-industry trade in intermediate products, pollution and increasing returns. We develop a two-country model in which production occurs in two stages, final and intermediate good production. Intermediate goods are produced under monopolistic competition and final good production exhibits increasing returns with respect to the number of varieties of intermediates. Pollution occurs in the production of the final good when polluting intermediates are used. We analyze the effects of international trade in intermediate products on pollution, output and welfare under an endogenous tax scenario and with two types of pollution functions. The results show that, because of increasing returns, international trade either leads to lower total pollution in each country or lower pollution per unit of output in at least one country. In addition, intra-industry trade causes countries to import the environmental quality of their trading partners.     

Firms' and states’ responses to laxer environmental standards

On June 1, 2017, President Trump announced the United States' withdrawal from the Paris agreement on climate change. Despite this decision, American firms continued investing in low-carbon technologies and some states committed to tougher environmental standards. To understand this apparent paradox, this paper studies how a weakening of environmental standards affects the behavior of profit-maximizing firms. It finds that a relaxation of emission standards (i) may increase firms’ incentives to adopt clean technologies, but not to pollute less; (ii) may negatively affect industry profitability if it is perceived as temporary; and, when this is the case, (iii) the unilateral adoption of stricter standards by large states may increase the expected profitability of every firm.     

Trade liberalization, corruption, and environmental policy formation: theory and evidence

This study explores the linkages between trade policy, corruption, and environmental policy. We begin by presenting a theoretical model that produces several testable predictions, including: (i) the effect of trade liberalization on the stringency of environmental policy depends on the level of corruption; and (ii) corruption reduces environmental policy stringency. Using panel data from a mix of developed and developing countries from 1982 to 1992, we find evidence that supports these conjectures. We view these results as representing an attempt at understanding the myriad of complex relationships that exist in an open economy.     

Multiscale Plume Transport from the Collapse of the World Trade Center on September 11, 2001

The collapse of the world trade center (WTC) produced enhanced levels of airborne contaminants in New York City and nearby areas on September 11, 2001 through December, 2001. This catastrophic event revealed the vulnerability of the urban environment, and the inability of many existing air monitoring systems to operate efficiently in a crisis. The contaminants released circulated within the street canyons, but were also lifted above the urban canopy and transported over large distances, reflecting the fact that pollutant transport affects multiple scales, from single buildings through city blocks to mesoscales. In this study, ground-and space-based observations were combined with numerical weather forecast fields to initialize fine-scale numerical simulations. The effort is aimed at reconstructing pollutant dispersion from the WTC in New York City to surrounding areas, to provide means for eventually evaluating its effect on population and environment. Atmospheric dynamics were calculated with the multi-grid Regional Atmospheric Modeling System (RAMS), covering scales from 250 m to 300 km and contaminant transport was studied using the Hybrid Particle and Concentration Transport (HYPACT) model that accepts RAMS meteorological output. The RAMS/HYPACT results were tested against PM2.5 observations from the roofs of public schools in New York City (NYC), Landsat images, and Multi-angle Imaging SpectroRadiometer (MISR) retrievals. Calculations accurately reproduced locations and timing of PM2.5 peak aerosol concentrations, as well as plume directionality. By comparing calculated and observed concentrations, the effective magnitude of the aerosol source was estimated. The simulated pollutant distributions are being used to characterize levels of human exposure and associated environmental health impacts.