International trade and air pollution: estimating the economic costs of air emissions from waterborne commerce vessels in the United States

Although there is a burgeoning literature on the effects of international trade on the environment, relatively little work has been done on where trade most directly effects the environment: the transportation sector. This article shows how international trade is affecting air pollution emissions in the United States' shipping sector. Recent work has shown that cargo ships have been long overlooked regarding their contribution to air pollution. Indeed, ship emissions have recently been deemed "the last unregulated source of traditional air pollutants". Air pollution from ships has a number of significant local, national, and global environmental effects. Building on past studies, we examine the economic costs of this increasing and unregulated form of environmental damage. We find that total emissions from ships are largely increasing due to the increase in foreign commerce (or international trade). The economic costs of SO2 pollution range from dollars 697 million to dollars 3.9 billion during the period examined, or dollars 77 to dollars 435 million on an annual basis. The bulk of the cost is from foreign commerce, where the annual costs average to dollars 42 to dollars 241 million. For NOx emissions the costs are dollars 3.7 billion over the entire period or dollars 412 million per year. Because foreign trade is driving the growth in US shipping, we also estimate the effect of the Uruguay Round on emissions. Separating out the effects of global trade agreements reveals that the trade agreement-led emissions amounted to dollars 96 to dollars 542 million for SO2 between 1993 and 2001, or dollars 10 to dollars 60 million per year. For NOx they were dollars 745 million for the whole period or dollars 82 million per year. Without adequate policy responses, we predict that these trends and costs will continue into the future.