International trade in waste products in the presence of illegal disposal

doi:10.1016/0095-0696(91)90047-M

Journal of Environmental Economics and Management

Volume 20, Issue 2, March 1991, Pages 143-162

https://doi.org/10.1016/0095-0696(91)90047-M Get rights and content

Abstract

This paper develops a simple model of international trade in waste disposal services and investigates the welfare effects of restricting such trade. While the first-best policy is to allow free trade in all goods and services and to use internal taxes and regulation to control the externalities associated with waste disposal, such a policy increases the incentives for firms to evade taxes and regulations and dispose of their wastes illegally. In this case, the optimal tax can be lower than it would be in the absence of illegal activity, and trade restrictions on waste disposal can be welfare improving.

References (30)

E.W Bond et al.
The welfare effects of illegal immigration
J. Internat. Econom.
(1987)
B.R Copeland
Strategic enhancement and destruction of fisheries and the environment in the presence of international externalities
J. Environ. Econom. Management
(1990)
P.B Downing et al.
The economics of enforcing air pollution controls
J. Enoiron. Econom. Management
(1974)
J.D Harford
Firm behavior under imperfectly enforceable pollution standards and taxes
J. Enoiron. Econom. Management
(1978)
J.D Harford
Self-reporting of pollution and the firm's behavior under imperfectly enforceable regulations
J. Enoiron. Econom. Management
(1987)
J.R Kesselman
Income tax evasion: An intersectoral analysis
J. Public Econom.
(1989)
D.R Lee
The economics of enforcing pollution taxation
J. Environ. Econom. Management
(1984)
S Linder et al.
Enforcement costs and regulatory reform: The agency and firm response
J. Environ. Econom. Management
(1984)
L Martin et al.
Smuggling, trade, and price disparity: A crime-theoretic approach
J. Internat. Econom.
(1984)
M McGuire
Regulation, factor rewards, and international trade
J. Public Econom.
(1982)

J.D Merrifield

The impact of selected abatement strategies on transnational pollution, the terms of trade, and factor rewards: A general equilibrium approach

J. Environ. Econom. Management

(1988)

S.R Milliman

Optimal fishery management in the presence of illegal activity

J. Environ. Econom. Management

(1986)

R Pethig

Pollution, welfare, and environmental policy in the theory of comparative advantage

J. Environ. Econom. Management

(1976)

A.M Sullivan

Policy options for toxics disposal: Laissez-faire, subsidization, and enforcement

J. Environ. Econom. Management

(1987)

R.C D'Arge et al.

Environmental quality and international trade

Internat. Organiz.

(1972)

Cited by (61)

Evolution of structural properties and its determinants of global waste paper trade network based on temporal exponential random graph models
2021, Renewable and Sustainable Energy Reviews
Citation Excerpt :
Some studies attempt to explain the international waste trade patterns with various factors. Specifically, they theoretically and empirically explored the impact of income (i.e., GDP, capital/labor ratios and GDP per capita) [42], environmental regulations [21], transport costs [43,44] and particular economic policies (e.g., trade restrictions, taxes, international environmental agreements) [45–50] of each economy on international waste trade based on international trade theory, waste trade hypotheses (e.g., pollution haven hypothesis, waste haven hypothesis) and models (e.g., gravity model, negative binomial regression model, fixed effect model) using waste trade data between economies. Moreover, D'Amato & Zoli (2012) [51] detailed the role that corrupt politicians and organized crime play in a variety of circumstances related to waste trade and management in different economies.
As an important recyclable and reusable resource, waste paper is traded in millions of dollars around the world every year. Global waste paper trade not only addresses resource scarcity issues, alleviates environmental pressures and brings substantial economic gains, but also contributes to the development of global circular economy. Using complex network methods, bilateral waste paper trade data, and temporal exponential random graph models (TERGM), we construct global waste paper trade networks (GWPTNs) during 2000–2018, and examine their structural evolution and determinants. We report that: (I) GWPTNs display obvious features of small-world network, low reciprocity, heterogeneity and disassortativity; (II) Asia is the leading recipient of global waste paper, while Europe and North America are the main exporters; (III) China and India dominate the waste paper import markets while the United States is the largest exporter, and Germany plays an essential role in both importing and exporting hubs of waste paper; (IV) The evolution of the GWPTNs is significantly influenced by endogenous reciprocity, transitivity and preferential attachment, and economies with more partners or within the same continents are more likely to trade waste paper. Economies with higher urbanization rates, more per capita income, stricter environmental regulation, or lower industrialization rates are more likely to export waste paper; conversely, they are more likely to be the importers. Economy-pairs sharing a language or religion, being a former colony of the same colonizer, historical colonial relationship or a border, or signing regional trade agreements are more likely to trade waste paper.
Advance disposal fee vs. disposal fee: A monopolistic producer's durability choice model
2021, Resource and Energy Economics
This study examines how the timing of waste disposal fee collection affects the producer’s choice of built-in product durability and social welfare in a durable-goods monopoly model. We categorize the waste disposal fee policies into two: advance disposal fee (ADF) policy and disposal fee (DF) policy. We show that a DF policy has two opposing effects on durability. Firstly, a DF policy gives the producer an incentive to increase durability in order to delay the households’ waste disposal and to discount future payments of the disposal fee (the payment-discounting effect). Secondly, a DF policy creates an incentive for consumers to dump waste illegally in order to mitigate the payment of the disposal fee, and gives the producer an incentive to reduce durability in order to avoid market saturation and the associated future price cuts (the illegal-dumping effect). When the disposal fee is low, the payment-discounting effect dominates the illegal-dumping effect under a DF policy, leading to the enhancement of durability. In this case, from a social welfare viewpoint, a DF policy may be more desirable than an ADF policy if the environmental damage associated with illegal dumping is not serious. However, when the disposal fee is high, a DF policy induces more illegal dumping, reduces durability, and inflicts more environmental damage. Therefore, an ADF policy is more socially desirable than a DF policy when the disposal fee is high. Moreover, we consider an oligopoly case and find that an ADF policy is more socially desirable in an industry with smaller market power.
The effect of border controls on waste imports: Evidence from China's Green Fence campaign
2019, China Economic Review
The international trade of waste has been an important and growing part of the global economy during the last two decades, which imposes regulatory challenges to governments in the South to protect the environment. This paper investigates the effect of border controls with a difference-in-difference design by exploiting a unique natural experiment, China's Operation Green Fence (OGF) implemented in 2013. We find that the OGF exerted a significant deterrent effect on the waste imported into China. Specifically, we find that the import weight of waste grew by 9.48 percentage less and the import price declined by 7.6 percentage more compared to those of the non-waste. The results are robust to a series of robustness checks, and there is no similar reaction in other regions, where the OGF was not initiated.
Is Environmental Income Reporting Evasive in Household Surveys? Evidence From Rural Poor in Laos
2018, Ecological Economics
Citation Excerpt :
In the recent years, with the advent of environmental regulation in developing countries; illegal trade of environmental goods has increased many folds (Clarke et al., 1993; Skonhoft and Solstad, 1996; Copeland, 1991).
Literature has consistently reiterated that the self-employed non-poor underreport their business income to tax authorities and in household surveys. In this work, we measure the extent to which poor households engaging in illegal environmental activities underreport income in Laos. We use a two year panel data and apply the Engel curve to detect and estimate the reporting gap. We further use a switching probit regression to identify the factors of income underreporting and its impact on income poverty outcomes. Results show that on an average, rural households who earn at least a quarter of their income from the environment underreport by over 50% in household surveys resulting in overestimation of income poverty. Moreover, we find that a perceived threat to food security drives rural poor to engage in illegal environmental extraction.
Economic aspects of thermal treatment of solid waste in a sustainable WM system
2015, Waste Management
Citation Excerpt :
Even though these studies have been initially focused on disposal into landfills, considerations can be similar in the case of incineration. Copeland (1991) first had the intuition of considering asymmetric regulation and enforcement, concluding that waste flow controls may be welfare-improving when external costs of garbage are not internalized, and there is no uniformity in regulation and/or enforcement. Brusco et al., 1996, extend the concept of “regulatory capture” to enforcement and control, showing how low-quality waste disposal may displace high quality solutions forcing them out of market, benefitting from loose enforcement.
This paper offers a systematic review of the literature of the last 15 years, which applies economic analysis and theories to the issue of combustion of solid waste. Waste incineration has attracted the interest of economists in the first place concerning the comparative assessment of waste management options, with particular reference to external costs and benefits. A second important field of applied economic research concerns the market failures associated with the provision of thermal treatment of waste, that justify some deviation from the standard competitive market model. Our analysis discusses the most robust achievements and the more controversial areas. All in all, the economic perspective seems to confirm the desirability of assigning a prominent role to thermal treatments in an integrated waste management strategy. Probably the most interesting original contribution it has to offer concerns the refusal of categorical assumptions and too rigid priority ladders, emphasizing instead the need to consider site-specific circumstances that may favor one or another solution.
North-south trade in reusable goods: Green design meets illegal shipments of waste
2015, Journal of Environmental Economics and Management
Citation Excerpt :
Few authors have studied the trade in waste and used products. From a theoretical perspective, Copeland (1991) studied international trade in waste disposal services. He found that in the presence of local illegal waste disposal, trade restrictions may improve welfare.
In a stylized model of international trade, firms in the North indirectly export second-hand products to a representative firm in the South to be reused as intermediate goods, with potential trade gains. The level of reusability of waste products – or green design – is a crucial choice variable in the North. This is because, in the presence of imperfect international monitoring, non-reusable waste can be illegally mixed with reusable waste. I explore the driving forces for illegal waste movement, with a particular focus on local waste regulations such as the EU׳s Directive on Waste Electrical and Electronic Equipment. Under mild conditions, it is shown that increasingly stringent regulations in the North can induce Northern firms to reduce product reusability. Consequently, the flow of non-reusable waste to the South increases, magnifying the pollution haven effect.

View all citing articles on Scopus

^☆: Part of this paper was written while the author was visiting the economics department at the University of Alberta. The author thanks members of that department for their hospitality and also two anonymous referees for helpful comments and suggestions which improved the paper.

View full text

International trade in waste products in the presence of illegal disposal☆

Abstract

J. Internat. Econom.

J. Environ. Econom. Management

J. Enoiron. Econom. Management

J. Enoiron. Econom. Management

J. Enoiron. Econom. Management

J. Public Econom.

J. Environ. Econom. Management

J. Environ. Econom. Management

J. Internat. Econom.

J. Public Econom.

J. Environ. Econom. Management

J. Environ. Econom. Management

J. Environ. Econom. Management

J. Environ. Econom. Management

Environmental quality and international trade

Internat. Organiz.