Evaluating Climate Hypocrisy
Gwyneth Sim, Research Executive
Apart from dominating headlines with the announcement of her world tour, you may have seen the news that Taylor Swift was the biggest celebrity CO2 polluter of 2022, emitting 637 times the U.S. per capita carbon emissions (Dolsak & Prakash, 2021). Naturally, she faced the backlash of climate activists, especially when many realise the individualism of everyday people may have a small impact on the climate crisis, but the individualism of the rich stand to have a greater impact on the climate crisis. Greta Thunberg has said in her ‘Our house is on fire’ speech that “The bigger your carbon footprint, the bigger your moral duty” (Paddison, 2021). There is irony in that the countries most able to financially, culturally, and politically influence climate change efforts are the ones contributing most to worsen it. This article will explore two global interactions: transboundary air pollution and waste trade, and how economics has led to the exacerbation of these problems by developed countries.
Environmentalism is a Zero-Sum Game
With the climate change crisis, “healthy and secure environments are becoming increasingly scarce resources, unequally distributed” (Parsons, 2023). Some necessary functions in society, such as production and waste management, are accompanied with negative environmental impacts that pollute the local environment. Therefore, especially with tighter environmental laws in developed countries, many firms realise offshoring as a solution to pass on their emissions to another place. This is known as Pollution Haven Hypothesis, an explanation for transboundary pollution propagated by large, industrialised nations. The victims are developing countries that usually have laxer environmental regulation and rely on foreign investment for economic growth and employment (Ben-David, Kleimeier, & Viehs, 2020). Rather than environmental progress, this is environmental trade: A cleaner environment in one place is most often the cause of a polluted environment in another place (Parsons, 2023). Thus, transboundary pollution is a zero-sum game which is a breeding ground for inequality.
Figure 1: Game Theory Matrix in Waste Trade and Offshoring
which produces winners and losers (Takacs, 2017). As such, we can think of the problems of transboundary air pollution and waste trade using the Game Theory framework.
The incentive to maximise economics benefits from overconsumption without having individual suffering from its environmental costs, such is the tragedy of the commons. Therefore, the dominant strategy of developed nations is exporting pollution. Meanwhile, there are two possible dominant strategies for developing nations, depending on their individual priorities. Majority of developing nations such as Egypt have embraced waste trade, incentivised by the economic opportunity to establish a circular economy (Kamel, 2021). Their dominant strategy is allowing import waste and harmful offshoring. However, that is not to say some developing nations like China have closed off such global interactions, recognising that the environmental costs outweigh the economic benefits. Nevertheless, the Nash Equilibrium outcome remains at ‘overconsumption’ by developed countries and hence excess pollution in developing countries. Developed countries are the ‘winners’ by avoiding environmental pollution they would have experienced. This outcome is not optimal not just from an equity perspective, but an efficiency perspective, as developing countries likely have lower “standards in resource use efficiency and pollution control” (Ravelo, 2018). The nationalistic perspective of developed countries causes short-sightedness- they may be able to avoid the short- term local impacts, but these short-term impacts all contribute to global climate change in the long-term. The consequences of global climate change are unavoidable to all nations and people regardless of wealth.
The US-China Carbon-Leakage
One form of transboundary pollution is “carbon leakage”, which explains that with stricter environmental laws, firms “decide strategically where to locate their production, and consequently, where they will emit greenhouse gases” (Ben-David, Kleimeier, & Viehs, 2020).
Take the US-China trade relationship, where US manufacturers offshore production to the cheaper, reliable, and technologically capable China. China is the world's premier location for manufacturing, accounting for “more than half of the global textile and clothing production” (Ma, 2022). Especially in the garment industry, that requires lower skilled labour accompanied with high levels of pollution, US firms are more willing to offshore garment production in China despite the US-China trade war. The cost of local environmental degradation to US firms exceeds the export costs. According to the US Department of Commerce, China is the largest exporter for apparel in the US, and exports double that of the next largest exporter, Vietnam (Neumann, Rockeman, & Wei, 2023).
The air pollution in the production process of textiles is often paid less attention to than the overconsumption problems in fast fashion (Bick, Halsey, & Ekenga, 2018). The textile industry “pose(s) a major climate threat”, and in China, accounted for over 6% of carbon emissions of all industrial enterprises (Peng, Lio, & Geng, 2022). Therefore by relying on less carbon efficient manufacturers, US firms may be aggravating the air pollution problem in China.
Exporting Waste to Developing Countries
The global waste trade industry is another avenue for developed countries to dump the burden of waste management and its environmental impacts onto developing countries. Most of these countries in Asia and Africa, lack the capacity to manage it “safely and securely” (Dell, 2019).
Recycled waste containing precious metals are argued to be beneficial to developing countries by providing these materials at a low cost (D.D., 2017). This can stimulate the nation’s productive capacity, and even its circular economy. However, waste like plastic that are often contaminated or of low-quality and hence unrecyclable would have to be incinerated. This leaves developing countries to have to incur the environmental damage that would have belonged to the developed country. China was the largest importer of waste, but after recognising the environmental harm from managing unrecyclable waste, China enacted an unprecedented ban, called the “National Sword” policy, on plastic waste imports in 2018, sending shockwaves in the global waste trade industry. Today, this has been seen to effective in reducing local air pollution levels (Shi & Zhang, 2023).
Going back to the garment industry, Chinese textile mills contribute to one-fifth of the world’s industrial water pollution (Ravelo, 2018). Laboratory testing of water from a textile manufacturing town in Guangdong found heavy metal concentrations to be “128 times in excess of national environmental standards” (Huang, 2010). Thus, in China’s efforts to address climate change, China’s deep economic reliance and involvement in many polluting industries have posed as a challenge.
The Global North
Therefore, it is apparent that global superpowers exploit developing nations’ thirst for economic opportunities, strategically ignoring the environmental pollution packaged with the trade deal. As global leaders that advocate for global equity and climate action, the Global North needs to be held accountable.
In response to China’s National Sword policy, the Global North proposed suggestions that lacked long-term sustainable solutions to resolve the exacerbated problem of excess supply in the waste trade industry (Lee, 2018). Countries like the US, Japan, and Germany have turned to Southeast Asian nations instead to export plastic waste (Hook & Reed, 2018). In 2018, US plastic waste exports to Thailand shot up by almost 2000% (McVeigh, 2018). The unexpected supply of waste had overwhelmed SEA nations like Thailand, Vietnam, and Malaysia, prompting them to enact their own restrictions (Javorsky, 2019). While data shows promising results that the recyclable waste exports from the G7 fell by more than 20% in the year of the National Sword policy, a key fact is that developed nations had decided to send more recyclable waste to landfills instead (Hook & Reed, 2018).
Moving Forward
The crux of this normative issue is deciding the extent that the Global North should be responsible for their own pollution. Most perspectives acknowledge the continued need for global interactions between the Global North and South. Afterall, offshoring and waste trade are prevalent industries because there is demand and supply. However, economists disagree on the extent of a role the Global North plays.
Some economists believe that morally, countries that have exploited waste trade should help fund and improve waste management technology in the Global South (Naomi, 2022).
Some economists however believe that from a global perspective, waste trade and offshoring pollution would make pollution more equally distributed across nations. In 1991, an internal World Bank memo signed by Lawrence Summers, the President of Harvard University and Chief Economist of the World Bank, wrote:
"I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that... I've always thought that countries in Africa are vastly under polluted; their air quality is probably vastly inefficiently low compared to Los Angeles... Just between you and me shouldn't the World Bank be encouraging more migration of the dirty industries to the Least Developed Countries?"
Challenging Mainstream Economics
In light of such challenges facing climate change efforts, new economic schools of thought have sprouted to offer possible solutions to reevaluate economic responses to the climate change problem.
Ecological Economics is a newer field in economics, focusing on the economic-environmental relationship in a dynamic, cause-and-effect manner, rather than the conventional treatment of the environment as an externality outside the market (Bergh, Ecological Economics: Themes, Approaches, and Differences with Environmental Economics, 2001). It captures the idea that nature imposes “constraints on economic growth”, therefore it must be considered in the centre of economics rather than just “material for humans and their wants” (Faber, 2008).
The Agrowth policy perspective argues that since GDP per capita is an “imperfect indicator of social welfare”, countries should be indifferent to it in conducting policies (Bergh, 2011). This would dampen the emphasis on overconsumption and overproduction, reducing the problems associated with waste trade and carbon leakage respectively.
Conclusion
Power has a central role in propagating inequality. In the waste trade industry and the global offshoring of manufacturing, developing nations have become the “dumping ground” for developed countries. The environmental degradation facing developing nations are out-of-sight and out-of-mind to the Global North. In mainstream economics, this has been seen as a negative externality, an added-on sub-topic to consider. However, the Ecological economics and the Agrowth perspective advocate for the environment to be seen as the central determinant for growth- a “cause” rather than an “effect”.
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