Embodied pollution in trade: Estimating the "environmental load displacement" of the industrial countries

The present paper sets out to aid in the development of "environmental load displacement" indicators. Developing the notion of the "environmental memory" of physical flows, we estimated embodied pollution in trade of 18 industrialized countries with a) the rest of the world and b) developing countries, from 1976 to 1994. We found that in the last years of analysis, total imports of Japan, USA and Western Europe have entailed, in general, larger air pollutant emissions than local exports. The balance of embodied emissions in trade (BEET) seems follow an inverted-U shape across time in Japan and Western Europe, and an N-shape in the US. In the period of analysis, Japanese and European environmental terms of trade with developing countries have "improved", whereas American environmental terms of trade with developing countries tended to "deteriorate" over time. Although there is no statistical trend between income and embodied emissions in imports in a cross-section analysis, there does seem to be a positive relationship between both variables at a national level. The results suggest that, despite many shortcomings, this type of assessment of embodied environmental pressures in inter-country physical flows may shed useful insights on the international aspects of sustainable development. Particularly, on the distribution of the environmental costs of trade and the relationship between economic growth and environmental degradation.