Can trade between wealthy and poorer countries damage the environment locally or globally The pollution h aven h ypothesis concentrates on international trades effect on the location of production ID: 658405
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Slide1
International Trade in Used Vehicles
Can trade between wealthy and poorer countries damage the environment locally or globally?
The pollution
h
aven
h
ypothesis concentrates on international trade’s effect on the location of production
Finds little evidence
that “dirty” industries migrate to poorer
countriesSlide2
Could changes in consumption (as opposed to production) induced by trade affect the environment?
North American Free Trade Agreement (NAFTA) went into effect in1994
Immediately lowered or eliminated US tariffs for many goods from Mexico (and Canada)
Set timetable for elimination of tariffs for other goods
Pre NAFTA, Mexico did not allow importation of used passenger vehicles from USSlide3
NAFTA mandated Mexico to allow gradual increase in used cars manufactured in US
From 2005 to 2008, Mexico allowed importation of used US and Canadian cars that were 10-15 years old
The allowance was ahead of schedule of what NAFTA called for
Political pressure in Mexico effectively ended the importation policy in 2008Slide4
Differences in income and cost of maintaining vehicles generates market between relatively poor and wealthy countries
Poorer countries may purchase used cars from richer
Due to technology differences and wear, used
cars
generally
more polluting than newer
Paper looks at whether the trade in used cars increased greenhouse gas emissions, and affected local air qualitySlide5
Vehicles
that entered Mexico 2005 - 2008
Stock of Vehicles
in US in 2005
Stock
of Vehicles in Mexico in 2008
Total
Number of vehicles (millions)
2.45
232
24.8
Mean Vehicle Age (years)
11.4
8.8
13.7Slide6
Top ten traded vehicles
Ford Explorer (SUV)
Chevrolet S-10 (truck)
Dodge Caravan (minivan)
Ford Ranger (truck)
Ford Windstar (minivan)
Chevrolet Silverado (truck)
Ford F-150 (truck)
Plymouth Voyager (minivan)
Jeep Cherokee (SUV)
Ford Taurus (car)Slide7
Were US cars traded in Mexico more polluting than the average vehicle in the US?
Knowledge on the VIN of traded cars allowed researchers to know the make and model year of each car
Used data from California emissions testing to calculate weighted average emissions for all cars in US, and used cars exported to MexicoSlide8
Stock
of Vehicles in US in 2005
Vehicles that Entered
Mexico 2005-2008
Stock
of Vehicles in Mexico in 2008
Local Pollutants
Hydrocarbons (ppm)
39.9
44.4
50.7
Carbon Monoxide
(percent)
0.147
0.153
0.215
Nitrogen Oxide (ppm)
248
309
321
Global Pollutants
Miles per Gallon
23.8
23.5
22.3
Vehicle
Weight (pounds)
3,516
3,708
3,460
Engine
Size (liters)
3.47
3.70
3.45Slide9
The effect of the trade policy on total emissions across the two countries reflects
Change in total number of cars across countries induced by policy
Total number of
vehicles
operating
in US estimated to have decreased only slightly
Total number of vehicles in Mexican may have
grown
Effect on composition of cars in two countries
Cars entering Mexico on average emitted more local pollutants than cars in the US but less than cars in Mexico
Cars entering Mexico were heavier and had larger engines than cars in the US or those in Mexico
.Slide10
Change in total number
of cars
used in the
two
countries induced by policy
Mexico
imported 2.5 million used vehicles between 2005 and 2008
Was the number of registered vehicles in the US at the end of the period 2.5 million less than it would have been if not for the trade
?
Vehicles exit from use yearly due to age, accidents etc. Slide11
The 2.5 million
exported vehicles
represented roughly 1% of the total stock of registered cars in US
Paper finds vehicle exit rate largely unaffected by used car trade
Concludes many of the vehicles traded to Mexico would have
been or
already had been retiredSlide12
Effect of policy on total cars in Mexico
Did
the flood of used cars in the country
substitute for new car purchases?
Sp
- supply of cars in Mexico before policy
Sa – supply while policy in
place
D – demand for autos
Total change in number of cars in Mexico depends partially on shape of demand curveSlide13
In the period immediately prior to 2005, roughly one million new cars were sold in Mexico yearly
Equal to number of used cars entering the country from US over 2005-2008
One to one replacement of new cars for used would have eliminated all new car sales
Little evidence is found that new car sales changed once US used cars became availableSlide14
What is the net change in pollution caused annually by the trade in used cars and the total pollution over the lifetime of the cars traded?
Pollution went up in Mexico due
to
2.5 million cars
entering the
country
The composition of the cars also contributed to total annual emissions change
Pollution was slightly less in the US due to small measured decrease in total number of vehiclesSlide15
Total emissions caused by the used car trade calculated as:
Net change in number of cars in country by make/model
×
average miles driven by make/model
×
emissions per mile
Emission
Annual Estimate
(2008)
Carbon
Dioxide (millions of tons)
5.6
Hydrocarbons (thousands
of tons)
3.4
Carbon Monoxide
(thousands of tons)
41.3
Nitrogen
Oxide (thousands of tons)
7.9Slide16
Contribution to Greenhouse emission over lifetime of vehicles
Trade in used vehicles from US to Mexico represent a net increase in greenhouse gas emissions for two primary reasons
Evidence suggests many of the vehicles traded (roughly 9 out of 10) would have otherwise been retired in US (sent to scrapyard).
Vehicles are used in Mexico longer
The estimated yearly retirement rate for US vehicles that are 10 to 30 years of age is 12.2%
The corresponding retirement rate in Mexico is 3.8%Slide17
Estimates of the
net change in emissions over 30 year
profile of traded autos
Emission
Lifetime Estimate
Carbon
Dioxide (millions of tons)
83.9
Hydrocarbons (thousands
of tons)
50.9
Carbon Monoxide
(thousands of tons)
618.7
Nitrogen
Oxide (thousands of tons)
118.9Slide18
The net lifetime increase in greenhouse emissions due to trade represents roughly 1% of the Mexico’s total annual CO2 emissions
The social damage from change in local pollutants is hard to evaluate
Depends on local environment
Additional nitrogen dioxide emission
is more damaging in
Mexico City than in rural area