Working Paper: NBER ID: w14936
Authors: Arik Levinson
Abstract: Two central topics in recent rounds of international trade negotiations have been environmental concerns, and services trade. While each is undoubtedly important, they are unrelated. In this paper I show that the services-environment link is small, for two reasons. First, services account for only a small fraction of overall pollution. For none of five major air pollutants does the service sector account for even four percent of total emissions; for three of the five services account for less than one percent. Second, those service industries that do pollute are the least likely to be traded internationally. Those services for which the U.S. collects and publishes international trade data -- presumably those services that are traded internationally -- are less polluting than services for which trade data do not exist -- presumably because the services are not traded. Even if we limit attention to the services that are traded across borders, the service industries most intensively traded are the ones that pollute the least. The bottom line is simple. International services trade bears little relation to the environment, because services in general contribute relatively little to overall pollution, and those industries that are traded internationally are among the least polluting.
Keywords: Pollution; International Trade; Services
JEL Codes: F18; Q56
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| International trade in services (F19) | environmental pollution (Q53) |
| Service sector pollution contribution (Q53) | overall pollution (Q53) |
| Pollution intensity of traded services (Q53) | likelihood of being traded internationally (F10) |
| Trade intensity (F14) | pollution intensity across service sectors (L99) |
| Transportation services traded (L92) | location of pollution (Q53) |