Study: “Pollution Offshoring” Lowers U.S. Plant Emissions

When manufacturing plants increase imports from low-wage countries by 10%, toxic emissions from the facility drop by 4% to 6%, a new study by researchers from University of Michigan (U-M) and Shanghai Jiaotong University in China posits.

“We found that domestic plants pollute less on American soil as their parent firms imports more from low-wage countries. They also shift production to less pollution-intensive industries, produce less waste, and spend less on pollution abatement,” said the study’s co-author Yue Maggie Zhou, assistant professor of strategy at U-M’s Ross School of Business, in a statement.

Analyzing U.S. Census Bureau data on over 8000 companies and 18,000 plants, the researchers said the high cost to comply with U.S. environmental standards, totaling “hundreds of billions of dollars each year,” was a driver behind the shift of production of “pollution-intensive” goods to low-wage countries.

“Industries that experienced the greatest increase in imports from low-wage countries – printing, apparel and textile, rubber and plastics, and furniture – experienced some of the largest drops in air pollution emissions,” said Zhou.

Toxic emissions of major sources of air pollution dropped by over half from 1992 to 2009, according to the researchers, noting that real manufacturing output in the U.S. grew at the same time. Also during this period, imports from low-wage countries grew to 23% from 7%.

“Our evidence is consistent with a pollution-offshoring strategy,” said Zhou. “We found that goods imported by U.S. firms from low-wage countries are in more pollution-intensive industries than goods imported from the rest of the world.”

Another study published recently by Chinese researchers said that 17% to 36% of four major sources of air pollution emitted in China were due to the production of export goods.

Zhou’s research will appear in an upcoming issue of Strategic Management Journal.

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