Exporting Pollution

Abstract

Pollution and how to address its impacts is a growing concern for people around the world. The idea of exporting pollution to third world countries was examined and found to be an economically sound proposition. If adopted as an acceptable practice, previously unwanted industries may find new homes in foreign countries at the expense of people and the environment.

Pollution: More Acceptable in Poorer Nations?

Pollution and what to do with it is a growing problem in the United States and other developed nations around the world. The economic, environmental and human impacts have gained attention in recent years due to the suggestion that exporting pollution to third world countries would be an acceptable solution. The following will look at both sides of the debate.

Background

In 1991, Lawrence Summers was the chief economist at the World Bank (Hosmer, 2008). A memorandum that he wrote to some colleagues and friends suggested that the World Bank should be encouraging more countries to move their dirty industries to third world countries or less developed countries for three reasons: 1) the cost of health-impairing pollution is based on the earnings of a nation, so the lowest cost would be in a country with the lowest earnings 2) pollution costs will be lower in under-populated countries because their air is under-polluted currently and 3) health concerns are higher in people and nations with higher income (Hosmer, 2008) .

His suggestions were made from a purely economic standpoint and started a debate if this was ethical, right or just.

An Economic View

A simplistic basis of the economic theory is to maximize outputs while minimizing the cost with the least expensive inputs such as materials and labor to satisfy customer needs. Following this basic rule, automatically leads to the well-being of society being met. If this is true, then it would be logical to assume that for companies with so called ‘dirty industries’, whose operations result in high pollution discharges, would find moving their operations to a third world country that has more lenient regulations on pollution, lower wages for employees and most likely lower restrictions for other environmental impacts, the best economic option. Corporations would be able to maximize their outputs with the least costing inputs. Additionally, it has been demonstrated that developing countries that allowed free-market economics to exist, grew and thrived while others that did not, had their economies stagnate (Crook, 1992). So it could be argued that this would be a win-win situation from a purely economic viewpoint.

However, is it morally right to encourage a behavior that so many find objectionable? One could argue that the economic theory