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Plastic Dumping Grounds: The International Incidence of Environmental Regulation
Summary
When China stopped accepting the world's plastic waste in 2017, that trash didn't disappear—it got rerouted to other countries, where it flooded local recycling markets and pushed some businesses to burn or dump waste illegally instead of recycling it properly. Researchers found that the resulting air pollution caused more harm to people's health than the economic benefit of having cheaper recycled materials. The takeaway: environmental laws in one country can quietly shift pollution and health risks onto people elsewhere, so cleaning up recycling in wealthy nations doesn't guarantee a cleaner, safer outcome globally.
Environmental regulations often generate environmental improvements at home, yet their consequences may extend far beyond the countries that adopt them. The international incidence of environmental regulation remains poorly understood. We study where the resulting environmental damages emerge and who ultimately bears their costs using China's 2017 ban on waste imports, which triggered a large reallocation of global recycling activity. Combining international trade data, administrative records, direct measures of firms' waste mismanagement, and local pollution data in the main destination for diverted waste, we examine the international incidence of environmental regulation by tracing the rarely observed process linking trade reallocation to firm behavior, pollution exposure, and welfare. The ban increased pollution-intensive plastic waste imports, lowering input costs for downstream firms using recyclable materials. Meanwhile, imported waste displaced domestic recyclables, leading firms to adopt harmful disposal methods. The environmental damages from air pollution exceeded the economic gains from access to lower-cost inputs.