Trade, foreign investment and the environment: the Brazilian experience

Abstract

This study is divided in two parts. The first one will deal with the consequences of rising industrial output (particularly those associated with exports) for urban pollution. This section will examine the impact of greater openness to trade – proxied here by industrial exports – on the level of urban pollution. The methodology will be based on the use of input-output modeling techniques, whereby pollution emission coefficients are linked with industrial activities. The aim is to estimate the total amount of emissions required to obtain a specified industrial export volume (exogenously determined). The second part of the study will emphasize the consequences of pollution control/mitigation costs for export competitiveness. This section will be an extension of the previous one. Given the impact of industrial exports on urban pollution, what would be the impact on external competitiveness of the adoption of pollution controls? The analyses will make use of a combination of (estimated) mitigation costs and price elasticities of the demand for industrial exports, also considering chain effects through input-output modeling. There will be, additionally, an effort to estimate employment impacts of pollution abatement expenditures.