Allocating environmental costs of China's rare earth production to global consumption

Abstract

China provides over 80% of global rare earth (RE) that caused serious domestic environmental impacts. However, how much RE-related pollution was transferred to China along global supply chain remains poorly understood. Here we, for the first time, established the RE industry-specific input-output approaches to trace environmental costs transfer through China's RE exports from whole supply chain perspective. We found that foreign consumption contributed over half of the environmental costs from China's RE production, with a gross value increasing from $4.8 billion (65% of total environmental costs) in 2010 to $5.4 billion in 2015 (74% of total environmental costs). Countries in the East Asia (i.e., Japan and South Korea) made the largest contribution (27-37%) to the exports induced environmental costs, followed by North America (i.e., the United States, Mexico, and Canada) with a contribution of 20-27% and the rest East Asia (including countries in Asia-Pacific except China Mainland, by 16-23%). Exports induced environmental costs were mainly from RE raw materials (60%) and high value-added products (22%). Suggestions such as rationalizing RE cost as well as production- and consumption-based measures to mitigate environmental impacts were proposed to enhance RE utilities for global sustainable development.

Keywords: Environmental costs; Environmentally extended input-output model; International trade; RE derivatives.