Examining industrial air pollution embodied in trade: implications of a hypothetical China-UK FTA

Yuquan W Zhang; Yong Geng; Bin Zhang; Shaohua Yang; David V Izikowitz; Haitao Yin; Fei Wu; Haishan Yu; Huiwen Liu; Weiduo Zhou

doi:10.1007/s10668-022-02612-z

Examining industrial air pollution embodied in trade: implications of a hypothetical China-UK FTA

Environ Dev Sustain. 2022 Aug 19:1-27. doi: 10.1007/s10668-022-02612-z. Online ahead of print.

Authors

Yuquan W Zhang¹, Yong Geng^{2

3

4

5}, Bin Zhang⁶, Shaohua Yang¹, David V Izikowitz¹, Haitao Yin⁷, Fei Wu^{8

9}, Haishan Yu¹, Huiwen Liu¹, Weiduo Zhou¹⁰

Affiliations

¹ China-UK Low Carbon College, Shanghai Jiao Tong University, 3 Yinlian Road, Pudong New Area, Shanghai, 201306 China.
² School of International and Public Affairs, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai, 200030 China.
³ School of Environmental Science and Engineering, Shanghai Jiao Tong University, 800 Dongchuan Road, Shanghai, 200240 China.
⁴ China Institute for Urban Governance, Shanghai Jiao Tong University, 1954 Huashan Road, Shanghai, 200030 China.
⁵ Shanghai Institute of Pollution Control and Ecological Security, Shanghai, 200092 China.
⁶ Policy Research Centre for Environment and Economy, Ministry of Ecology and Environment, 1 Yuhuinan Road, Chaoyang, Beijing, 100029 China.
⁷ Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, China.
⁸ Institute for Environmental Decisions, ETH Zürich, Zurich, Switzerland.
⁹ Faculty of Technology, Policy and Management, Delft University of Technology, Delft, The Netherlands.
¹⁰ Institute of Ecology and Sustainable Development, Shanghai Academy of Social Sciences, Shanghai, China.

Abstract

Very few developed economies have a full free trade agreement (FTA) with China. This study employs one GTAP model and builds an extended environmental multi-region input-output model to investigate a hypothetical China-UK FTA, concerning embodied industrial emissions of SO₂, PM_2.5, NO_X, and NH₃. The economic sectors are also classified based on their embodied pollution intensity and trade advantage index under various FTA scenarios. Results show that the UK's GDP and welfare and China's welfare will increase, along with changes in their trade structures. Overall, this FTA brings about larger net impacts on embodied emissions of SO₂ than on PM_2.5, NO_X and NH₃, and both countries are net importers of the latter three pollutants. Key sectors such as non-metallic mineral products, chemical products, and agriculture are inclined to become less competitive and less polluting under the FTA. The inclusion of agri-food sectors exhibits slight counteracting effects in general. The findings are of policy importance as they provide insights into how best to target key sectors, seeking a balance between trade development and environmental protection.

Supplementary information: The online version contains supplementary material available at 10.1007/s10668-022-02612-z.

Keywords: Embodied pollution; Environmental MRIO; FTA; GTAP; Trade competitiveness.

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