Waste Haven Transfer and Poverty-Environment Trap: Evidence from EU

Abstract

This paper tests the extent to which the migration of "waste haven" causes a "poverty-environment trap". That is to say, imported waste caused the mid-income trap of the less developed European countries. Using Spatial Durbin Model on waste carbon dioxide emission of 28 EU countries from 2001 to 2018, we estimate the carbon footprint of imported wastes of the European Union (EU) members. The result shows an inverted "U" shape curve between GDP per capita and imported waste carbon footprint, confirming an Environment Kuznets Curve of "waste haven" transfer. It hinders the inbound of high-quality FDI. In the further mechanism test, we found industrial structure, FDI, industrialization, and urbanization are responsible for the spatial-temporal transfer of "pollution haven" and "environmental-poverty trap". The results also show that "waste haven" may accelerate the economic growth of less developed countries to some extent, however, with a higher percentage of dirty industries, FDI in the pollution-intensive sectors of these countries worsens their environmental conditions. It reinforces pollution haven effects and created a vicious circle of "poverty-environment trap" for low-income countries in the EU.