Air pollution's impact on sustainable trade is unmistakable: How should we proceed?

The Hinrich-IMD Sustainable Trade Index 2022 highlights a crucial link between trade and environmental pollution. As global economies continue to grow, the degradation of the environment, including air pollution, has become a significant concern. The pandemic's early stages saw a 31 percent year-on-year reduction in air pollution due to lockdowns worldwide, according to the Proceedings of the National Academy of Sciences. Visual Capitalist's ranking of 30 global economies on trade-related indicators, including air pollution, reveals a potential link between economic output per capita and air pollution. The AFPC-USA spoke with Christos Cabolis, chief economist and Head of Operations at the IMD World Competitiveness Center, to gain insights into the impact of economic activity on the environment and ways to reconfigure our relationship with trade.

Cabolis's expertise is crucial in understanding how economic activity affects the environment. He provides valuable insight into sustainable trade and how we can move forward in building a more sustainable future.

Cabolis's interview with the AFPC-USA covers the connection between air pollution and sustainable trade, highlighting the need for a reconfiguration of our current economic practices. By understanding the link between trade and environmental pollution, we can make more informed decisions and take steps towards a cleaner, more sustainable future.

Cabolis’s interview with foreignpress.org is within the scope of AFPC-USA’s partnership with the Hinrich Foundation. The AFPC-USA is solely responsible for the content of this interview.

The following conversation has been condensed and edited for clarity.

According to the 2022 Sustainable Trade Index (STI), which covers 30 countries, air pollution is a major concern for several nations. For example, India's significant export of refined petroleum has contributed to high levels of air pollution, while Pakistan and Bangladesh face environmental challenges due to their agricultural practices and industrial emissions in their rapidly growing economies.

How is air pollution connected to sustainability and how is it a threat to sustainable development?

Air pollution has far-reaching implications for all the pillars of the Sustainable Trade Index (STI). Not only does it contribute to climate change, but it also damages soil, water, and vegetation, reducing biodiversity and posing a threat to the environment. In addition, air pollution has a disruptive impact on the societal pillar by adversely affecting human health, particularly for vulnerable populations such as low-income communities. Respiratory and cardiovascular diseases are just some of the health concerns associated with air pollution.

Furthermore, the negative externality of poor air quality also has economic implications. Healthcare expenses and reduced productivity of resources, such as agricultural land, are just a few examples of the costs that must be considered. Ultimately, air pollution undermines the foundations of sustainable development, including sustainable economic growth, societal development, and environmental protection.

What is the link between air pollution and economic output per capita?

The relationship between air pollution and economic output per capita is a complex and multifaceted one. In many cases, rapid economic growth and industrialization have been accompanied by an increase in energy consumption, transportation, and industrial activities, which often lead to higher levels of air pollution. This is particularly true for emerging economies, where air pollution levels can be especially high. As we noted earlier, air pollution can have negative effects on economic growth, potentially reducing labor productivity and increasing healthcare costs.

How do lower-income economies bear the brunt of environmental hazards like air pollution?

Lower-income economies are disproportionately affected by environmental hazards, such as air pollution, due to a variety of social, economic, and environmental factors. Inadequate environmental regulations and enforcement mechanisms, particularly in the industrial and transportation sectors, can result in higher pollution levels. Furthermore, the use of traditional fuels like oil, wood, and charcoal is more common in these economies than clean energy sources, further contributing to pollution. Limited access to healthcare and resources to deal with the health consequences of air pollution is also a challenge. Climate change is another factor, as lower-income economies are more vulnerable to the effects of natural disasters like wildfires and dust storms, which can worsen air pollution.

How are trade and environmental sustainability compatible?

Trade and environmental sustainability can, in principle, be compatible. However, achieving this requires a comprehensive approach that takes into account the environmental impacts of trade while promoting sustainable trade practices.

Ultimately, achieving compatibility between trade and environmental sustainability requires collaboration among all stakeholders, including governments, businesses, and civil society organizations.

We tend to hear only the negatives: What are the positive environmental impacts of trade?

Trade can have positive environmental impacts that are often overlooked. By increasing the available choices for goods and services to both consumers and producers, trade can enhance efficiency, productivity, job creation and innovation, ultimately leading to growth and development. One of the key ways trade can support environmental sustainability is through certification schemes such as Rainforest Alliance or Fairtrade, which promote the production of sustainable agricultural goods.

Furthermore, trade can encourage the transfer of environmental technologies and expertise between countries, leading to the reduction of greenhouse gas emissions and the improvement of air and water quality. For example, the UN Clean Development Mechanism (CDM) facilitates the transfer of clean energy technologies from developed to developing countries.

Finally, trade can drive green innovation. The increasing demand for renewable energy technologies has led to the growth of the renewable energy industry, with countries like China becoming major exporters of solar panels and other renewable energy technologies. Meanwhile, countries such as Germany and Denmark have developed significant expertise in wind power technology. In all these areas, trade can have positive environmental impacts that are crucial for sustainable development.

How can developed countries lead the way to ensure global trade has a lower impact on the environment?

Developed economies can also promote sustainable consumption by providing technical assistance and capacity building to governments, civil society organizations, and the private sector. The UN Sustainable Lifestyles and Education (SLE) program promotes sustainable consumption and production practices, while the SWITCH-Asia Program provides funding and technical assistance for projects that support sustainable consumption and production practices such as eco-labeling, sustainable supply chain management, and green public procurement.

Overall, developed economies can lead the way towards a more sustainable and environmentally responsible global economy by implementing strong environmental regulations, promoting sustainable development and consumption, promoting sustainable trade agreements, and encouraging corporate sustainability. However, it is important that collaboration between developed and developing economies establishes meaningful and feasible objectives and requirements for such initiatives to be successful.

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Adapted from the original article by ForeignPress.org.

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