Should We Ban the Export of Coal?

by Reihan Salam

As you can imagine, I tend to think that we should not ban the export of coal. But one of the ironies of efforts to restrict coal-fired electrical generation in the U.S. is that, as Brad Plumer reports, coal exports to East Asia and countries that impose less stringent emissions regulations more broadly might soon increase dramatically. The net result would be increased global carbon emissions.

This isn’t as absurdly perverse an outcome as one might think at first glance: apart from carbon emissions, coal-fired electrical plants emit particulate matter that can have adverse consequences for human health, and more specifically for infant brain health. Perhaps we can understand a shift away from coal-fired electrical generation as a decision to spend more to protect the health of individuals residing in the United States at the expense of a somewhat higher level of global carbon emissions. Meanwhile, less affluent countries, particularly those that prioritize economic growth while discounting public health to at least some degree, will have access to cheap, reliable fuel. 

One is reminded of the infamous 1991 Summers memo, which included the following:

1) The measurements of the costs of health impairing pollution depends on the foregone earnings from increased morbidity and mortality. From this point of view a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

2) The costs of pollution are likely to be non-linear as the initial increments of pollution probably have very low cost. I’ve always though that under-populated countries in Africa are vastly UNDER-polluted, their air quality is probably vastly inefficiently low compared to Los Angeles or Mexico City. Only the lamentable facts that so much pollution is generated by non-tradable industries (transport, electrical generation) and that the unit transport costs of solid waste are so high prevent world welfare enhancing trade in air pollution and waste.

3) The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity. The concern over an agent that causes a one in a million change in the odds of prostrate cancer is obviously going to be much higher in a country where people survive to get prostrate cancer than in a country where under 5 mortality is is 200 per thousand. Also, much of the concern over industrial atmosphere discharge is about visibility impairing particulates. These discharges may have very little direct health impact. Clearly trade in goods that embody aesthetic pollution concerns could be welfare enhancing. While production is mobile the consumption of pretty air is a non-tradable. [Emphasis added]

While many were shocked by Summers’ sentiments, the migration of labor-intensive manufacturing work to emerging economies partly reflects the fact that poor countries are often eager to welcome forms of production that people in affluent countries consider unacceptably dirty. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.