Is there an environmental benefit to being an exporter? Evidence from firm-level data

Abstract

One of the greatest concerns over globalisation is its impact on the environment. This paper contributes to this debate by analysing the consequences of becoming an exporter on a firm's energy consumption. We show both theoretically and empirically that for low fuel intensity firms exporting status is associated with higher fuel consumption while for high fuel intensity firms exporting is results in decreased fuel consumption. Further analysis reveals that higher fuel consumption of low fuel intensity firms occurs after exporting, perhaps as a response to increased production. In contrast, firms using relatively large quantities of fuel decrease their energy use after exporting, perhaps by adopting more fuel-efficient technology. These results indicate that the use of aggregate data, as is the case in almost all studies of trade and the environment, is likely to conceal important connections between the two.

Subglobal carbon policy and the competitive selection of heterogeneous firms

“…Coalition policies offer a competitive advantage for energy intensive production in non-coalition regions. Relative to an Armington structure, 12 Batrakova and Davies (2010) provide evidence that selection into export status is consistent with lower fuel consumption by high fuel intensity firms. Another interesting qualitative difference to notice across structures (in Figure 1) is that, under the Melitz structure, coalition welfare remains below its BAU level when border measures are imposed.…”

“…Bustos (2011) looks specifically at the impact of trade on technology adoption. Of relevance to climate policy, Batrakova and Davies (2010) provide evidence that firm-level export behavior is 1 The EIT sector was agreed to as the aggregate manufacturing industry to focus on for the EMF model comparison exercise on trade and border carbon adjustment. The EIT sector includes the metals, chemicals, rubber, plastic, and minerals industries.…”

Trade and the Environment: The Role of Firm Heterogeneity

“…Firms differ in their productivity, as in Melitz (), and we assume that firm‐level emission intensity is linked to firm‐level productivity. While in our model firm‐level emission intensity could increase or decrease with firm‐level productivity, depending on parameter values, we focus—in line with empirical evidence (Forslid et al, ; Batrakova and Davies, ; Cui et al, )—on the case that more productive firms are also environmentally more efficient. In this setup, unilateral trade liberalization affects average emission intensity in the economy via a previously unmodeled reallocation effect .…”

Exporters and the environment

“…Introducing productivity differences into the trade and environment debate provides some evidence of how international trade exposure may impact firm‐level emissions. Batrakova and Davies () show that exporters use energy more efficiently than competitors for a panel of Irish firms. Cui et al.…”