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Tuesday, October 25, 2016

China Consumes More Pork, and Latin Americans Pay the Environmental Price

I've written before about the environmental impact of feeding more people, especially in China, the world's most populous country and second largest economy. A new report out from Boston University tries to gauge this impact on Latin American and Caribbean (LAC) countries. China has become a huge trading partner with Latin America, but China mainly buys agricultural and mineral resources, while selling manufactured goods. As the report notes, this is essentially a backward step for Latin America.

LAC is, in effect, exporting water and importing carbon. Overall, LAC’s boom in exports to China has driven the region’s production into carbon- and water-intensive sectors. At the same time, LAC’s boom in imports from China has further increased the region’s environmental footprint on both fronts.
Contrary to the hypothesis of the environmental Kuznets curve, primary production is more environmentally sensitive than manufacturing in LAC: it creates more net greenhouse gas emissions and uses or contaminates more water per million dollars. So it is not surprising that LAC exports to China are more environmentally sensitive than other LAC exports. Given these risks associated with this important new economic relationship, LAC governments would be wise to approach it with reinforced emphasis on setting environmental safeguards that meet the needs of their development strategies.
Although the focus of the report is not on any specific Latin American country or countries, we in the U.S. are obviously especially interested in Mexico. One of the features of the current presidential campaign in the U.S. is Donald Trump's insistence that NAFTA was one of the worst trade deals ever signed. Admittedly, it didn't turn out as well as expected, but that was not the fault of those who designed the deal. I was one among many demographers who testified before Congressional committees and caucuses back in 1993 as Congress was debating the bill. My recollection is that we were all in agreement that good jobs in Mexico would raise wages in that country, thus cutting down migration to the U.S., while also offering cheaper goods for sale in the U.S.--a genuine win-win. NAFTA was, however, undermined by the fact that East Asian countries (principally China and South Korea) offered companies even lower wages than were prevailing in Mexico, and jobs wound up going to Asia rather than Mexico. My sense is that these global dynamics are not well understood by the current crop of American politicians.

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