Environmental effects of shipping imports from China and their economic valuation: the case of metallic valve components

Abstract

This paper aims to consider the total cost, including polluting environmental emissions, of imports from China to Europe of five valve components in aluminium, steel and iron. These are compared with locally produced alternatives to investigate whether internalising such external costs affects their price competitiveness. Seaborne trade represents 90% of international trade and is growing faster than the world's economy, but marine pollution emissions are not reflected in market prices. Chinese aluminium, iron and steel production are about 2.5 times more polluting than their European counterparts, but this is also not reflected in prices. In this paper both types of extra emissions are calculated, valued and added to the cost of the components analysed, for comparison with locally produced alternatives. The locally produced components generally remain uncompetitive with Chinese imports for all likely values of external cost, except for heavy aluminium components under high external cost assumptions. The Chinese iron components analysed are simply too low in cost for European (in this case Spanish) equivalents to be competitive even allowing for environmental costs; while the stainless steel ones are so small and light that transport cost, even including externalities, is not significant. While these specific results are of limited generalizability, they provide insight into an issue of considerable and growing importance. Some suggestions are offered for further research. (C) 2011 Elsevier Ltd. All rights reserved.