A Research On Internalization Of Environmental Cost In International Trade

Environmental sensitive industries will produce lots of pollutant directly or indirectly if there is no governance during the production, so they can also be called pollution-intensive industries. China is a big exporter of Environmental sensitive products, and the development of the industries has contributed a lot to Chinese economic growth. However serious environmental pollution and resource depletion has also been brought about, due to the inherent defect of traditional trade pattern which is the price of the goods cannot reflect the environmental cost. Internalization of Environmental Cost is generally accepted as an effective way to solve the problem.. At present, the emission load of three industrial wastes and the energy depletion in chemical industry and paper industry are generally increased year by year in China, moreover, the human's environmental consciousness is enhancing a lot and the Environmental Treaties is more and more strict world while, so it is imperative to carry out the internalization of environmental cost for Chinese environmental sensitive industries. International competitiveness of goods must be affected after internalization of environmental cost. In the paper, qualitative analysis and quantitative analysis are combined to research this question. For qualitative analysis, the Environment-Competitiveness model is adopted. The result shows that the effect of internalization of environmental cost is not same to all environmental sensitive industries, for industries with innovativeness like chemical industries; it may produce positive effect except the increasing cost. What is more, the effect is different between short period and long period, in the short run, it will add the goods'cost and weaken the goods'international competitiveness, but in the long run, it can force the companies to use advanced technology, resulting to reduce the pollution and resource deletion. For the quantitative analysis,in this paper,chemical industries is chosen as the representative of environmental sensitive industries. RCA is adopted to reflect the international competitiveness, and pollution concentration is used to reflect the level of internalization of environmental cost. The result shows that the internalization of environmental cost has little negative effect to the international competitiveness of Chinese chemical industry. All in all, it is feasible to internalize the environmental cost for the environmental sensitive industries, and it is good for the environment protection and the reasonable use of nature resource. The measures of internalization of environmental cost includes: delimitation of property rights, making reasonable price for environmental resources and Polluter Pay Principle. For developing countries like China,the level of internalization should also be thought. The carrying out of internalization needs the common effort of there aspects: the government, the industry and the company. The government should make related laws and so on, for the industry aspect, the green industry should be promoted, and thirdly, the company should adopt advanced technology to increase efficiency.