Fending off Waste from the West: Effects of the Operation Green Fence on the International Waste Trade

Abstract: Existing international legislation has been shown to have little impact on the waste trade flows from developed to developing countries. Our paper is the first to explore the effect of unilateral action of enforcing more stringent domestic regulation on the international waste trade. We study the Operation Green Fence (OGF), a 10 month long intervention in China that strictly enforced existing waste import standards. We assess the short-term effects of the OGF on the non-hazardous waste exports from developed countries to China and to other developing countries. Taking advantage of the natural experiment setting and high quality international trade panel data, we run a fixed effects gravity model and claim causal effect of the OGF. During the OGF we find a 24% average drop in low quality waste exports to China from developed countries and a 16% increase in exports to other developing countries. We find no empirical evidence that the low quality exports were disproportionally absorbed by countries with lax environmental legislation. We conclude that strictly enforcing rigid domestic waste import environmental regulation within large developing waste importers is an effective tool to reduce low quality waste flows into the country and to possibly reduce the overall waste flows from developed to developing countries.