How Green Are Your Imports? This Index Provides an Answer
Co-authored with Vali Mara
The 2018 Environmental Performance Index (EPI) was recently released at the World Economic Forum in Davos, revealing once again that high income countries generally outperform low income countries. CIESIN, a unit of the Earth Institute where I work, has been involved in developing the EPI since 2006. (For past releases visit the NASA SEDAC.) This year’s top 10 performers—Switzerland, France, Denmark, Malta, Sweden, United Kingdom, Luxembourg, Austria, Ireland, and Finland—generally have well-developed economies dominated by the service sector (i.e., post-industrial), strong environmental protections, and relatively low carbon emissions considering their income levels. They could be considered paragons of environmental virtue.
But to what degree do these “green” countries depend on the import of goods and services from more polluting countries? Are these advanced countries “exporting” their polluting industries to developing countries, as has been reported in The Guardian and more recently in The Conversation? As a co-author of the EPI, the question interests me. We live in a globalized economy and trade links greatly complicate our ability to isolate environmental performance to the nation state.
There are many possible ways to evaluate whether wealthy countries receive high scores at the expense of rapidly industrializing developing countries. As a first cut I worked with a CIESIN statistician, Vali Mara, to develop a Green Imports Index (GII) that builds on the EPI.
In the EPI, countries are assigned scores for each of 24 indicators ranging from 0 to 100, with 0 representing worst performance and 100 representing best performance. The indicators rate a country on its performance on a range of issues such as air pollution, waste water treatment, biodiversity protection, deforestation, nitrogen runoff, pressure on marine fisheries, and carbon emissions. The EPI represents a weighted average of these indicator scores (see methodology for details). As a result of this averaging, Switzerland obtained a top EPI score of 87.4, whereas Burundi obtained the worst score, at 27.4.
The GII represents a weighted average of the EPI scores all the countries from which a country (“Country X”) receives imports. The weights are based on the proportion of total imports of all goods (in US dollars) from each country Y (exporting countries) to Country X, based on data from the UN Comtrade database.
Table 1 shows the results for the top 30 countries on the GII. What we see is that European countries still perform well, in part because imports from neighbors often make up the highest proportion imports in any given country. If your neighbors are green, you stand a better chance of having green imports. But, we also see that several countries that were lower ranked—especially former Eastern European countries including Hungary, Romania, Latvia, Croatia, Estonia, Slovenia and the Czech Republic—rise to the top 30. A number of these countries have acceded to the European Union, which has likely increased their trade links with green neighbors. Three African countries—Cape Verde, Morocco, and Tunisia—also do well on the GII. In addition, as we see below, a number of “post-industrial” countries tumble down the ranks when comparing their GII to their EPI scores.
Table 2 shows a comparison between each country’s GII and EPI ranks, with countries sorted based on their EPI ranks. The colored cells in the last column point to the greatest rank changes. What the table reveals is that our top-scoring countries on the EPI, Switzerland and France, see declines of 17 and 18 ranks, respectively, when comparing their GII to their EPI ranks. For Switzerland, the score is strongly affected by high dollar values of imports from Germany (ranked 13th on the EPI) and the US (ranked 27th), which respectively contribute 19 and 9 percent of total value of goods imported. France’s GII score (and associated rank) is brought down by high values of imports from Germany and China (ranked 120th), which respectively contribute 17 and 9 percent of total value of goods imported. The UK also sees a significant drop in rank owing to imports.
Japan, Australia, and the US are among the countries with the greatest drops between their EPI and GII ranks. Japan is heavily dependent on lower-scoring China, US, Australia, and Korea for more than 46 percent of imports of goods. Australia has high dependence on lower scoring-China and the US for one-third of its imports. And the US is dependent on lower-scoring China and Mexico for more than one-third of its imports.
On the other hand, a number of top-10 EPI countries either see increased ranks (Austria, Luxembourg, Ireland, and Sweden) or relatively little change. Ireland increases 7 rank spots to #2 on the GII owing to high levels of imports from higher ranked France and the UK, which together constitute 36 percent of all its imports by value. Luxembourg, the #1 ranked country on the GII, benefits from a high volume of imports from higher-ranked France (11.5 percent of all imports).
Beyond these high level findings from this quick and dirty analysis, another thing we learn is that there are important neighborhood effects: countries in Europe tend to have high levels of imports from relatively high-scoring neighbors, resulting in higher GII scores, whereas countries in Africa will tend to have lower GII scores owing to high levels of imports from lower-scoring African neighbors.
Caveats and future improvements: Note that there are some important gaps in the Comtrade data, which means that some large countries such as Venezuela, Bangladesh, Kenya, and Vietnam are not included. This means that GII ranks may be artificially inflated for some countries in our sample. In the future, a more sophisticated analysis might focus on imports of goods that are produced using particularly polluting industrial processes, or trends in a trade-weighted EPI (to see if the sources of imports for Country X are getting greener or dirtier).