C. Runge

Recent Articles

Environmental Risk and the World Economy

Health and the environment are no longer purely matters of domestic policy. In the 1980s air pollution, acid rain, and global warming became major items on the international agenda. That shift reflects growing recognition of the global impact of economic development and the rising problem of international "externalities," as hazards spill over national borders and affect the oceans, air, and climate. But just as health risks flow through the world's physical environment, so they also flow through the world economy -- and threaten to disrupt it. Risk tends to move to countries with the least regulation, in some cases because the advanced economies are directly exporting to the less advanced various products and production methods no longer considered safe at home. Ironically, the higher the advanced countries set their regulatory standards, the more they create incentives for a kind of "environmental arbitrage," that is, for making a profit by producing goods cheaply where regulation...