Plastic Turkey: International Leakages of China's Waste Contamination Policy

Abstract
Global plastic production has increased dramatically over recent decades, and it has generated large volumes of plastic waste. High-income countries reduce their plastic waste burden by exporting it to developing countries. China has been a major importer of plastic waste since its integration with the global economy. But following environmental concerns over waste disposal and processing, China banned key plastic waste imports in 2017. This paper shows that China’s policy led to a dramatic diversion of trade that had repercussions for emerging markets across the world. Turkey became a major importer of plastic waste from more advanced economies. Importers in Turkey got better access to plastic waste that could be recycled as inputs in production. But imports of plastic waste displaced domestic waste in production, and we show that firms in Turkey that generated plastic waste became more likely to mismanage it, including through burning or dumping in water bodies. Emissions from waste management increased in Turkish regions that were more specialised in production of the waste products banned by China. While importing firms increased output, their gains were not enough to undo the losses faced by domestic waste suppliers. The policy led to economic losses and more waste emissions in Turkey, but it offered savings in emissions from reduced use of virgin resources in plastic production. We model the channels of recycling and environmental degradation in a gravity model of trade and the environment to quantify the global spillovers of environmental externalities and the welfare impacts of China’s import ban. Joint paper with Deniz Atalar and Swati Dhingra.