Ecological Indicators 47 (2014) 156–163 Contents lists available at ScienceDirect Ecological Indicators journal homepage: www.elsevier.com/locate/ecolind China’s unequal ecological exchange Yang Yu, Kuishuang Feng, Klaus Hubacek ∗ Department of Geographical Sciences, University of Maryland, College Park, MD 20742, USA article info Article history: Received 21 November 2013 Received in revised form 30 January 2014 Accepted 31 January 2014 Keywords: Local consumption Global supply chains Ecological unequal exchange Multi-region input–output analysis China abstract Since the economic reform started in 1978, China has experienced unprecedented economic growth and rates of urbanization and associated changes in lifestyles. As a result, China has become one of the world’s greatest consumers of natural resources. In a tele-connected world, China’s demand for goods and services is increasingly met by global supply chains involving countries that are situated in far geo- graphical distances, and where processes at each stage in the production chain create environmental impacts. On the other hand, China is the world’s largest exporter producing goods for the consumption in developed countries. Based on the hypothesis of ecologically unequal exchange that low and middle income countries export natural resources and high impact commodities thus allowing richer countries to reduce ecologically harmful industries domestically, we assess the unequal exchange between China and the rest of world (186 countries) using value added, and four environmental indicators: SO 2 emis- sions, GHG emissions, water, and land, associated with China’s trade relations with the outside world. By using a global multi-region input–output model, we found that developed regions, such as North America, the EU and East Asia including Japan, South Korea externalize environmental impacts through importing goods produced in China. By contrast, less developed regions, such as Southeast Asia, South Asia and Africa, export large quantities of goods and associated SO 2 and CO 2 emissions, land and water to China, but only gain relatively small shares of economic values in exchange. Less developed countries may recognize the value of resources and the cost of pollution and launch stricter environmental policies to prevent further ecologically unequal exchange with developed countries. © 2014 Elsevier Ltd. All rights reserved. 1. Introduction Ecologically unequal exchange posits that natural resources being extracted from poor countries to satisfy consumer demand in richer countries (Moran et al., 2013; Walter and Alier, 2012). In classical economic theory ecologically unequal exchange is a result of specialization and trade (Moran et al., 2013). According to this theory countries would export goods and services for which they have a comparative advantage, with trade allowing for better allocation of resources which in turn is leading to an increase in global social welfare (WTO, 2010). In principle, trade can spatially distribute environmental burden among the least sensitive natu- ral systems, since natural resources such as land are immovable, trade is the only way to spatially match consumption, production, and resources (Van den Bergh and Verbruggen, 1999). However, because of a variety of market failures, natural resources are often under-valued and therefore not allocated efficiently or equitably (Wackernagel and Rees, 1997). Prices may not necessarily reflect ∗ Corresponding author. Tel.: +1 301 405 4567. E-mail address: hubacek@umd.edu (K. Hubacek). real material flows, including the energy and productive potential embodied in these flows, and the environmental and human health costs incurred (Giljum and Eisenmenger, 2004; Hornborg, 1998). There may nonetheless be an unfair exchange of energy, productive potential and sink-capacity demand among trading partners, even in cases where trade is balanced in monetary terms (Andersson and Lindroth, 2001; Rice, 2007). The ecologically unequal exchange concept is rooted in world- system theory, which assumes that national development cannot be understood if isolated from the global system, where relatively few nations exert great economic and military power (Braudel, 1981; Jorgenson, 2006; Jorgenson and Rice, 2005, 2007; Roberts and Parks, 2007; Wallerstein, 1974). These economically and militarily powerful countries are advantageously situated within the world economy and appropriate a disproportionate share of natural resources as well as externalize the environmental costs of their production, consumption and disposal activities (Bonds, 2012; Rice, 2007; Roberts and Parks, 2007). For example, Prell et al. (2014) assessed the economic gains and environmental losses of US consumption and found that larger shares of value-added are generally prompted within the “core” countries, whereas the opposite effect tends to be experienced in the “periphery” http://dx.doi.org/10.1016/j.ecolind.2014.01.044 1470-160X/© 2014 Elsevier Ltd. All rights reserved.