Toxic pollution and employment dynamics: uncovering Europe’s left-behind places

Abstract:

The dark sides of pollution are still relatively understudied by the economic literature. Although more attention has been devoted to health-related effects, fewer investigations have been conducted in terms of the negative effects propagating from pollution to socio-economic deprivation, particularly in terms of employment by looking at point-source pollution from industrial facilities. Indeed, the presence of a highly polluting facility in a given area might adversely affect regional economic development, both in terms of employment segregation in such facility and sector, but also in terms of the poor economic trajectory and specialization in which the place might end up, reducing employment opportunities over time (see relatedly, Boschma et al., 2017). Such negative spillovers are tangible in places such as ILVA in Italy, INEOS Chemicals Grangemouth in UK, and Lausitz Energie Kraftwerke in Germany, the so-called left-behind places in Europe, but have been poorly investigated until recently. While regional studies often focus on performance dimensions of firms (MacKinnon et al., 2022), less room has been devoted to studying negative-quality indicators, such as environmental pollution as by-product, or dark side, of economic activity that varies significantly at the facility level (see, e.g., Biggi et al., 2022). Making left-behind places a priority area of research would also move the discipline forward in acknowledging the notion of crisis of contemporary capitalism (see Leyshon, 2021). The emergence of toxic pollution as a cause and consequence of growing regional inequalities adds a new dimension to recent geography studies such as Pinheiro et al. (2022). The literature of left-behind places stresses its multidimensionality (MacKinnon et al., 2022). However, while socio-economic and in particular cultural-political consequences are being investigated (see, e.g., Rodríguez-Pose, 2018; Dijkstra et al., 2020; MacKinnon et al., 2022), so far it has remained silent on the environmental dimension. We propose to include the latter through the concept of so-called sacrifice zones which jointly conceive environmental toxicity and economic disinvestment (see Lerner, 2012), and recently have been developed further by Feltrin et al. (2021) to coin the term "noxious deindustrialization" as left-behind places where ongoing pollution and underemployment coexist. This paper investigates the latter concepts by looking at the nexus between industrial pollution that is toxic to human health, and the spillovers from the plant’s production activities in terms of employment opportunities, leading to regional lock-ins. Geolocalised facility-level data from the European Pollutant Release and Transfer Register (E-PRTR) (European Commission, 2006) are used to calculate annual chemical-specific pollution, weighted by CAS-number toxicity using the USEtox 2.12 model. The E-PRTR contains environmental data from over 30,000 georeferenced industrial facilities in Europe, with information on quantities of 91 key pollutants released to air, water and land. Combined with regional employment data sourced from Cambridge Econometrics, our analysis covers more than 1200 NUTS-3 regions for 15 European countries, over the period 2007-2019. First, a spatial mapping of toxic pollution by sector, chemical group, and toxicity levels provides evidence for strong disproportionalities across all levels (in line with, e.g., Collins et al., 2016; Zwickl et al., 2014). This result can be considered as novel evidence for regional environmental inequality in pollution production and exposure in Europe, and stresses that implementing environmental stringency requires very selected interventions. Second, we show that pollution and toxicity are associated with regional employment deprivation. The effect of pollution from the chemical and the metal industry on employment in levels is particularly strong, pointing to the need for sector-sensitive regulation. Overall, the analysis pinpoints the stratification of socio-economic and environmental risks and opens up another channel of inequalities and asymmetries characterizing modern capitalism, namely environmental inequality. The latter does not occur randomly but rather couples with, and exacerbates economic deprivation. From a policy perspective, addressing the economic consequences of toxic pollution is crucial for the design of green industrial policies able to reconvert such sacrifice zones by reducing toxic pollution. In this way, places until now left behind by urban and regional policy will attract renewed political attention, and a transition to a more economically and environmentally just society will be fostered.