Environmental-social-economic footprints of consumption and trade in the Asia-Pacific region

Heterogeneous and affluence-influenced footprints of APAC

The amount of natural resource extractions, environmental emissions, and socio-economic influences associated with satisfying the final demand of average person vary significantly among the eight APAC countries/regions (Fig. 1). The variations correlate with differences in affluence levels (Supplementary Table 2), which is consistent with the findings of previous footprint research focusing on GHG emissions4, and blue water consumption42 across countries worldwide. While the footprints of lower-income countries (e.g., India, Indonesia, RoAP, and China) have also increased with poverty alleviation, yet, most of them are still below the global averages by 2015. In addition, based on the varying environmental footprints (i.e., blue water, energy, and GHG) of the region’s six countries assessed annually from 1995–2015, we find some evidence for the Environmental Kuznets Curve (EKC) hypothesis, i.e., environmental pollution first rises and then falls as economic development proceeds (Supplementary Fig. 1 and Supplementary Fig. 2). Previously, few studies have addressed the socio-economic implications driven by final demand, such as the labor inputs required (employment) and revenues generated (value added)1. Here we find that a country/region’s employment and value-added footprints are both positively correlated with its affluence level.

Fig. 1: The environmental-social-economic footprints of APAC countries/regions in 1995 and 2015.

The six footprint indicators fall into three categories and are presented in a natural resource, b local and global environmental threats, c socio-economic effects. The eight countries/regions are aligned on the y-axis following a descending order by average income per capita in 2015. Footprints are further broken down to the impacts occurred within the country/region, abroad in other APAC countries/regions, and abroad in non-APAC countries/regions. In each subplot, the dashed line indicates the world average level. GHG (CO2, N2O, and CH4) are measured in CO2 equivalent based on the 100-year Global Warming Potential (GWP100). Note, in the plots for value added, we use the insets to show the footprint compositions of the last four countries/region. China refers to Chinese mainland, and we call Taiwan, China as Taiwan for short in the rest.

Affluence levels also affected the geo-compositions of the footprint indicators in the APAC region. Richer APAC economies showed high and increasing reliance on outsourcing blue water consumption, PM2.5 emissions, and labor abroad, especially within the APAC region. Specifically, 58, 56, and 52% of the blue water footprints of Japan, South Korea and Taiwan were traced to water consumed in other APAC economies in 2015 (Fig. 1), primarily through the intra-APAC trade of agricultural products, such as sugar cane/sugar beet and paddy rice (Supplementary Fig. 3). In contrast, the final demand of middle- to low-income APAC economies has been largely satisfied by domestic natural and labor resources over the two decades. Moreover, during the same period, the PM2.5 footprint of high-income APAC economies (Australia, Japan, South Korea, and Taiwan) that occurred in other APAC economies increased from ~17 to 40%. Yet, for the less wealthy countries (e.g., China, India, and Indonesia), 75−99% of PM2.5 footprints were indigenous, a considerable fraction of which are attributed to direct household emissions (Supplementary Fig. 3). The consumption of traditional fossil fuels and biomass (e.g., fuelwood and agriculture wastes) for home cooking and heating, and the open-air combustion of biomass, especially in rural areas of India and China has been considered a significant source of PM2.5 emissions43,44,45.

Among all the indicators, we find the value-added footprints of the APAC economies, i.e., the contributions of their final demand to global economic growth (domestic + intra-APAC + non-APAC) experienced the most significant increases. Such increases are especially significant for the middle- and low-income APAC economies. For example, China’s per capita value-added footprint increased by eight times during 1995−2015, followed by India (217%), Indonesia (113%), and RoAP (82%). The rates are much higher than those experienced by the high-income economies (28% on average).

The APAC economies have grown more interdependently linked during the past two decades. Depending on the footprint indicators, the foreign footprint shares traced to APAC countries (Abroad, APAC in Fig. 1) increased by 4–27% while the domestic shares decreased by 3–33%. Given that the compositional changes within the aggregated RoAP cannot be estimated, the variation of RoAP is not included in the ranges. The increased intra-APAC interdependencies are primarily attributable to the strengthened linkages among the six major APAC countries. In contrast, India’s environmental-social-economic footprints remained predominantly domestic (90–99% in 1995 and 82–97% in 2015). Previously, researchers highlighted that resource constraints have already become a bottleneck for India’s social and economic development, such as fresh water scarcity46 and energy deficiency47. Air quality deterioration caused by PM2.5 emissions has also made India under severe health burden48. Our results here confirm that India remains highly dependent on local resource use and labor-intensive production activities to sustain its socio-economic growth. Engaging in international trades has the potential of reducing the depletion of local scare resources (e.g., blue water and energy) through import while adding employment and added-value through exporting goods produced with abundant labor resources and low environmental impacts locally1,30. The trade-environment relationship is primarily rooted in the economic principle of competitive advantages among countries for international trade. Therefore, adopting the strategy of reducing trade barriers rationally, increasing the openness to the outside world to actively promote international economic cooperation may be one solution to alleviating the pressure of domestic resource depletion (i.e., water and energy) and environmental damages (i.e., carbon and air pollutions) during India’s economic growth.

Footprint outsourcing and disparity through intratrade

The linkages and imbalances among the APAC countries/regions, through the virtual flows of environmental-social-economic resources embedded in intra-APAC trade, are highlighted in Fig. 2 (2015) and Supplementary Fig. 4 (1995). The intra-APAC trade patterns observed over the past two decades confirm that developed economies (Japan, Australia, South Korea, and Taiwan) import natural resources and labor from less-developed regions where resources and labors are cheaper (China, India, and RoAP). In 2015, for the 37 billion m3 of net bilateral virtual water trade in the region, nearly 80% was associated with the exports from RoAP and India, while ~50% was driven by the final demand of Japan and South Korea, mainly embedded in a range of water-intensive agricultural crops and products. Yet, as mentioned above, India has already been threatened by serious water crises with low availabilities of safe drinking water49. For the 15 EJ net bilateral energy flow embedded in the 2015 intra-APAC trade, China was the main net supplier to the rest of the region, contributing 43%, followed by South Korea (27%), which possesses strong petrochemical and steel industries. China’s net energy outflows were predominately embedded in energy-intensive products (e.g., coal power, steel, and gasoline), 73% of which ultimately served RoAP’s final demand. Of the 488 Tg net bilateral flows of GHG emissions, 76% was supplied by China, while the final demand of RoAP contributed more than half of it (286 Tg), and the rest is attributed to the final demand of four higher-income economies (Australia, Japan, South Korea, and Taiwan, 123 Tg in total). 81% of the 677 thousand tons of net bilateral PM2.5 flows occurred in China and India. And 38% of the net flows were driven by the final demand of four higher-income economies. The social and economic effects of the intra-APAC trade are more nuanced than those related to natural resources and emissions. The Intra-APAC trade resulted in a net bilateral outpouring of 99 million people, i.e., labor resources, in 2015. RoAP was the largest net labor supplier, contributing 77%, while Australia, Japan, South Korea, and Taiwan had net inflows of labor to satisfy their final demands, equivalent to employing 11.4, 27.6, 9.3, and 5.6 million people from the rest of APAC, respectively. In terms of net flows of value added, the intraregion pattern appears significantly different and almost opposite from those of other indicators. By net outpouring value added to other APAC economies, China turned from the second trade surplus country in 1995 to the largest one within APAC in 2015, followed by the developed economies. Yet, on the per capita basis, South Korea, Australia, Japan and Taiwan achieved the most prominent economic gains through the intra-APAC trade.

Fig. 2: Net environmental-social-economic virtual flows of the intra-APAC trade in 2015.

The top five net flows are shown for each footprint indicator, and fall into three panels a natural resource, b local and global environmental threats, c socio-economic effects. The width of the arrows in each panel represents the magnitude of the net flow within the APAC region. The background colors indicate the specific net footprint (import-export) per capita of each region/country. The negative net footprint indicates net displacements (of resource use, emissions, labors, and economic value added) to other APAC countries/regions. Note, the background color and flows of Taiwan, China could not be shown on the map.

Our results further demonstrate that the economic and environmental inequity owing to the intraregional trade worsened along time. From 1995 to 2015, the majority of the environmental externalities (i.e., more than 90% of the virtual water flows) were shifted from higher-income to lower-income countries, with a considerable worsening trend for PM2.5 (Supplementary Table 3). As for the economic gains associated with the intraregional trade, higher-income countries’ share increased from 38 to 59% from 1995 to 2015. At country level, China experienced the most significant transformation in intra-APAC trade, especially in the virtual trade of water and labor. For virtual blue water flows, China turned from the second largest net exporter of the region in 1995 to the third largest net importer in APAC (5.3 billion m3), largely due to the reverse of the import-export relationship with RoAP. Over the same period, the net virtual water export of India surged by 161%, despite the aggravating water stress concerns. China turned from the largest net supplier of employment (Supplementary Fig. 4) to the second net demander in APAC after two decades, while RoAP showed an opposite trend. For example, the labor- and resource-intensive textile and apparel production industries have been shifted from China to other less-developed countries, such as Vietnam and Bangladesh50. Such a role switching stemmed from the rising labor costs in China, which is expected to drive more low-end manufacturers to low-cost foreign economies in the coming years51,52. Overall, based on the consistently calculated virtual flows of multiple indicators, we highlight a growing environmental-socio-economic disparity within the APAC region, owing to the intraregional trade. The undesirable environmental externalities are primarily and increasingly shifted from higher to lower-income economies, while higher-income economies achieved more economic gains.

The role of APAC and intra-APAC trade in globalization

APAC is becoming an important player in the globalization process: as natural resource suppliers and manufacturers for the rest of the world, for managing global environmental emissions, and in the labor and monetary markets (Fig. 3). By 2015, APAC-related share of these categories had surpassed 50% (the red, yellow, and blue parts in Fig. 3). In contrast, the international trade without APAC countries (gray in Fig. 3) shrank for all the indicators. Moreover, for all the footprint indicators, the intra-APAC trade and non-APAC’s outsourcing to APAC (red and yellow parts in Fig. 3, respectively) account for a considerable and increasing fraction of the global trade. The former grew from 17 to 20% on average and the latter from 23 to 27% on average. APAC’s outsourcing to non-APAC countries (blue in Fig. 3) only grew slowly, with an average of 14 and 16% in 1995 and 2015, respectively. Earlier studies have proven that the world’s dominating embedded labor flows originate from developing countries, predominately to satisfy the final demand of wealthier economies23. Here, we further elucidate that non-APAC economies became more dependent on offshoring the resources, emissions and labor-intensive industries to APAC over the investigation period.

Fig. 3: Natural resources, environmental emissions, and socio-economic factors embedded in exports.

a natural resource, b local and global environmental threats, c socio-economic effects are shown in three panels. Note, the red and blue sections correspond to the same components in Fig. 1.

Among the six indicators, we find APAC’s share in global value added was the smallest. In particular, APAC’s economic gains from exports (red + yellow) were significantly smaller (27–32%) than APAC’s resources, emissions, and labor embedded in its exports (40–48%). Intuitively, this may be due to the fact that the APAC region is dominated by population from developing countries, thus resource/labor-intensive and low value-added products dominate the region’s export. In comparison, non-APAC countries are relatively more skilled in producing products and with higher value added and lower intensities of resource and emissions4. Also, APAC’s relatively small share in the value-added dimensions of the global supply chains can be a result of the overall low resource efficiency of the region12. As resource extractions and environment emissions become increasingly outsourced to the region, where environmental regulations and efficiency measures are only emerging, more environmental impacts will likely be resulted on the global level, offsetting or even reversing the resource efficiency gains and climate change mitigation efforts achieved in developed countries.

On the positive note, from 1995 to 2015, APAC’s resource and environmental intensities declined substantially, both from the perspective of footprint, i.e., footprint per final expenditure, and from the perspective of trade, i.e., direct impacts/gross trade (see Materials and Methods). Such improvement is most noticeable for labor (Table 1). More specifically, over the past two decades, APAC improved faster than the world averages in blue water, PM2.5, and labor requirements per expenditure of final consumer, which decreased by 30, 39, and 35%, respectively, while lagging behind the global averages in reduction pace of energy and GHG intensity from footprint perspectives. The intra-APAC trade achieved a reduction in the intensities of energy, GHG and labor by 22, 42, and 34%, respectively. Relatively, this was higher than the world averages over the period. However, the PM2.5 embedded in intra-APAC trade per traded values even grew by 7%, whereas the same indicator decreased by 34% at the global scale. This can be explained primarily by the PM2.5 trade magnitude in APAC nearly tripling in 2015, much higher than that of the global average (0.8 time). This indicates that the PM2.5 issue has become graver for the APAC trade after two decades. The ratio of traded value added to total intratrade values measures the economic gains of trade. Value added is a general indicator of economic performance, yet, it could not evaluate all the advantages of trade, which may cause misleading results in some cases. Therefore, more comprehensive indicators need to be incorporated to assess its advantages.

Table 1 Intensity comparison between APAC and the global average from the footprint and trade perspectives.

Despite APAC’s improvement, APAC’s resource and environmental intensities remain higher in general than the world averages in 2015. The comparison of intensity changes at the national and regional levels was also shown in Supplementary Fig. 5. This can be attributed to the characteristics of the APAC region and may not be altered soon. Specifically, the socio-economic development is supported by resource- and emission-intensive productions in primary industries, especially those linked with capital development and those to satisfy the export demand. The APAC region has a long way to go to achieve a greener and more sustainable trade pathway.

Our result further reveals that, China played a crucial role in APAC’s transformation to greener trade and greener consumption. Generally, without China’s improvement, all the footprint intensities of APAC would exhibit a further increase from 1995–2015, at 8% on average. By contrast, the value is −20% with China in the picture. For the trade intensities, the decline ranges would be much smaller (−1% on average) without China as opposed to with China (−24% on average). Another noteworthy finding is that when eliminating China from APAC, the intensities of footprint and trade in 1995 would be 20–30% lower, implying that China had turned from the lagger to the leader of efficiency improvement in the APAC region.

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